DELTA APPAREL, INC, 10-K filed on 11/29/2016
Annual Report
Document and Entity Information (USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended
Oct. 1, 2016
Nov. 15, 2016
Apr. 2, 2016
Document and Entity Information [Abstract]
 
 
 
Entity Registrant Name
DELTA APPAREL, INC 
 
 
Entity Central Index Key
0001101396 
 
 
Current Fiscal Year End Date
--10-01 
 
 
Entity Filer Category
Accelerated Filer 
 
 
Document Type
10-K 
 
 
Document Period End Date
Oct. 01, 2016 
 
 
Document Fiscal Year Focus
2016 
 
 
Document Fiscal Period Focus
FY 
 
 
Amendment Flag
false 
 
 
Entity Common Stock, Shares Outstanding
 
7,579,255 
 
Entity Well-known Seasoned Issuer
No 
 
 
Entity Voluntary Filers
No 
 
 
Entity Current Reporting Status
Yes 
 
 
Entity Public Float
 
 
$ 136.2 
Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Oct. 1, 2016
Oct. 3, 2015
Assets
 
 
Cash and cash equivalents
$ 397 
$ 300 
Accounts receivable, net
63,013 
61,921 
Other receivables
596 
820 
Income tax receivable
86 
0 
Inventories, net
164,247 
148,372 
Prepaid expenses and other current assets
4,145 
2,844 
Total current assets
232,484 
214,257 
Property, plant and equipment, net
43,503 
39,653 
Goodwill
36,729 
36,729 
Intangible assets, net
20,922 
22,162 
Deferred income taxes
5,246 
7,294 
Other assets
5,768 
4,808 
Total assets
344,652 
324,903 
Liabilities:
 
 
Accounts payable
51,395 
53,349 
Accrued expenses
21,706 
20,996 
Income taxes payable
0 
87 
Current portion of long-term debt
9,192 
8,340 
Total current liabilities
82,293 
82,772 
Long-term debt, less current maturities
106,603 
93,872 
Other liabilities
1,241 
660 
Contingent consideration
2,500 
3,100 
Total liabilities
192,637 
180,404 
Commitments and contingencies
   
   
Shareholders’ equity:
 
 
Preferred stock—$0.01 par value, 2,000,000 shares authorized, none issued and outstanding
0 
0 
Common stock —$0.01 par value, 15,000,000 shares authorized, 9,646,972 shares issued, and 7,609,727 and 7,797,166 shares outstanding as of October 1, 2016 and October 3, 2015, respectively
96 
96 
Additional paid-in capital
60,847 
59,399 
Retained earnings
116,679 
107,715 
Accumulated other comprehensive loss
(112)
(429)
Treasury stock —2,037,245 and 1,849,806 shares as of October 1, 2016 and October 3, 2015, respectively
(25,495)
(22,282)
Total shareholders’ equity
152,015 
144,499 
Total liabilities and shareholders’ equity
$ 344,652 
$ 324,903 
Consolidated Balance Sheets (Parenthetical) (USD $)
Oct. 1, 2016
Oct. 3, 2015
Shareholders' equity:
 
 
Preferred stock, par value (usd per share)
$ 0.01 
$ 0.01 
Preferred stock, shares authorized (shares)
2,000,000 
2,000,000 
Preferred stock, shares issued (shares)
0 
0 
Preferred stock, shares outstanding (shares)
0 
0 
Common stock, par value (usd per share)
$ 0.01 
$ 0.01 
Common stock, shares authorized (shares)
15,000,000 
15,000,000 
Common stock, shares issued (shares)
9,646,972 
9,646,972 
Common stock, shares outstanding (shares)
7,609,727 
7,797,166 
Treasury stock, shares (shares)
2,037,245 
1,849,806 
Consolidated Statements of Operations (USD $)
In Thousands, except Per Share data, unless otherwise specified
12 Months Ended
Oct. 1, 2016
Oct. 3, 2015
Sep. 27, 2014
Income Statement [Abstract]
 
 
 
Net sales
$ 425,249 
$ 449,142 
$ 452,901 
Cost of goods sold
331,750 
360,823 
367,160 
Gross profit
93,499 
88,319 
85,741 
Selling, general and administrative expenses
76,578 
81,086 
86,275 
Change in fair value of contingent consideration
(600)
(500)
200 
Gain on sale of business
0 
(7,704)
0 
Other (income) expense, net
(552)
(682)
927 
Restructuring costs
1,741 
0 
0 
Operating income (loss)
16,332 
16,119 
(1,661)
Interest expense
5,287 
6,021 
5,792 
Earnings (loss) before provision for (benefit from) income taxes
11,045 
10,098 
(7,453)
Provision for (benefit from) income taxes
2,081 
2,005 
(6,493)
Net earnings (loss)
$ 8,964 
$ 8,093 
$ (960)
Basic earnings (loss) per share (usd per share)
$ 1.16 
$ 1.03 
$ (0.12)
Diluted earnings (loss) per share (usd per share)
$ 1.12 
$ 1.00 
$ (0.12)
Weighted average number of shares outstanding (shares)
7,726 
7,874 
7,901 
Dilutive effect of stock options and awards (shares)
253 
206 
0 
Weighted average number of shares assuming dilution (shares)
7,979 
8,080 
7,901 
Consolidated Statements of Comprehensive Income (Loss) Consolidated Statements of Comprehensive Income (Loss) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Oct. 1, 2016
Oct. 3, 2015
Sep. 27, 2014
Statement of Comprehensive Income [Abstract]
 
 
 
Net earnings (loss)
$ 8,964 
$ 8,093 
$ (960)
Other comprehensive income (loss) related to unrealized gain (loss) on derivatives, net of income tax
317 
(160)
288 
Comprehensive income (loss)
$ 9,281 
$ 7,933 
$ (672)
Consolidated Statements of Shareholders' Equity (USD $)
In Thousands, except Share data, unless otherwise specified
Total
Common Stock
Additional Paid-in Capital
Retained Earnings
Accumulated Other Comprehensive Income (Loss)
Treasury Stock
Beginning Balance at Sep. 28, 2013
$ 138,872 
$ 96 
$ 59,425 
$ 100,582 
$ (557)
$ (20,674)
Beginning Balance, shares at Sep. 28, 2013
 
9,646,972 
 
 
 
1,773,124 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
Net loss and other comprehensive income
(672)
 
 
(960)
288 
 
Stock grant
0 
 
0 
 
 
0 
Stock grant, shares
 
 
 
 
 
0 
Stock options exercised
931 
 
(32)
 
 
963 
Stock options exercised, shares
 
 
 
 
 
(82,500)
Excess tax benefits from option exercises
27 
 
27 
 
 
 
Purchase of common stock
(1,180)
 
 
 
 
(1,180)
Purchase of common stock, shares
 
 
 
 
 
78,674 
Stock based compensation
229 
 
229 
 
 
 
Ending Balance at Sep. 27, 2014
138,207 
96 
59,649 
99,622 
(269)
(20,891)
Ending Balance, shares at Sep. 27, 2014
 
9,646,972 
 
 
 
1,769,298 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
Net loss and other comprehensive income
7,933 
 
 
8,093 
(160)
 
Stock grant
(455)
 
(663)
 
 
208 
Stock grant, shares
 
 
 
 
 
(42,244)
Stock options exercised
198 
 
(304)
 
 
502 
Stock options exercised, shares
 
 
 
 
 
(17,584)
Excess tax benefits from option exercises
(673)
 
(673)
 
 
 
Purchase of common stock
(2,101)
 
 
 
 
(2,101)
Purchase of common stock, shares
 
 
 
 
 
140,336 
Stock based compensation
1,390 
 
1,390 
 
 
 
Ending Balance at Oct. 03, 2015
144,499 
96 
59,399 
107,715 
(429)
(22,282)
Ending Balance, shares at Oct. 03, 2015
 
9,646,972 
 
 
 
1,849,806 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
Net loss and other comprehensive income
9,281 
 
 
8,964 
317 
 
Stock grant
(163)
 
(493)
 
 
330 
Stock grant, shares
 
 
 
 
 
(30,129)
Excess tax benefits from option exercises
89 
 
89 
 
 
 
Purchase of common stock
(3,543)
 
 
 
 
(3,543)
Purchase of common stock, shares
 
 
 
 
 
217,568 
Stock based compensation
1,852 
 
1,852 
 
 
 
Ending Balance at Oct. 01, 2016
$ 152,015 
$ 96 
$ 60,847 
$ 116,679 
$ (112)
$ (25,495)
Ending Balance, shares at Oct. 01, 2016
 
9,646,972 
 
 
 
2,037,245 
Consolidated Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Oct. 1, 2016
Oct. 3, 2015
Sep. 27, 2014
Operating activities:
 
 
 
Net earnings (loss)
$ 8,964 
$ 8,093 
$ (960)
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
 
 
 
Depreciation
8,295 
8,204 
8,156 
Amortization of intangibles
1,330 
1,338 
1,337 
Amortization of deferred financing fees
413 
517 
362 
Excess tax benefits from stock awards and option exercises
(89)
(2)
(27)
Provision for (benefit from) deferred income taxes
2,048 
786 
(6,382)
(Benefit from) provision for allowances on accounts receivable, net
(1,007)
(175)
201 
Non-cash stock compensation
1,852 
1,390 
229 
Change in fair value of contingent consideration
(600)
(500)
200 
Loss on disposal of equipment
108 
29 
126 
Fixed asset impairment charge
607 
0 
913 
Gain on sale of The Game assets before transaction costs
0 
(8,114)
0 
Changes in operating assets and liabilities, net of effect of acquisitions:
 
 
 
Accounts receivable
140 
6,236 
(296)
Inventories, net
(15,662)
7,730 
3,002 
Prepaid expenses and other current assets
(1,302)
376 
(747)
Other non-current assets
(346)
(308)
198 
Accounts payable
(2,217)
(4,370)
4,698 
Accrued expenses
(420)
158 
2,503 
Income taxes
(84)
1,447 
(101)
Other liabilities
170 
(528)
561 
Net cash provided by operating activities
2,200 
22,307 
13,973 
Investing activities:
 
 
 
Purchases of property and equipment
(12,315)
(7,773)
(8,894)
Proceeds from sale of property and equipment
1,861 
470 
71 
Proceeds from sale of The Game assets
0 
14,913 
0 
Cash paid for businesses, net of cash acquired
(313)
0 
0 
Net cash (used in) provided by investing activities
(10,767)
7,610 
(8,823)
Financing activities:
 
 
 
Proceeds from long-term debt
488,093 
497,364 
493,360 
Repayment of long-term debt
(474,510)
(525,125)
(498,121)
Payment of capital financing
(350)
(150)
0 
Payment of financing fees
(1,018)
(42)
(384)
Repurchase of common stock
(3,477)
(2,023)
(1,180)
Proceeds from exercise of stock options
0 
59 
931 
Payment of withholding taxes on stock awards and option exercises
(163)
(314)
0 
Excess tax benefits from stock awards and option exercises
89 
2 
27 
Net cash provided by (used in) financing activities
8,664 
(30,229)
(5,367)
Net increase (decrease) in cash and cash equivalents
97 
(312)
(217)
Cash and cash equivalents at beginning of period
300 
612 
829 
Cash and cash equivalents at end of period
397 
300 
612 
Supplemental cash flow information:
 
 
 
Cash paid during the period for interest
4,273 
4,803 
4,698 
Cash paid (received) during the period for income taxes, net of refunds received
308 
(328)
255 
Non-cash financing activity—shortfall to excess tax benefit pool
0 
673 
0 
Non-cash financing activity—capital lease agreement
781 
0 
778 
Accrued capital expenditures
$ 1,615 
$ 0 
$ 0 
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 and accessories. We specialize in selling casual and athletic products through a variety of distribution channels and distribution tiers, including specialty stores, boutiques, department stores, mid and mass channels, e-retailers, and the U.S. military. Our products are also made available direct-to-consumer on our websites and in our retail stores. We 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 are prepared in conformity with accounting principles generally accepted in the United States of America and 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 entities are not considered variable interest entities.
We operate our business in two distinct segments: basics and branded 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.
Revisions
Certain amounts have been corrected in the October 3, 2015, balance sheet and related footnotes to conform to the classification of those balances as of October 1, 2016. These include the revision of deposits from Prepaid expenses and other current assets to Other assets in the amount of $1.3 million and the revision of the current portion of interest rate swaps from Other liabilities to Accrued liabilities in the amount of$0.3 million.
(b) Fiscal Year: We operate on a 52-53 week fiscal year ending on the Saturday closest to September 30. The 2016 and 2014 fiscal years were 52-week years that ended on October 1, 2016, and September 27, 2014, respectively. The 2015 fiscal year was a 53-week year that ended on October 3, 2015.
(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) Cash and Cash Equivalents: Cash and cash equivalents consists of cash and temporary investments with original maturities of three months or less.
(e) 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. Accounts receivable is presented net of reserves for allowances which include allowance for doubtful accounts, returns and allowances. The reserves for allowances were $2.0 million and $3.0 million, as of October 1, 2016, and October 3, 2015, respectively.
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 1% of net sales in fiscal years 2016, 2015, and 2014.
(f) 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. See Note 2(y) for further information regarding yarn procurements. 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.
(g) 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.
(h) 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.
(i) 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.
(j) Goodwill and Intangible Assets: We recorded goodwill and intangible assets with definite lives, including trade names and trademarks, customer relationships, technology, and non-compete agreements, in conjunction with the acquisitions of Salt Life, Junkfood, 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 7 — Goodwill and Intangible Assets for further details.
(k) 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.
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 annual impairment analysis, there is not an impairment on the goodwill associated with Junkfood and Salt Life, the only goodwill recorded on our financial statements.
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 impaired.
(l) Contingent Consideration: At the end of each reporting period, we are required to remeasure the fair value of the contingent consideration related to the Salt Life and Art Gun acquisitions in accordance with FASB Codification No. 805, Business Combinations (“ASC 805”). Based on the operating results and projections, we analyzed the fair value of the contingent consideration for both Salt Life and Art Gun as of October 1, 2016. The estimated fair value of the contingent consideration for Salt Life was $2.5 million and $3.1 million at October 1, 2016, and October 3, 2015, respectively. No contingent consideration is expected to be paid under the terms of the Art Gun arrangement.
(m) Self-Insurance Reserves: Prior to January 1, 2015, our medical, prescription and dental care benefits were primarily self-insured. Effective January 1, 2015, our medical and prescription benefits became fully insured, but our dental insurance remained self-insured. Our prior self-insurance accruals were based on claims filed and estimates of claims incurred but not reported. We developed 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. Self-insurance reserves were less than $0.1 million as of October 1, 2016, and October 3, 2015.
(n) Revenue Recognition: Revenues from product sales are recognized when ownership is transferred 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.
(o) 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.
(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, inventory write-downs, and depreciation and amortization expense associated with our manufacturing and sourcing operations. 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 $15.1 million, $16.8 million and $16.9 million in fiscal years 2016, 2015 and 2014, 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 2% 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 $4.4 million, $4.7 million and $3.6 million in fiscal years 2016, 2015 and 2014, respectively. Included in these costs were $1.1 million in fiscal years 2016, 2015 and 2014 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 our 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 selling, general and administrative expense in the Consolidated Statements of Operations over the vesting period.
(t) 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.
(u) 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.
(v) 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. Property, plant and equipment 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.
(w) 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.
(x) Other Comprehensive Income (Loss): Other Comprehensive Income (Loss) consists of net earnings (loss) and unrealized gains (losses) from cash flow hedges, net of tax. Accumulated other comprehensive loss contained in the shareholders’ equity section of the Consolidated Balance Sheets was $0.1 million and $0.4 million as of October 1, 2016, and October 3, 2015, respectively, and was related to interest rate swap agreements.
(y) Yarn and Cotton Procurements: We have a supply agreement with Parkdale to supply our yarn requirements until December 31, 2018. 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.
(z) 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.
From time to time, we may purchase cotton option contracts to economically hedge the risk related to market fluctuations in the cost of cotton used in our operations. During fiscal year 2016 we entered into various cotton option contracts to economically hedge the risk related to market fluctuations in the cost of cotton used in our operations. We do not receive hedge accounting treatment for these derivatives. As such the realized gains and losses associated with them were recorded within cost of goods sold on the Consolidated Statement of Operations. There were no significant raw material option agreements that were purchased during fiscal years 2016, 2015 or 2014.
In September 2013, we entered into four interest rate swap agreements, as follows:
 
Effective Date
 
Notational
Amount
 
LIBOR Rate
 
Maturity Date
Interest Rate Swap
September 9, 2013
 
$15 million
 
1.1700
%
 
September 9, 2016
Interest Rate Swap
September 9, 2013
 
$15 million
 
1.6480
%
 
September 11, 2017
Interest Rate Swap
September 19, 2013
 
$15 million
 
1.0030
%
 
September 19, 2016
Interest Rate Swap
September 19, 2013
 
$15 million
 
1.4490
%
 
September 19, 2017

During fiscal years 2016, 2015, and 2014, 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 $0.3 million for the year ended October 1, 2016, an AOCI loss, net of taxes, of $0.2 million for the year ended October 3, 2015, an AOCI gain, net of taxes of $0.3 million for the year ended September 27, 2014. See Note 16(d) - Derivatives for further details.
(aa) Recently Adopted Accounting Pronouncements:
In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, ("ASU 2015-17"). This new guidance requires businesses to classify deferred tax liabilities and assets on their balance sheets as noncurrent. Under existing accounting standards, a business must separate deferred income tax liabilities and assets into current and noncurrent. ASU 2015-17 was issued as a way to simplify the way businesses classify deferred tax liabilities and assets on their balance sheets. Public companies must apply ASU 2015-17 to fiscal years beginning after December 15, 2016. Companies must follow the requirements for interim periods within those fiscal years, but early adoption at the beginning of an interim or annual period is allowed for all entities. ASU 2015-17 was adopted in our fiscal year beginning October 4, 2015. The implementation of ASU 2015-17 was applied retroactively to the October 3, 2015, Consolidated Balance Sheet included in this Form 10-K. As a result of this retroactive application, current deferred income tax assets of $7.3 million have been netted with noncurrent deferred income tax liabilities of $7 thousand and reclassified to noncurrent deferred income tax assets in the October 3, 2015, Consolidated Balance Sheet.
(ab) Recently Issued Accounting Pronouncements Not Yet Adopted:
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, ("ASU 2014-09"). This new guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. ASU 2014-09 is effective for annual periods beginning after December 15, 2017, for public business entities and permits the use of either the retrospective or cumulative effect transition method. Early application is permitted only for annual reporting periods beginning after December 15, 2016. ASU 2014-09 will therefore be effective in our fiscal year beginning September 30, 2018. We are evaluating the effect that ASU 2014-09 will have on our Consolidated Financial Statements and related disclosures.
In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory, ("ASU 2015-11").  This new guidance requires an entity to measure inventory at the lower of cost and net realizable value. Currently, entities measure inventory at the lower of cost or market. ASU 2015-11 replaces market with net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.  Subsequent measurement is unchanged for inventory measured under last-in, first-out or the retail inventory method.  ASU 2015-11 requires prospective adoption for inventory measurements for fiscal years beginning after December 15, 2016, and interim periods within those years for public business entities.  Early application is permitted.  ASU 2015-11 will therefore be effective in our fiscal year beginning October 1, 2017. We are evaluating the effect that ASU 2015-11 will have on our Consolidated Financial Statements and related disclosures.
In February 2016, the FASB issued ASU No. 2016-02, Leases, (ASU 2016-02). ASU 2016-02 requires lessees to recognize assets and liabilities for most leases. All leases will be required to be recorded on the balance sheet with the exception of short-term leases. Early application is permitted. The guidance must be adopted using a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. ASU 2016-02 is effective for financial statements issued for annual periods beginning after December 15, 2018, and interim periods within those annual periods. ASU 2016-02 will therefore be effective in our fiscal year beginning September 29, 2019. We are evaluating the effect that ASU 2016-02 will have on our Consolidated Financial Statements and related disclosures.
In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, (ASU 2016-09). ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. ASU 2016-09 will therefore be effective in our fiscal year beginning October 1, 2017. We are evaluating the effect that ASU 2016-09 will have on our Consolidated Financial Statements and related disclosures.
Sale of The Game
Sale of The Game
SALE OF THE GAME
On March 2, 2015, we completed the sale of our The Game branded collegiate headwear and apparel business to David Peyser Sportswear, Inc., owner of MV Sport, Inc., for $14.9 million. The business sold consisted of The Game branded products sold nationally in college bookstores and through team dealers. This transaction further strengthened our balance sheet and enabled us to focus on areas of our business that are more strategic to our long-term goals. Our Salt Life business and corporate business, Kudzu, previously operated within To The Game, LLC (now Salt Life, LLC) were not included in the sale of the collegiate part of the business.
The sale included finished goods inventory of $6.0 million, $0.4 million in fixed assets, and $0.1 million in other assets, along with the requirement that we indemnify up to $0.3 million of legal costs associated with a particular litigation matter which was subsequently settled. The transaction did not include accounts receivable which we subsequently collected in the normal course of business, and certain undecorated apparel inventory. We incurred $0.4 million in direct selling expenses associated with the transaction. In addition, we incurred certain indirect costs associated with the transaction, including a $0.8 million devaluation of the inventory not included in the sale and $1.4 million in indirect incentive-based expenses.
The pre-tax gain on the sale of The Game assets, inclusive of the direct and indirect expenses, was $5.6 million. The transaction and associated indirect expenses were recorded in our Consolidated Statements of Operations in the year ended October 3, 2015, as follows: (i) proceeds of $14.9 million less costs of assets sold and direct selling costs resulting in a gain of $7.7 million recorded as a gain on sale of business; (ii) $1.4 million in indirect expenses recorded in our selling, general and administrative expense; and (iii) $0.8 million of indirect expenses recorded in our cost of goods sold.
Restructuring Plan
Restructuring Plan
RESTRUCTURING PLAN
On May 10, 2016, in connection with our ongoing strategic manufacturing initiatives, we announced plans to restructure our manufacturing operations with the closing of our textile manufacturing facility in Maiden, North Carolina, the consolidation of sew facilities in Mexico, and the expansion of production at our lower-cost Ceiba Textiles facility in Honduras. In September, 2016, we sold the real estate and certain machinery, equipment and supply parts used in the Maiden facility for approximately $1.7 million. As part of the closing of the Maiden facility and the expansion of operations at our offshore facilities, we incurred the following costs (in thousands):
 
 
Fiscal Year Ended
 
 
October 1, 2016
Excess manufacturing costs related to the shutdown and start-up operations
 
$
1,096

Total expenses included in cost of goods sold
 
1,096

 
 
 
Employee termination costs
 
597

Fixed asset impairment
 
607

Inventory and supply part impairment
 
144

Other costs to exit facility
 
393

Total restructuring costs
 
1,741

Total manufacturing realignment expenses
 
$
2,837


All of these expenses were recorded in our basics segment. We do not expect to incur any significant additional costs related to the manufacturing initiative in fiscal year 2017. At the end of 2016, we had paid $0.4 million in employee termination benefits and had $0.2 million accrued.
Inventories
Inventories
INVENTORIES
Inventories, net of reserves of $8.8 million and $8.4 million as of October 1, 2016, and October 3, 2015, respectively, consist of the following (in thousands):
 
October 1,
2016
 
October 3,
2015
Raw materials
$
11,442

 
$
11,412

Work in process
18,158

 
19,071

Finished goods
134,647

 
117,889

 
$
164,247

 
$
148,372


Raw materials include finished yarn and direct materials for the basics segment, undecorated garments for the Art Gun and Junkfood businesses and direct embellishment materials 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, except economic life data):
 
Estimated
Useful Life
 
October 1,
2016
 
October 3,
2015
Land and land improvements
25 years
 
$
572

 
$
996

Buildings
20 years
 
3,369

 
8,706

Machinery and equipment
10 years
 
72,068

 
80,843

Computers and software
3-10 years
 
20,889

 
20,635

Furniture and fixtures
7 years
 
1,977

 
3,126

Leasehold improvements
3-10 years
 
3,686

 
2,645

Vehicles and related equipment
5 years
 
808

 
821

Construction in progress
N/A
 
3,719

 
3,256

 
 
 
107,088

 
121,028

Less accumulated depreciation and amortization
 
 
(63,585
)
 
(81,375
)
 
 
 
$
43,503

 
$
39,653

Goodwill and Intangible Assets
Goodwill and Intangible Assets
GOODWILL AND INTANGIBLE ASSETS
Goodwill and components of intangible assets consist of the following (in thousands, except economic life data):
 
October 1, 2016
 
October 3, 2015
 
 
 
Cost
Accumulated Amortization
Net Value
 
Cost
Accumulated Amortization
Net Value
 
Economic Life
 
 
 
 
 
 
 
 
 
 
Goodwill
$
36,729

$
—

$
36,729

 
$
36,729

$
—

$
36,729

 
N/A
 
 
 
 
 
 
 
 
 
 
Intangibles:
 
 
 
 
 
 
 
 
 
Tradename/trademarks
$
17,620

$
(2,514
)
$
15,106

 
$
17,530

$
(1,896
)
$
15,634

 
20 - 30 yrs
Customer relationships
7,220

(4,016
)
3,204

 
7,220

(3,664
)
3,556

 
20 yrs
Technology
1,220

(826
)
394

 
1,220

(703
)
517

 
10 yrs
License Agreements
2,100

(320
)
1,780

 
2,100

(216
)
1,884

 
15 - 30 yrs
Non-compete agreements
1,287

(849
)
438

 
1,287

(716
)
571

 
4 – 8.5 yrs
Total intangibles
$
29,447

$
(8,525
)
$
20,922

 
$
29,357

$
(7,195
)
$
22,162

 
 


Goodwill represents the acquired goodwill net of the cumulative impairment losses of $0.6 million. In August 2016, we acquired Coast Apparel for $313 thousand, which resulted in additional intangible assets of $90 thousand. Amortization expense for intangible assets was $1.3 million for the years ended October 1, 2016, October 3, 2015, and September 27, 2014. Amortization expense is estimated to be approximately $1.3 million for fiscal years 2017, 2018 and 2019, approximately $1.2 million for fiscal year 2020, and approximately $1.1 million for fiscal year 2021.
Accrued Expenses
Accrued Expenses
ACCRUED EXPENSES
Accrued expenses consist of the following (in thousands):
 
October 1,
2016
 
October 3,
2015
Accrued employee compensation and benefits
$
12,899

 
$
10,704

Taxes accrued and withheld
1,003

 
1,455

Accrued insurance
263

 
349

Accrued advertising
256

 
363

Accrued royalties
1,653

 
2,173

Accrued commissions
460

 
512

Accrued freight
1,105

 
1,501

Other
4,067

 
3,939

 
$
21,706

 
$
20,996



During the fourth quarter of fiscal year 2014, we implemented certain initiatives to improve our results of operations and financial position. As a result of these initiatives, approximately $4.0 million in expenses were recognized during the fourth quarter of fiscal year 2014, consisting of $2.2 million in severance expense, $0.9 million in expense related to reduced manufacturing production, and $1.0 million in fixed asset impairments.
These expenses were reported in our Consolidated Statement of Operations as follows (in thousands):
 
September 27,
2014
Cost of goods sold
$
868

Selling, general and administrative expenses
2,169

Other expense
984

 
$
4,021



During fiscal years 2016 and 2015, no additional expenses were incurred in association with these 2014 strategic initiatives. As of October 3, 2015, $0.5 million of these expenses were accrued and reported on our Consolidated Balance Sheet. No expenses remained accrued as of October 1, 2016.
Long-Term Debt
Long-Term Debt
LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
 
October 1,
2016
 
October 3,
2015
Revolving U.S. credit facility, interest at base rate or adjusted LIBOR rate plus an applicable margin (interest at 2.7% on October 1, 2016) due May 2021
$
92,137

 
$
—

Revolving credit facility, interest at base rate or adjusted LIBOR rate plus an applicable margin (interest at 2.7% on October 3, 2015) due May 2017
—

 
79,550

Revolving credit facility with Banco Ficohsa, a Honduran bank, interest at 8% due March 2019 (denominated in U.S. dollars)
5,000

 
4,390

Term loan with Banco Ficohsa, a Honduran bank, interest at 7%, monthly installments beginning March, 2011 through March 2018 (denominated in U.S. dollars)
1,459

 
2,432

Term loan with Banco Ficohsa, a Honduran bank, interest at 7.5%, monthly installments beginning November 2014 through December 2020 (denominated in U.S. dollars)
2,600

 
3,150

Term loan with Banco Ficohsa, a Honduran bank, interest at 8%, monthly installments beginning June 2016 through April 2022 (denominated in U.S. dollars)
1,650

 
1,881

Term loan with Banco Ficohsa, a Honduran bank, interest at 8%, monthly installments beginning June 2016 through July 2017 (denominated in U.S. dollars)
4,833

 
—

Salt Life acquisition promissory note, imputed interest at 1.92%, one-time installment due September 30, 2014, quarterly installments beginning April 2015 through June 2016
—

 
2,979

Salt Life acquisition promissory note, imputed interest at 3.62%, quarterly payments beginning September 2016 through June 2019
8,116

 
7,830

 
115,795

 
102,212

Less current installments
(9,192
)
 
(8,340
)
Long-term debt, excluding current installments
$
106,603

 
$
93,872


On May 10, 2016, we amended our U.S. revolving credit facility and entered into a Fifth Amended and Restated Credit Agreement (the "Amended Credit Agreement") with Wells Fargo Bank, National Association ("Wells Fargo"), as Administrative Agent, the Sole Lead Arranger and the Sole Book Runner, and the financial institutions named therein as Lenders, which are Wells Fargo, PNC Bank, National Association and Regions Bank. Our subsidiaries, M.J. Soffe, LLC, Junkfood Clothing Company, Salt Life, LLC, and Art Gun, LLC (together with the Company, the "Companies"), are co-borrowers under the Amended Credit Agreement.
The Amended Credit Agreement amends and restates our Fourth Amended and Restated Loan and Security Agreement dated May 27, 2011, which was amended on four occasions and had a maturity date of May 27, 2017. Bank of America, N.A. departed the syndicate of Lenders and Regions Bank joined the syndicate of Lenders for the Amended Credit Agreement. Bank of America, N.A. also ceased to serve as the syndication agent for the facility, and Merrill Lynch, Pierce, Fenner and Smith Incorporated is no longer a joint book runner with Wells Fargo.
The Amended Credit Agreement allows us to borrow up to $145 million (subject to borrowing base limitations), including a maximum of $25 million in letters of credit. Provided that no event of default exists, we have the option to increase the maximum credit to $200 million (subject to borrowing base limitations), conditioned upon the Administrative Agent's ability to secure additional commitments and customary closing conditions. The credit facility matures on May 10, 2021. We paid $1.0 million in financing costs associated with the Amended Credit Agreement.
Our U.S. revolving credit facility is secured by a first-priority lien on substantially all of the real and personal property of Delta Apparel, Junkfood, Soffe, Salt Life, 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 October 1, 2016, we had $92.1 million outstanding under our U.S. revolving credit facility at an average interest rate of 2.7%, and had the ability to borrow an additional $32.8 million. This credit facility includes the financial covenant that if the amount of availability falls below the threshold amounts set forth in the Amended Credit Agreement, our Fixed Charge Coverage Ratio (“FCCR”) (as defined in the Amended Credit Agreement) for the preceding 12-month period must not be less than 1.1 to 1.0. We were not subject to the FCCR covenant as of October 1, 2016, because our availability was above the minimum required under the Amended Credit Agreement. At October 1, 2016, our FCCR was above the required 1.1 to 1.0 ratio and, therefore, we would have satisfied our financial covenant had we been subject to it. 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 made pursuant to the Amended Credit Agreement may be used for permitted acquisitions (as defined in the Amended Credit Agreement), general operating expenses, working capital, other corporate purposes, and to finance credit facility fees and expenses. Pursuant to the terms of our credit facility, 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% of the lesser of the borrowing base or the commitment, and average availability for the 30-day period immediately preceding that date of not less than 15% of the lesser of the borrowing base or the commitment; and (ii) the aggregate amount of dividends and stock repurchases after May 10, 2016, does not exceed $10 million plus 50% of our cumulative net income (as defined in the Amended Credit Agreement) from the first day of the third quarter of fiscal year 2016 to the date of determination. At October 1, 2016, and October 3, 2015, there was $10.7 million and $7.3 million, respectively, of retained earnings free of restrictions to make cash dividends or stock repurchases.
The Amended Credit Agreement contains a subjective acceleration clause and a “springing” lockbox arrangement (as defined in FASB Codification No. 470, Debt ("ASC 470")), whereby remittances from customers will be forwarded to our general bank account and will not reduce the outstanding debt until and unless a specified event or an event of default occurs. Pursuant to ASC 470, we classify borrowings under the facility as long-term debt.
In August 2013, we acquired Salt Life and issued two promissory notes in the aggregate principal amount of $22.0 million, which included a one-time installment of $9.0 million that was due and paid as required on September 30, 2014, and quarterly installments commencing on March 31, 2015, with the final installment due on June 30, 2019. The promissory notes are zero-interest notes and state that interest will be imputed as required under Section 1274 of the Internal Revenue Code. We have imputed interest at 1.92% and 3.62% on the promissory notes that mature on June 30, 2016, and June 30, 2019, respectively. At October 1, 2016, the discounted value of the promissory note was $8.1 million.
On December 6, 2013, we entered into an agreement (the "IMG Agreement") with IMG Worldwide, Inc. ("IMG") that provided for the termination of the Salt Life brand license agreements entered into between Delta and IMG (as agent on behalf of Salt Life Holdings) prior to the acquisition of Salt Life as well as the agency agreement entered into between Salt Life Holdings and IMG prior to the acquisition of Salt Life. In addition, the IMG Agreement provides that Delta and Salt Life Holdings are released from all obligations and liabilities under those agreements or relating to the acquisition of Salt Life. Pursuant to the IMG Agreement, Salt Life and IMG entered into a separate, multi-year agency agreement, which has since been terminated, whereby IMG represented Salt Life with respect to the licensing of the Salt Life brand in connection with certain product and service categories. Salt Life agreed to pay IMG installments totaling $3,500,000 to terminate the existing arrangements. There was a $3,000,000 indemnification asset that was recorded as part of the purchase of Salt Life that was released from escrow during the quarter ended December 28, 2013, and applied towards these payment obligations, along with additional amounts previously accrued for royalty obligations under the above-referenced Salt Life brand license agreements. During the year ended October 3, 2015, we made payments of $0.8 million in accordance with the terms of the agreement. As of October 3, 2015 there were 3 quarterly installments of $195 thousand remaining, and we had recorded the fair value of the liability as of October 3, 2015, in our financials with $0.6 million in accrued expenses. During the year ended October 1, 2016, we made the final payments of $0.6 million in accordance with the terms of the agreement and no amounts remain accrued in our financials as of October 1, 2016.
Since March, 2011, we have entered into loans and a revolving credit facility with Banco Ficohsa, a Honduran bank, in order to finance both the operations and capital expansion of our Honduran facilities. Each of these loans are secured by a first-priority lien on the assets of our Honduran operations, and are not guaranteed by our U.S. entities. These loans are denominated in U.S. dollars and the carrying value of the debt approximates the fair value. The revolving credit facility requires minimum payments during each six-month period of the 18-month term; however the loan agreement permits additional drawdowns to the extent payments are made and certain objective covenants are met. The current revolving Honduran debt, by its nature, is not long-term, as it requires scheduled payments each six months. However, as the loan permits us to re-borrow funds up to the amount repaid, subject to certain covenants, and we intend to re-borrow funds, subject to the objective covenants, the amounts have been classified as long-term debt. Information about these loans and the outstanding balance as of October 1, 2016, is listed as part of the long-term debt schedule above.
The aggregate maturities of debt at October 1, 2016, are as follows (in thousands):
Fiscal Year
Amount

2017
$
9,192

2018
7,955

2019
10,835

2020
4,469

2021
83,149

Thereafter
195

 
$
115,795

Income Taxes
Income Taxes
INCOME TAXES
The provision for income taxes consists of the following (in thousands):
 
Period ended
 
October 1, 2016
 
October 3, 2015
 
September 27, 2014
Current:
 
 
 
 
 
Federal
$
36

 
$
—

 
$
—

State
78

 
60

 
79

Foreign
179

 
186

 
158

Total current
$
293

 
$
246

 
$
237

Deferred:
 
 
 
 
 
Federal
$
1,462

 
$
1,320

 
$
(5,807
)
State
326

 
439

 
(923
)
Total deferred
1,788

 
1,759

 
(6,730
)
Provision for (benefit from) income taxes
$
2,081

 
$
2,005

 
$
(6,493
)

For financial reporting purposes our income (loss) before provision for (benefit from) income taxes includes the following components (in thousands):
 
Period ended
 
October 1, 2016
 
October 3, 2015
 
September 27, 2014
United States
$
3,966

 
$
3,434

 
$
(16,832
)
Foreign
7,079

 
6,664

 
9,379

 
$
11,045

 
$
10,098

 
$
(7,453
)

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):
 
Period ended
 
October 1, 2016
 
October 3, 2015
 
September 27, 2014
Income tax expense at the statutory rate
$
3,755

 
$
3,433

 
$
(2,533
)
State income tax expense, net of federal income tax effect
447

 
374

 
(893
)
Impact of state rate changes
116

 
—

 
—

Rate difference and nondeductible items in foreign jurisdictions
54

 
(30
)
 
(55
)
Impact of foreign earnings in tax-free zone
(2,319
)
 
(2,168
)
 
(3,098
)
Valuation allowance adjustments
(71
)
 
—

 
4

Nondeductible compensation
—

 
335

 
—

Nondeductible amortization and other permanent differences
96

 
81

 
76

Other
3

 
(20
)
 
6

Provision for (benefit from) income taxes
$
2,081

 
$
2,005

 
$
(6,493
)

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 $66.3 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):
 
October 1,
2016
 
October 3,
2015
 
Deferred tax assets:
 
 
 
 
Federal net operating loss carryforwards
$
6,256

 
$
7,842

 
State net operating loss carryforwards
1,784

 
2,362

 
Charitable donation carryforward
—

 
28

 
Derivative — interest rate contracts
70

 
268

 
Alternative minimum tax credit carryforward
135

 
99

 
Currently nondeductible accruals
7,613

 
6,029

 
Gross deferred tax assets
15,858

 
16,628

 
Less valuation allowance — state net operating loss
(131
)
 
(202
)
 
Net deferred tax assets
15,727

 
16,426

 
 
 
 
 
 
Deferred tax liabilities:
 
 
 
 
Depreciation
(2,868
)
 
(2,941
)
 
Goodwill and intangibles
(7,463
)
 
(6,024
)
 
Other
(150
)
 
(167
)
 
Gross deferred tax liabilities
(10,481
)
 
(9,132
)
 
Net deferred tax asset
5,246

 
7,294

 

As of October 1, 2016, and October 3, 2015, we had federal net operating loss carryforwards of approximately $18.3 million and $23.1 million, respectively. The deferred tax asset resulting from federal net operating losses for October 1, 2016, and October 3, 2015, were $6.3 million and $7.8 million, respectively. There is no carryback opportunity for these losses and the carryforwards expire at various intervals from 2033 to 2035. We determined that no valuation allowance is required, as we expect that all such carryforwards more likely than not will be realized within statutory periods of carryover and utilization.
As of October 1, 2016, and October 3, 2015, we had state net operating loss carryforwards of approximately $45.4 million and $58.5 million, respectively. These carryforwards expire at various intervals from 2019 through 2036. 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.
For both federal and state purposes, the ultimate realization of deferred tax assets depends upon the generation of future taxable income or tax planning strategies during the periods in which those temporary differences become deductible or when the carryforwards are available.
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. Accrued interest and penalties related to unrecognized tax benefits would also be recorded. We did not have any material unrecognized tax benefits as of October 1, 2016, or October 3, 2015.
The tax years 2012 to 2014 according to statute and with few exceptions, remain open to examination by various federal, state, local and foreign jurisdictions.
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 October 1, 2016, were as follows (in thousands):
Fiscal Year
Amount

2017
$
7,177

2018
6,595

2019
6,237

2020
5,897

2021
3,633

Thereafter
10,396

 
$
39,935


Rent expense for all operating leases was $9.3 million, $9.4 million and $9.8 million for fiscal years 2016, 2015, and 2014, 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 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, as well as a Roth Plan that allows for after tax contributions. The 401(k) Plan provides for us to make a guaranteed match of a defined portion of the employee’s contributions. During fiscal years 2016, 2015, and 2014 we contributed approximately $1.1 million, $1.1 million, and $1.3 million, respectively, to the 401(k) Plan.
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 2016 and 2015. The following table presents the benefit obligation for these benefits, which is included in accrued expenses in the accompanying balance sheets (in thousands).
 
October 1,
2016
 
October 3,
2015
Balance at beginning of year
$
412

 
$
443

Interest expense
6

 
1

Benefits paid
(81
)
 
(32
)
Adjustment
7

 
—

Balance at end of year
$
344

 
$
412

Stock-based Compensation
Stock-based Compensation
STOCK-BASED COMPENSATION
On February 4, 2015, our shareholders re-approved the Delta Apparel, Inc. 2010 Stock Plan ("2010 Stock Plan") that was originally approved by our shareholders on November 11, 2010. The re-approval of the 2010 Stock Plan, including the material terms of the performance goals included in the 2010 Stock Plan, enables us to continue to grant equity incentive compensation awards that are structured in a manner intended to qualify as tax deductible, performance-based compensation under Section 162(m) of the Internal Revenue Code of 1986. Since November 2010, no additional awards have been or will be granted under either the Delta Apparel Stock Option Plan ("Option Plan") or the Delta Apparel Incentive Stock Award Plan ("Award Plan"); instead, all stock awards have been and will continue to be granted under the 2010 Stock Plan.
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. Compensation expense is recorded on the selling, general and administrative expense line item in our Consolidated Statements of Operations over the vesting periods. Total employee stock-based compensation expense for fiscal years 2016 and 2015 was $2.0 million and $1.9 million, respectively. During the 2014 fiscal year, we reduced this expense by $90 thousand in connection with our outstanding awards due to adjustments to the expected vesting of certain performance units granted and known forfeitures of certain restricted stock units granted.
Associated with the compensation cost are income tax benefits recognized of $0.8 million and $0.7 million in fiscal years 2016 and 2015, respectively. Tax expense of $35 thousand, associated with the reduction of expense, was recognized in fiscal year 2014.
2010 Stock Plan
Under the 2010 Stock Plan, the Compensation Committee of our Board of Directors has the authority to determine the employees and directors to whom awards may be granted and the size and type of each award and manner in which such awards will vest. The awards available consist of stock options, stock appreciation rights, restricted stock, restricted stock units, performance stock, performance units, and other stock and cash awards. The aggregate number of shares of common stock that may be delivered under the 2010 Stock Plan is 500,000 plus any shares of common stock subject to outstanding awards under the Option Plan or Award Plan that are subsequently forfeited or terminated for any reason before being exercised. The 2010 Stock Plan limits the number of shares that may be covered by awards to any participant in a given calendar year and also limits the aggregate awards of restricted stock, restricted stock units and performance stock granted in any given calendar year. If a participant dies or becomes disabled (as defined in the 2010 Stock Plan) while employed by 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.
Stock Options
No stock options were granted during fiscal year 2016. All outstanding options granted by the Company have vested and are exercisable.
A summary of the stock option activity during the periods ended October 1, 2016, October 3, 2015, and September 27, 2014 is as follows:
 
Fiscal Year Ended
 
October 1, 2016
 
October 3, 2015
 
September 27, 2014
 
Shares
Weighted Average Exercise Price
 
Shares
Weighted Average Exercise Price
 
Shares
Weighted Average Exercise Price
Stock options outstanding, beginning of period
10,000

$
13.07

 
50,000

$
13.47

 
50,000

$
13.47

Stock options granted
—

—

 
—

—

 
—

—

Stock options exercised
—

—

 
—

—

 
—

—

Stock options forfeited
—

—

 
(40,000
)
13.56

 
—

—

Stock options outstanding, end of period
10,000

$
13.07

 
10,000

$
13.07

 
50,000

$
13.47

Stock options outstanding and exercisable, end of period
10,000

$
13.07

 
10,000

$
13.07

 
50,000

$
13.47


The following table summarizes information about our stock options outstanding, all of which are vested and exercisable as of October 1, 2016:
Date of Option Grant
Number of Options Outstanding and Exercisable
Exercise Price
Grant-Date Fair Value
Expiration Date
February 2, 2011
10,000

$
13.07

$
6.35

February 18, 2018
 
10,000

 
 
 

Restricted Stock Units and Performance Units
The following table summarizes the restricted stock unit and performance unit award activity during the periods ending October 1, 2016, October 3, 2015, and September 27, 2014:
 
Fiscal Year Ended
 
October 1, 2016
 
October 3, 2015
 
September 27, 2014
 
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 period
518,800

$
10.80

 
215,352

$
14.31

 
348,852

$
14.25

Units granted
159,138

$
14.03

 
524,000

$
10.81

 
—

$
—

Units issued
(49,529
)
$
12.32

 
(69,657
)
$
14.31

 
—

$
—

Units forfeited
(42,771
)
$
10.87

 
(150,895
)
$
14.26

 
(133,500
)
$
14.16

Units outstanding, end of fiscal period
585,638

$
11.54

 
518,800

$
10.80

 
215,352

$
14.31


During fiscal year 2016, restricted stock units representing 83,788 shares of our common stock were granted. These restricted stock units are service-based and 8,438 units are eligible to vest upon the filing of our Annual Report on Form 10-K for the year ended October 1, 2016. The remaining 75,350 units are eligible to vest upon the filing of our Annual Report on Form 10-K for the year ending September 30, 2017. Upon vesting, one-half of these awards are payable in the common stock of Delta Apparel, Inc. and are accounted for under the equity method pursuant to ASC 718 and one-half are payable in cash and are accounted for under the liability method pursuant to ASC 718.
During fiscal year 2016, performance units representing 75,350 shares of our common stock were granted. These performance units are based on the achievement of certain performance criteria for the fiscal years ended October 1, 2016, and ending September 30, 2017, and are eligible to vest upon the filing of our Annual Report on Form 10-K for the year ending September 30, 2017. Upon vesting, one-half of these awards are payable in the common stock of Delta Apparel, Inc. and are accounted for under the equity method pursuant to ASC 718 and one-half are payable in cash and are accounted for under the liability method pursuant to ASC 718.
During fiscal year 2016, previously issued performance units representing 49,529 shares of our common stock vested upon the filing of our Annual Report on Form 10-K for the fiscal year ended October 3, 2015. Of these performance units, one-half were payable in common stock and one-half were payable in cash and were issued in accordance with their respective agreement.
During fiscal year 2015, restricted stock units representing 355,000 shares of our common stock were granted. These restricted stock units are serviced-based and vest upon the filing of our Annual Report on Form 10-K for the period ending September 29, 2018. Upon the filing of such Annual Report on Form 10-K, these 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 2015, performance units representing 169,000 shares of our common stock were granted. Of these performance units, 65,000 were based on the achievement of certain performance criteria for the fiscal year ended October 3, 2015, and were eligible to vest upon the filing of our Annual Report on Form 10-K. Of these units, one-half were payable in the common stock of Delta Apparel, Inc. and were therefore accounted for under the equity method pursuant to ASC 718 and one-half were payable in cash and were therefore accounted for under the liability method pursuant to ASC 718. Of the remaining units, 52,000 were based on the achievement of certain performance criteria for the fiscal year ended October 1, 2016, and 52,000 units are based on the achievement of certain performance criteria for the fiscal year ending September 30, 2017. These units vest upon the filing of our Annual Report on Form 10-K for the periods ended October 1, 2016, and ending September 30, 2017, respectively. Upon the filing of each Annual Report on Form 10-K, these units are payable in the common stock of Delta Apparel, Inc. and are therefore accounted for under the equity method pursuant to ASC 718. Based upon the performance achieved for fiscal year 2015, 49,529 units were issued upon the filing our Annual Report on Form 10-K for fiscal year 2015 and 5,200 units were forfeited on October 3, 2015.
During fiscal year 2015, previously issued restricted stock units representing 69,657 shares of our common stock vested upon the filing of our Quarterly Report on Form 10-Q for the period ended June 27, 2015, and were issued in accordance with their agreement, either in shares of common stock or cash. The total fair value of vested restricted stock units was $1.0 million in fiscal year 2015. No restricted stock units vested during fiscal years 2014 or 2013. In addition, during fiscal year 2015, previously issued restricted stock units representing 12,019 shares of our common stock were forfeited. During fiscal year 2015, previously issued performance shares representing 133,676 shares of our common stock were forfeited due to the failure to achieve the performance criteria specified in the award agreement.
As of October 1, 2016, there was $2.9 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 2.2 years.
The following table summarizes information about the unvested restricted stock units and performance units as of October 1, 2016.
Restricted Stock Units/Performance Units
Number of Units
Average Market Price on Date of Grant
Vesting Date
Fiscal year 2015 Restricted Stock Units
95,000

 
$10.52
December 2018
Fiscal year 2015 Restricted Stock Units
230,000

 
$10.73
December 2018
Fiscal year 2015 Performance Units
52,000

 
$10.52
December 2016
Fiscal year 2015 Performance Units
52,000

 
$10.52
December 2017
Fiscal year 2016 Restricted Stock Units
8,438

 
$14.04
December 2016
Fiscal year 2016 Restricted Stock Units
74,100

 
$14.03
December 2017
Fiscal year 2016 Performance Units
74,100

 
$14.03
December 2017
 
585,638

 
 
 

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 selling, general and administrative expense line item in our Consolidated Statements of Operations on a straight-line basis over the vesting periods.
A summary of our stock option activity during the periods ended October 1, 2016, October 3, 2015, and September 27, 2014, is as follows:
 
Fiscal Year Ended
 
October 1, 2016
 
October 3, 2015
 
September 27, 2014
 
Shares
Weighted Average Exercise Price
 
Shares
Weighted Average Exercise Price
 
Shares
Weighted Average Exercise Price
Stock options outstanding, beginning of period
86,000

$
8.30

 
502,000

$
12.27

 
584,500

$
12.13

Stock options exercised
—

$
—

 
(350,000
)
$
13.12

 
(82,500
)
$
11.28

Stock options forfeited
—

$
—

 
(66,000
)
$
12.94

 
—

$
—

Stock options outstanding, end of period
86,000

$
8.30

 
86,000

$
8.30

 
502,000

$
12.27

Stock options outstanding and exercisable, end of period
86,000

$
8.30

 
86,000

$
8.30

 
502,000

$
12.27


No stock options were exercised during fiscal year 2016. The total intrinsic value of options exercised during fiscal year 2015 and 2014 was $0.3 million and$0, respectively. During fiscal year 2015, stock option exercises resulted in a reduction of deferred excess tax benefits by $0.7 million. During fiscal year 2014, stock option exercises resulted in an excess tax benefit of $27 thousand.
The following table summarizes information about our stock options outstanding, all of which are vested and exercisable as of October 3, 2015:
Date of Option Grant
Number of Options Outstanding and Exercisable
Exercise Price
Grant-Date Fair Value
Expiration Date
February 8, 2008
86,000

$
8.30

$
2.95

February 8, 2018
 
86,000

 
 
 
Business Segments
Business Segments
BUSINESS SEGMENTS
We operate our business in two distinct segments: basics and branded Although the two segments are similar in their production processes and regulatory environments, they are distinct in their economic characteristics, products, marketing and distribution methods.
In the second quarter of 2016, in connection with the ongoing evaluation of our current and future strategic initiatives, Robert W. Humphreys, our Chief Operating Decision Maker, began reviewing the performance of the basics and branded segments excluding general corporate expenses. Therefore, we report our financial performance on the two reportable segments, basics and branded, with corporate activities stated separately. Our financial statements reflect this reporting with prior periods adjusted accordingly.
The basics segment is comprised of our business units primarily focused on garment styles characterized by low fashion risk, and includes our Delta Activewear (which includes Delta Catalog and FunTees) and Art Gun business units. We market, distribute and manufacture 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, trendy regional brands, retailers, and sports licensed apparel marketers. Typically our private label products are sold with value-added services such as hangtags, ticketing, hangers, and embellishment so that they are fully ready for retail. Using digital print equipment and its proprietary technology, Art Gun embellishes garments to create private label, custom decorated apparel servicing the fast-growing e-retailer channels.
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 our Salt Life, Junkfood, Soffe, and Coast business units as well as The Game business unit prior to its disposition on March 2, 2015. These branded embellished and unembellished products are sold through specialty and boutique shops, upscale and traditional department stores, mid-tier retailers, sporting goods stores, e-retailers and the U.S. military. Products in this segment are marketed under our lifestyle brands of Salt Life®, Junk Food®, Soffe®, and COAST®, as well as other labels. The results of the Coast business have been included in the branded segment since acquisition on August 30, 2016.
Our Chief Operating Decision Maker and management evaluate performance and allocate resources based on profit or loss from operations before interest, income taxes and special charges ("segment operating earnings (loss)"). Our segment operating earnings (loss) may not be comparable to similarly titled measures used by other companies. 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).
 
Fiscal Year Ended
 
October 1, 2016
 
October 3, 2015
 
September 27, 2014
Segment net sales:
 
 
 
 
 
Basics
$
277,146

 
$
282,467

 
$
265,882

Branded
148,103

 
166,675

 
187,019

Total net sales
425,249

 
449,142

 
452,901

 
 
 
 
 
 
Segment operating income:
 
 
 
 
 
Basics
22,307

 
13,060

 
6,785

Branded
6,950

 
12,379

 
3,070

Total segment operating income
29,257

 
25,439

 
9,855

 
 
 
 
 
 
Purchases of property, plant and equipment:
 
 
 
 
 
Basics
10,734

 
6,037

 
6,436

Branded
1,501

 
689

 
1,458

Corporate
80

 
1,047

 
1,000

Total purchases of property, plant and equipment
12,315

 
7,773

 
8,894

 
 
 
 
 
 
Depreciation and amortization:
 
 
 
 
 
Basics
6,437

 
6,208

 
6,096

Branded
2,772

 
2,902

 
2,948

Corporate
416

 
432

 
449

Total depreciation and amortization
9,625

 
9,542

 
9,493


The following reconciles the segment operating income to the consolidated income (loss) before provision for (benefit from) income taxes (in thousands):
 
Fiscal Year Ended
 
October 1, 2016
 
October 3, 2015
 
September 27, 2014
Segment operating income
$
29,257

 
$
25,439

 
$
9,855

Unallocated corporate expenses
12,925

 
9,320

 
11,516

Unallocated interest expense
5,287

 
6,021

 
5,792

Consolidated income (loss) before provision for (benefit from) income taxes
$
11,045

 
$
10,098

 
$
(7,453
)

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):
 
Fiscal Year Ended
 
October 1, 2016
 
October 3, 2015
 
September 27, 2014
United States
$
418,627

 
$
442,207

 
$
442,062

Foreign
6,622

 
6,935

 
10,839

Total net sales
$
425,249

 
$
449,142

 
$
452,901


Our total assets and equity investment by segment are as follows (in thousands):
 
As of
 
October 1, 2016
 
October 3, 2015
Total assets by segment:
 
 
 
Basics
178,347

 
160,902

Branded
156,119

 
152,210

Corporate
10,186

 
11,791

Total assets
344,652

 
324,903

 
 
 
 
Equity investment in joint venture:
 
 
 
Basics
3,593

 
3,195

Branded
—

 
—

Total equity investment in joint venture
3,593

 
3,195

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):
 
As of
 
October 1, 2016
 
October 3, 2015
 
 
 
 
United States
$
18,523

 
$
22,302

 
 
 
 
Honduras
19,650

 
13,072

El Salvador
4,215

 
3,276

Mexico
1,115

 
1,003

All foreign countries
24,980

 
17,351

 
 
 
 
Total long-lived assets, excluding goodwill and intangibles
$
43,503

 
$
39,653

Repurchase of Common Stock
Repurchase of Common Stock
REPURCHASE OF COMMON STOCK
As of October 1, 2016, our Board of Directors had authorized management to use up to $40.0 million to repurchase stock in open market transactions under our Stock Repurchase Program.
During fiscal years 2016, 2015 and 2014, we purchased 217,568 shares, 140,336 shares, 78,674 shares, respectively, of our common stock for a total cost of $3.5 million, $2.1 million, $1.2 million, respectively. As of October 1, 2016, we have purchased 2,480,150 shares of common stock for an aggregate of $30.9 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 October 1, 2016, $9.1 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 October 1, 2016:

Period
 
Total Number of Shares Purchased
 
Average Price Paid per Share
 
Total Number of Shares Purchased as Part of Publicly Announced Plans
 
Dollar Value of Shares that May Yet Be Purchased Under the Plans
July 3 to August 6, 2016
 
—

 
$
—

 
—

 

$10.8
 million
August 7 to September 3, 2016
 
16,093

 
$
18.43

 
16,093

 

$10.5
 million
September 4 to October 1, 2016
 
87,685

 
$
16.30

 
87,685

 

$9.1
 million
Total
 
103,778

 
$
16.63

 
103,778

 

$9.1
 million
Commitments and Contingencies
Commitments and Contingencies
COMMITMENTS AND CONTINGENCIES
(a) Litigation
U.S. Consumer Product Safety Commission
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 Junkfood, 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. Junkfood subsequently received notification from the Commission staff alleging that Junkfood knowingly violated CPSA Section 15(b) and that the staff will recommend to the Commission a $900,000 civil penalty. We disputed the Commission's allegations and subsequently responded to the Commission staff regarding its recommended penalty, setting forth a number of defenses and mitigating factors that could have resulted in a much lower penalty, if any, ultimately imposed by a court had the matter proceeded to litigation.
We believe that any claims brought by the Commission seeking enforcement of the recommended penalty would be time-barred under any reasonable interpretation of the applicable civil statute of limitations.  Accordingly, we consider this matter to be resolved and during the quarter ended October 1, 2016, we reversed the liability previously recorded in connection with this matter.
California Wage and Hour Litigation
We were served with a complaint in the Superior Court of the State of California, County of Los Angeles, on or about March 13, 2013, by a former employee of our Delta Activewear business unit at our Santa Fe Springs, California distribution facility alleging violations of California wage and hour laws and unfair business practices with respect to meal and rest periods, compensation and wage statements, and related claims (the "Complaint"). The Complaint was brought as a class action and sought to include all of our Delta Activewear business unit's current and certain former employees within California who are or were non-exempt under applicable wage and hour laws. The Complaint also named as defendants Junkfood, Soffe, an independent contractor of Soffe, and a former employee, and sought to include all current and certain former employees of Junkfood, Soffe and the Soffe independent contractor within California who are or were non-exempt under applicable wage and hour laws. The Complaint sought injunctive and declaratory relief, monetary damages and compensation, penalties, attorneys' fees and costs, and pre-judgment interest.
On or about August 22, 2014, we were served with an additional complaint in the Superior Court of the State of California, County of Los Angeles, by a former employee of Junkfood and two former employees of Soffe at our Santa Fe Springs, California distribution facility alleging violations of California wage and hour laws and unfair business practices the same or substantially similar to those alleged in the Complaint and seeking the same or substantially similar relief as sought in the Complaint. This complaint was brought as a class action and sought to include all current and certain former employees of Junkfood, Soffe, our Delta Activewear business unit, the Soffe independent contractor named in the Complaint and an individual employee of such contractor within California who are or were non-exempt under applicable wage and hour laws.
On September 17, 2015, an agreement in principle was reached between all parties to settle the above-referenced wage and hour matters, with the defendants in the matters agreeing to pay an aggregate amount of $300,000 in exchange for a comprehensive release of all claims at issue in the matters. Delta Apparel, Inc., Soffe and Junkfood collectively agreed to contribute$200,000 towards the aggregate settlement amount, and we have this amount included in our accrued expenses as of October 1, 2016, and October 3, 2015. The settlement agreement has been approved by the applicable court and these matters have been finally resolved, with the agreed amounts funded subsequent to the 2016 fiscal year-end.
The Sports Authority Bankruptcy Litigation
Soffe is involved in several related litigation matters stemming from The Sports Authority's ("TSA") March 2, 2016, filing of a voluntary petition(s) for relief under Chapter 11 of the United States Bankruptcy Code (the "TSA Bankruptcy"). Prior to such filing, Soffe provided TSA with products to be sold on a consignment basis pursuant to a "pay by scan" agreement and the litigation matters relate to Soffe's interest in the products it provided TSA on a consignment basis (the "Products") and the proceeds derived from the sale of such products (the "Proceeds").
TSA Stores, Inc. and related entities TSA Ponce, Inc. and TSA Caribe, Inc. filed an action against Soffe on March 16, 2016, in the United States Bankruptcy Court for the District of Delaware (the "TSA Action") essentially seeking a declaratory judgment that: (i) Soffe does not own the Products but rather has a security interest that is not perfected or senior and is avoidable; (ii) Soffe only has an unsecured claim against TSA; (iii) TSA and TSA's secured creditors have valid, unavoidable and senior rights in the Products and the Products are the property of TSA’s estate; (iv) Soffe does not have a perfected purchase money security interest in the Products; (v) Soffe is not entitled to a return of the Products; and (vi) TSA can continue to sell the Products and Soffe is not entitled to any proceeds from such sales other than as an unsecured creditor. The TSA Action also contains claims seeking to avoid Soffe's filing of a financing statement related to the Products as a preference and recover the value of that transfer as well as to disallow Soffe's claims until it has returned preferential transfers or their associated value. TSA also brings a claim for a permanent injunction barring Soffe from taking certain actions. We believe that many of the claims in the TSA Action, including TSA’s claim for injunction, are now moot as a result of Soffe’s agreement to permit TSA to continue selling the Products in TSA’s going-out-of-business sale.
On May 16, 2016, TSA lender Wilmington Savings Fund Society, FSB, as Successor Administrative and Collateral Agent ("WSFS"), intervened in the TSA Action seeking a declaratory judgment that: (i) WSFS has a perfected interest in the Products and Proceeds that is senior to Soffe's interest; and (ii) the Proceeds paid to Soffe must be disgorged pursuant to an order previously issued by the court. WSFS's intervening complaint also contains a separate claim seeking the disgorgement of all Proceeds paid to Soffe along with accrued and unpaid interest.
Soffe has asserted counterclaims against WSFS in the TSA Action essentially seeking a declaratory judgment that: (i) WSFS is not perfected in the Products; and (ii) WSFS's interest in the Products is subordinate to Soffe's interest.
On May 24, 2016, Soffe joined an appeal filed by a number of TSA consignment vendors in the United States District Court for the District of Delaware challenging an order issued in the TSA Bankruptcy that, should WSFS or TSA succeed in the TSA Action, granted TSA and/or WSFS a lien on all Proceeds received by Soffe and requiring the automatic disgorgement of such Proceeds. As of November 14, 2016, Soffe and another entity are the remaining consignment vendors pursuing this appeal.
Although we will continue to vigorously defend against the TSA Action and pursue the above-referenced counterclaims and appeal, should TSA and/or WSFS ultimately prevail on their claims, we could be forced to disgorge all Proceeds received and forfeit our ownership rights in any Products that remain in TSA's possession. We believe the range of possible loss in this matter is currently $0 to$3.3 million; however, it is too early to determine the probable outcome and, therefore, no amount has been accrued related to this matter.
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 October 1, 2016, minimum payments under these contracts were as follows (in thousands):
Yarn
$
13,823

Finished fabric
6,952

Finished products
22,130

 
$
42,905


(c) Letters of Credit
As of October 1, 2016, we had outstanding standby letters of credit totaling $0.4 million.
(d) Derivatives and Contingent Consideration
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 October 1, 2016:
 
Effective Date
 
Notational
Amount
 
LIBOR Rate
 
Maturity Date
Interest Rate Swap
September 9, 2013
 
$15 million
 
1.6480
%
 
September 11, 2017
Interest Rate Swap
September 19, 2013
 
$15 million
 
1.4490
%
 
September 19, 2017

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
 
 
 
 
 
 
 
October 1, 2016
$
(182
)
 
—

 
$
(182
)
 
—

October 3, 2015
$
(697
)
 
—

 
$
(697
)
 
—

September 27, 2014
$
(438
)
 
—

 
$
(438
)
 
—

 
 
 
 
 
 
 
 
Contingent Consideration
 
 
 
 
 
 
 
October 1, 2016
$
(2,500
)
 
—

 
—

 
$
(2,500
)
October 3, 2015
$
(3,100
)
 
—

 
—

 
$
(3,100
)
September 27, 2014
$
(3,600
)
 
—

 
—

 
$
(3,600
)

The fair value of the interest rate swap agreements were derived from discounted cash flow analysis based on the terms of the contract and the forward interest rate curves adjusted for our credit risk, which fall in Level 2 of the fair value hierarchy. Fair values for debt are based on quoted market prices for the same or similar issues or on the current rates offered to us for debt of the same remaining maturities (a Level 2 fair value measurement).
In August 2013, we acquired Salt Life and issued contingent consideration payable in cash after the end of calendar year 2019 if financial performance targets involving the sale of Salt Life-branded products are met during the 2019 calendar year.  We used a Monte Carlo model which used the historical results and projected cash flows based on the contractually defined terms, discounted as necessary, to estimate the fair value of the contingent consideration for Salt Life at acquisition, as well as to remeasure the contingent consideration related to the acquisition of Salt Life at each reporting period.  Accordingly, the fair value measurement for contingent consideration falls in Level 3 of the fair value hierarchy. 
At October 1, 2016, we had $2.5 million accrued in contingent consideration related to the Salt Life Acquisition, a $0.6 million reduction from the accrual at October 3, 2015. The reduction in the fair value of contingent consideration is based on the inputs into the Monte Carlo model, including the time remaining in the measurement period. We still expect sales in calendar year 2019 to approximate the expectations for calendar 2019 sales used in the valuation of contingent consideration at acquisition. No contingent consideration is expected to be paid under the terms of our acquisition of the Art Gun business.
The following table summarizes the fair value and presentation in the Consolidated Balance Sheets for derivatives as of October 1, 2016, and October 3, 2015.
 
October 1,
2016
 
October 3,
2015
 
Accrued expenses
$
(182
)
 
$
(519
)
 
Deferred tax liabilities
70

 
269

 
Other liabilities
—

 
(179
)
 
Accumulated other comprehensive loss
$
(112
)
 
$
(429
)
 

(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 $8.2 million, $10.1 million and $11.1 million during fiscal years 2016, 2015, and 2014, respectively.
At October 1, 2016, based on minimum sales requirements, future minimum royalty payments required under these license agreements were as follows (in thousands):
Fiscal Year
Amount

2017
$
1,132

2018
178

2019
—

2020
—

2021 and thereafter
—

 
$
1,310

Quarterly Financial Information (Unaudited)
Quarterly Financial Information (Unaudited)
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Presented below is a summary of our unaudited consolidated quarterly financial information for the fiscal years ended October 1, 2016, and October 3, 2015 (in thousands, except per share amounts):
 
2016 Quarter Ended
 
2015 Quarter Ended
 
January 2,
2016
 
April 2,
2016
 
July 2,
2016
 
October 1,
2016
 
December 27,
2014
 
March 28,
2015
 
June 27,
2015
 
October 3,
2015
Net sales
$
90,171

 
$
109,160

 
$
111,552

 
$
114,366

 
$
93,381

 
$
115,042

 
$
120,525

 
$
120,194

Gross profit
18,879

 
25,726

 
24,986

 
23,908

 
15,326

 
21,235

 
25,484

 
26,274

Operating income (loss)
2,227

 
5,931

 
4,227

 
3,947

 
(3,217
)
 
7,328

 
6,897

 
5,111

Net earnings (loss)
681

 
3,436

 
2,542

 
2,305

 
(4,211
)
 
3,646

 
4,418

 
4,240

 
 
 


 


 


 
 
 
 
 
 
 
 
Basic EPS
$
0.09

 
$
0.44

 
$
0.33

 
$
0.30

 
$
(0.53
)
 
$
0.46

 
$
0.56

 
$
0.54

Diluted EPS
$
0.09

 
$
0.43

 
$
0.32

 
$
0.29

 
$
(0.53
)
 
$
0.46

 
$
0.55

 
$
0.53

As discussed in Note 4, gross profit and operating income in the quarters ended July 2, 2016, and October 1, 2016, included restructuring expenses related to the manufacturing realignment, and as discussed in Note 3, operating income for the quarter ended March 28, 2015, included a gain from the sale of The Game.
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
 
Expense
 
Write-Offs/
Credits Issued
 
Ending
Balance
2016
$
1,470

 
$
195

 
$
(1,096
)
 
$
569

2015
1,047

 
771

 
(348
)
 
1,470

2014
851

 
467

 
(271
)
 
1,047

RETURNS AND ALLOWANCES
 
Beginning
Balance
 
Expense
 
Write-Offs/
Credits Issued
 
Ending
Balance
2016
$
1,515

 
$
7,822

 
$
(7,928
)
 
$
1,409

2015
2,113

 
12,173

 
(12,771
)
 
1,515

2014
2,108

 
12,425

 
(12,420
)
 
2,113

TOTAL RESERVES FOR ALLOWANCES
 
Beginning
Balance
 
Expense
 
Write-Offs/
Credits Issued
 
Ending
Balance
2016
$
2,985

 
$
8,017

 
$
(9,024
)
 
$
1,978

2015
3,160

 
12,944

 
(13,119
)
 
2,985

2014
2,959

 
12,892

 
(12,691
)
 
3,160

Significant Accounting Policies (Policies)
Basis of Presentation 
Basis of Presentation: Our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America and 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 entities are not considered variable interest entities.
We operate our business in two distinct segments: basics and branded 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 
Fiscal Year: We operate on a 52-53 week fiscal year ending on the Saturday closest to September 30. The 2016 and 2014 fiscal years were 52-week years that ended on October 1, 2016, and September 27, 2014, respectively. The 2015 fiscal year was a 53-week year that ended on October 3, 2015.
Use of Estimates 
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.
Cash and Cash Equivalents 
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: 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. Accounts receivable is presented net of reserves for allowances which include allowance for doubtful accounts, returns and allowances. The reserves for allowances were $2.0 million and $3.0 million, as of October 1, 2016, and October 3, 2015, respectively.
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. B
Inventories 
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. See Note 2(y) for further information regarding yarn procurements. 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.
Property, Plant and Equipment 
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 
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 Long-Lived Assets (Including Amortizable Intangible Assets) and Goodwill 
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.
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.
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 annual impairment analysis, there is not an impairment on the goodwill associated with Junkfood and Salt Life, the only goodwill recorded on our financial statements.
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 impaired.
Goodwill and Intangibles 
Goodwill and Intangible Assets: We recorded goodwill and intangible assets with definite lives, including trade names and trademarks, customer relationships, technology, and non-compete agreements, in conjunction with the acquisitions of Salt Life, Junkfood, 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 7 — Goodwill and Intangible Assets for further details.
Contingent Consideration 
Contingent Consideration: At the end of each reporting period, we are required to remeasure the fair value of the contingent consideration related to the Salt Life and Art Gun acquisitions in accordance with FASB Codification No. 805, Business Combinations (“ASC 805”). Based on the operating results and projections, we analyzed the fair value of the contingent consideration for both Salt Life and Art Gun as of October 1, 2016.
Self-Insurance Reserves 
Self-Insurance Reserves: Prior to January 1, 2015, our medical, prescription and dental care benefits were primarily self-insured. Effective January 1, 2015, our medical and prescription benefits became fully insured, but our dental insurance remained self-insured. Our prior self-insurance accruals were based on claims filed and estimates of claims incurred but not reported. We developed 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
Revenue Recognition 
Revenue Recognition: Revenues from product sales are recognized when ownership is transferred 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: 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.
Cost of Goods Sold 
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, inventory write-downs, and depreciation and amortization expense associated with our manufacturing and sourcing operations. 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 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 $15.1 million, $16.8 million and $16.9 million in fiscal years 2016, 2015 and 2014, 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 
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 2% 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.
Stock-Based Compensation 
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 our 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 selling, general and administrative expense in the Consolidated Statements of Operations over the vesting period.
Income Taxes 
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.
Earnings per Share 
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 Translations 
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. Property, plant and equipment 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 
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): Other Comprehensive Income (Loss) consists of net earnings (loss) and unrealized gains (losses) from cash flow hedges, net of tax.
Yarn and Cotton Procurements 
Yarn and Cotton Procurements: We have a supply agreement with Parkdale to supply our yarn requirements until December 31, 2018. 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.
Derivatives 
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.
From time to time, we may purchase cotton option contracts to economically hedge the risk related to market fluctuations in the cost of cotton used in our operations. During fiscal year 2016 we entered into various cotton option contracts to economically hedge the risk related to market fluctuations in the cost of cotton used in our operations. We do not receive hedge accounting treatment for these derivatives. As such the realized gains and losses associated with them were recorded within cost of goods sold on the Consolidated Statement of Operations.
Recently Adopted Accounting Pronouncements 
Recently Adopted Accounting Pronouncements:
In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, ("ASU 2015-17"). This new guidance requires businesses to classify deferred tax liabilities and assets on their balance sheets as noncurrent. Under existing accounting standards, a business must separate deferred income tax liabilities and assets into current and noncurrent. ASU 2015-17 was issued as a way to simplify the way businesses classify deferred tax liabilities and assets on their balance sheets. Public companies must apply ASU 2015-17 to fiscal years beginning after December 15, 2016. Companies must follow the requirements for interim periods within those fiscal years, but early adoption at the beginning of an interim or annual period is allowed for all entities. ASU 2015-17 was adopted in our fiscal year beginning October 4, 2015. The implementation of ASU 2015-17 was applied retroactively to the October 3, 2015, Consolidated Balance Sheet included in this Form 10-K. As a result of this retroactive application, current deferred income tax assets of $7.3 million have been netted with noncurrent deferred income tax liabilities of $7 thousand and reclassified to noncurrent deferred income tax assets
Significant Accounting Policies (Tables)
Schedule of Interest Rate Derivatives
In September 2013, we entered into four interest rate swap agreements, as follows:
 
Effective Date
 
Notational
Amount
 
LIBOR Rate
 
Maturity Date
Interest Rate Swap
September 9, 2013
 
$15 million
 
1.1700
%
 
September 9, 2016
Interest Rate Swap
September 9, 2013
 
$15 million
 
1.6480
%
 
September 11, 2017
Interest Rate Swap
September 19, 2013
 
$15 million
 
1.0030
%
 
September 19, 2016
Interest Rate Swap
September 19, 2013
 
$15 million
 
1.4490
%
 
September 19, 2017
Restructuring Plan (Tables)
12 Months Ended
Oct. 1, 2016
Oct. 3, 2015
Restructuring and Related Costs
As part of the closing of the Maiden facility and the expansion of operations at our offshore facilities, we incurred the following costs (in thousands):
 
 
Fiscal Year Ended
 
 
October 1, 2016
Excess manufacturing costs related to the shutdown and start-up operations
 
$
1,096

Total expenses included in cost of goods sold
 
1,096

 
 
 
Employee termination costs
 
597

Fixed asset impairment
 
607

Inventory and supply part impairment
 
144

Other costs to exit facility
 
393

Total restructuring costs
 
1,741

Total manufacturing realignment expenses
 
$
2,837

Restructuring and Related Costs
These expenses were reported in our Consolidated Statement of Operations as follows (in thousands):
 
September 27,
2014
Cost of goods sold
$
868

Selling, general and administrative expenses
2,169

Other expense
984

 
$
4,021

Inventories (Tables)
Schedule of Inventories, Net of Reserves
Inventories, net of reserves of $8.8 million and $8.4 million as of October 1, 2016, and October 3, 2015, respectively, consist of the following (in thousands):
 
October 1,
2016
 
October 3,
2015
Raw materials
$
11,442

 
$
11,412

Work in process
18,158

 
19,071

Finished goods
134,647

 
117,889

 
$
164,247

 
$
148,372

Property, Plant and Equipment (Tables)
Schedule of Property, Plant and Equipment
Property, plant and equipment consist of the following (in thousands, except economic life data):
 
Estimated
Useful Life
 
October 1,
2016
 
October 3,
2015
Land and land improvements
25 years
 
$
572

 
$
996

Buildings
20 years
 
3,369

 
8,706

Machinery and equipment
10 years
 
72,068

 
80,843

Computers and software
3-10 years
 
20,889

 
20,635

Furniture and fixtures
7 years
 
1,977

 
3,126

Leasehold improvements
3-10 years
 
3,686

 
2,645

Vehicles and related equipment
5 years
 
808

 
821

Construction in progress
N/A
 
3,719

 
3,256

 
 
 
107,088

 
121,028

Less accumulated depreciation and amortization
 
 
(63,585
)
 
(81,375
)
 
 
 
$
43,503

 
$
39,653

Goodwill and Intangible Assets (Tables)
Components of Intangible Assets
Goodwill and components of intangible assets consist of the following (in thousands, except economic life data):
 
October 1, 2016
 
October 3, 2015
 
 
 
Cost
Accumulated Amortization
Net Value
 
Cost
Accumulated Amortization
Net Value
 
Economic Life
 
 
 
 
 
 
 
 
 
 
Goodwill
$
36,729

$
—

$
36,729

 
$
36,729

$
—

$
36,729

 
N/A
 
 
 
 
 
 
 
 
 
 
Intangibles:
 
 
 
 
 
 
 
 
 
Tradename/trademarks
$
17,620

$
(2,514
)
$
15,106

 
$
17,530

$
(1,896
)
$
15,634

 
20 - 30 yrs
Customer relationships
7,220

(4,016
)
3,204

 
7,220

(3,664
)
3,556

 
20 yrs
Technology
1,220

(826
)
394

 
1,220

(703
)
517

 
10 yrs
License Agreements
2,100

(320
)
1,780

 
2,100

(216
)
1,884

 
15 - 30 yrs
Non-compete agreements
1,287

(849
)
438

 
1,287

(716
)
571

 
4 – 8.5 yrs
Total intangibles
$
29,447

$
(8,525
)
$
20,922

 
$
29,357

$
(7,195
)
$
22,162

 
 
Accrued Expenses (Tables)
12 Months Ended
Oct. 1, 2016
Oct. 3, 2015
Payables and Accruals [Abstract]
 
 
Schedule of Accrued Expenses
Text Block 
 
Restructuring and Related Costs
Text Block 
Text Block 
Schedule of Accrued Expenses 
Accrued expenses consist of the following (in thousands):
 
October 1,
2016
 
October 3,
2015
Accrued employee compensation and benefits
$
12,899

 
$
10,704

Taxes accrued and withheld
1,003

 
1,455

Accrued insurance
263

 
349

Accrued advertising
256

 
363

Accrued royalties
1,653

 
2,173

Accrued commissions
460

 
512

Accrued freight
1,105

 
1,501

Other
4,067

 
3,939

 
$
21,706

 
$
20,996

Restructuring and Related Costs 
As part of the closing of the Maiden facility and the expansion of operations at our offshore facilities, we incurred the following costs (in thousands):
 
 
Fiscal Year Ended
 
 
October 1, 2016
Excess manufacturing costs related to the shutdown and start-up operations
 
$
1,096

Total expenses included in cost of goods sold
 
1,096

 
 
 
Employee termination costs
 
597

Fixed asset impairment
 
607

Inventory and supply part impairment
 
144

Other costs to exit facility
 
393

Total restructuring costs
 
1,741

Total manufacturing realignment expenses
 
$
2,837

Restructuring and Related Costs 
These expenses were reported in our Consolidated Statement of Operations as follows (in thousands):
 
September 27,
2014
Cost of goods sold
$
868

Selling, general and administrative expenses
2,169

Other expense
984

 
$
4,021

Long-Term Debt (Tables)
Schedule of long-term debt 
Long-term debt consists of the following (in thousands):
 
October 1,
2016
 
October 3,
2015
Revolving U.S. credit facility, interest at base rate or adjusted LIBOR rate plus an applicable margin (interest at 2.7% on October 1, 2016) due May 2021
$
92,137

 
$
—

Revolving credit facility, interest at base rate or adjusted LIBOR rate plus an applicable margin (interest at 2.7% on October 3, 2015) due May 2017
—

 
79,550

Revolving credit facility with Banco Ficohsa, a Honduran bank, interest at 8% due March 2019 (denominated in U.S. dollars)
5,000

 
4,390

Term loan with Banco Ficohsa, a Honduran bank, interest at 7%, monthly installments beginning March, 2011 through March 2018 (denominated in U.S. dollars)
1,459

 
2,432

Term loan with Banco Ficohsa, a Honduran bank, interest at 7.5%, monthly installments beginning November 2014 through December 2020 (denominated in U.S. dollars)
2,600

 
3,150

Term loan with Banco Ficohsa, a Honduran bank, interest at 8%, monthly installments beginning June 2016 through April 2022 (denominated in U.S. dollars)
1,650

 
1,881

Term loan with Banco Ficohsa, a Honduran bank, interest at 8%, monthly installments beginning June 2016 through July 2017 (denominated in U.S. dollars)
4,833

 
—

Salt Life acquisition promissory note, imputed interest at 1.92%, one-time installment due September 30, 2014, quarterly installments beginning April 2015 through June 2016
—

 
2,979

Salt Life acquisition promissory note, imputed interest at 3.62%, quarterly payments beginning September 2016 through June 2019
8,116

 
7,830

 
115,795

 
102,212

Less current installments
(9,192
)
 
(8,340
)
Long-term debt, excluding current installments
$
106,603

 
$
93,872

Schedule of aggregate maturities of debt 
The aggregate maturities of debt at October 1, 2016, are as follows (in thousands):
Fiscal Year
Amount

2017
$
9,192

2018
7,955

2019
10,835

2020
4,469

2021
83,149

Thereafter
195

 
$
115,795

Income Taxes (Tables)
Provision for income taxes 
The provision for income taxes consists of the following (in thousands):
 
Period ended
 
October 1, 2016
 
October 3, 2015
 
September 27, 2014
Current:
 
 
 
 
 
Federal
$
36

 
$
—

 
$
—

State
78

 
60

 
79

Foreign
179

 
186

 
158

Total current
$
293

 
$
246

 
$
237

Deferred:
 
 
 
 
 
Federal
$
1,462

 
$
1,320

 
$
(5,807
)
State
326

 
439

 
(923
)
Total deferred
1,788

 
1,759

 
(6,730
)
Provision for (benefit from) income taxes
$
2,081

 
$
2,005

 
$
(6,493
)
Schedule of income before income tax, domestic and foreign 
For financial reporting purposes our income (loss) before provision for (benefit from) income taxes includes the following components (in thousands):
 
Period ended
 
October 1, 2016
 
October 3, 2015
 
September 27, 2014
United States
$
3,966

 
$
3,434

 
$
(16,832
)
Foreign
7,079

 
6,664

 
9,379

 
$
11,045

 
$
10,098

 
$
(7,453
)
Reconciliation between actual provision for incomes taxes and federal statutory income tax rate 
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):
 
Period ended
 
October 1, 2016
 
October 3, 2015
 
September 27, 2014
Income tax expense at the statutory rate
$
3,755

 
$
3,433

 
$
(2,533
)
State income tax expense, net of federal income tax effect
447

 
374

 
(893
)
Impact of state rate changes
116

 
—

 
—

Rate difference and nondeductible items in foreign jurisdictions
54

 
(30
)
 
(55
)
Impact of foreign earnings in tax-free zone
(2,319
)
 
(2,168
)
 
(3,098
)
Valuation allowance adjustments
(71
)
 
—

 
4

Nondeductible compensation
—

 
335

 
—

Nondeductible amortization and other permanent differences
96

 
81

 
76

Other
3

 
(20
)
 
6

Provision for (benefit from) income taxes
$
2,081

 
$
2,005

 
$
(6,493
)
Significant components of deferred tax assets and liabilities 
Significant components of our deferred tax assets and liabilities are as follows (in thousands):
 
October 1,
2016
 
October 3,
2015
 
Deferred tax assets:
 
 
 
 
Federal net operating loss carryforwards
$
6,256

 
$
7,842

 
State net operating loss carryforwards
1,784

 
2,362

 
Charitable donation carryforward
—

 
28

 
Derivative — interest rate contracts
70

 
268

 
Alternative minimum tax credit carryforward
135

 
99

 
Currently nondeductible accruals
7,613

 
6,029

 
Gross deferred tax assets
15,858

 
16,628

 
Less valuation allowance — state net operating loss
(131
)
 
(202
)
 
Net deferred tax assets
15,727

 
16,426

 
 
 
 
 
 
Deferred tax liabilities:
 
 
 
 
Depreciation
(2,868
)
 
(2,941
)
 
Goodwill and intangibles
(7,463
)
 
(6,024
)
 
Other
(150
)
 
(167
)
 
Gross deferred tax liabilities
(10,481
)
 
(9,132
)
 
Net deferred tax asset
5,246

 
7,294

 
Leases (Tables)
Schedule of Future Minimum Payments
Future minimum lease payments under non-cancelable operating leases as of October 1, 2016, were as follows (in thousands):
Fiscal Year
Amount

2017
$
7,177

2018
6,595

2019
6,237

2020
5,897

2021
3,633

Thereafter
10,396

 
$
39,935

At October 1, 2016, based on minimum sales requirements, future minimum royalty payments required under these license agreements were as follows (in thousands):
Fiscal Year
Amount

2017
$
1,132

2018
178

2019
—

2020
—

2021 and thereafter
—

 
$
1,310

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).
 
October 1,
2016
 
October 3,
2015
Balance at beginning of year
$
412

 
$
443

Interest expense
6

 
1

Benefits paid
(81
)
 
(32
)
Adjustment
7

 
—

Balance at end of year
$
344

 
$
412

Stock-based Compensation (Tables)
Summary of stock option activity 
A summary of our stock option activity during the periods ended October 1, 2016, October 3, 2015, and September 27, 2014, is as follows:
 
Fiscal Year Ended
 
October 1, 2016
 
October 3, 2015
 
September 27, 2014
 
Shares
Weighted Average Exercise Price
 
Shares
Weighted Average Exercise Price
 
Shares
Weighted Average Exercise Price
Stock options outstanding, beginning of period
86,000

$
8.30

 
502,000

$
12.27

 
584,500

$
12.13

Stock options exercised
—

$
—

 
(350,000
)
$
13.12

 
(82,500
)
$
11.28

Stock options forfeited
—

$
—

 
(66,000
)
$
12.94

 
—

$
—

Stock options outstanding, end of period
86,000

$
8.30

 
86,000

$
8.30

 
502,000

$
12.27

Stock options outstanding and exercisable, end of period
86,000

$
8.30

 
86,000

$
8.30

 
502,000

$
12.27

Shares authorized by exercise price range 
The following table summarizes information about our stock options outstanding, all of which are vested and exercisable as of October 3, 2015:
Date of Option Grant
Number of Options Outstanding and Exercisable
Exercise Price
Grant-Date Fair Value
Expiration Date
February 8, 2008
86,000

$
8.30

$
2.95

February 8, 2018
 
86,000

 
 
 
The following table summarizes information about the unvested restricted stock units and performance units as of October 1, 2016.
Restricted Stock Units/Performance Units
Number of Units
Average Market Price on Date of Grant
Vesting Date
Fiscal year 2015 Restricted Stock Units
95,000

 
$10.52
December 2018
Fiscal year 2015 Restricted Stock Units
230,000

 
$10.73
December 2018
Fiscal year 2015 Performance Units
52,000

 
$10.52
December 2016
Fiscal year 2015 Performance Units
52,000

 
$10.52
December 2017
Fiscal year 2016 Restricted Stock Units
8,438

 
$14.04
December 2016
Fiscal year 2016 Restricted Stock Units
74,100

 
$14.03
December 2017
Fiscal year 2016 Performance Units
74,100

 
$14.03
December 2017
 
585,638

 
 
 
Schedule of nonvested restricted stock units activity 
The following table summarizes the restricted stock unit and performance unit award activity during the periods ending October 1, 2016, October 3, 2015, and September 27, 2014:
 
Fiscal Year Ended
 
October 1, 2016
 
October 3, 2015
 
September 27, 2014
 
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 period
518,800

$
10.80

 
215,352

$
14.31

 
348,852

$
14.25

Units granted
159,138

$
14.03

 
524,000

$
10.81

 
—

$
—

Units issued
(49,529
)
$
12.32

 
(69,657
)
$
14.31

 
—

$
—

Units forfeited
(42,771
)
$
10.87

 
(150,895
)
$
14.26

 
(133,500
)
$
14.16

Units outstanding, end of fiscal period
585,638

$
11.54

 
518,800

$
10.80

 
215,352

$
14.31

Summary of stock option activity 
A summary of the stock option activity during the periods ended October 1, 2016, October 3, 2015, and September 27, 2014 is as follows:
 
Fiscal Year Ended
 
October 1, 2016
 
October 3, 2015
 
September 27, 2014
 
Shares
Weighted Average Exercise Price
 
Shares
Weighted Average Exercise Price
 
Shares
Weighted Average Exercise Price
Stock options outstanding, beginning of period
10,000

$
13.07

 
50,000

$
13.47

 
50,000

$
13.47

Stock options granted
—

—

 
—

—

 
—

—

Stock options exercised
—

—

 
—

—

 
—

—

Stock options forfeited
—

—

 
(40,000
)
13.56

 
—

—

Stock options outstanding, end of period
10,000

$
13.07

 
10,000

$
13.07

 
50,000

$
13.47

Stock options outstanding and exercisable, end of period
10,000

$
13.07

 
10,000

$
13.07

 
50,000

$
13.47

Shares authorized by exercise price range 
The following table summarizes information about our stock options outstanding, all of which are vested and exercisable as of October 1, 2016:
Date of Option Grant
Number of Options Outstanding and Exercisable
Exercise Price
Grant-Date Fair Value
Expiration Date
February 2, 2011
10,000

$
13.07

$
6.35

February 18, 2018
 
10,000

 
 
 
Business Segments (Tables)
Segment reporting information by segment 
 
Fiscal Year Ended
 
October 1, 2016
 
October 3, 2015
 
September 27, 2014
Segment net sales:
 
 
 
 
 
Basics
$
277,146

 
$
282,467

 
$
265,882

Branded
148,103

 
166,675

 
187,019

Total net sales
425,249

 
449,142

 
452,901

 
 
 
 
 
 
Segment operating income:
 
 
 
 
 
Basics
22,307

 
13,060

 
6,785

Branded
6,950

 
12,379

 
3,070

Total segment operating income
29,257

 
25,439

 
9,855

 
 
 
 
 
 
Purchases of property, plant and equipment:
 
 
 
 
 
Basics
10,734

 
6,037

 
6,436

Branded
1,501

 
689

 
1,458

Corporate
80

 
1,047

 
1,000

Total purchases of property, plant and equipment
12,315

 
7,773

 
8,894

 
 
 
 
 
 
Depreciation and amortization:
 
 
 
 
 
Basics
6,437

 
6,208

 
6,096

Branded
2,772

 
2,902

 
2,948

Corporate
416

 
432

 
449

Total depreciation and amortization
9,625

 
9,542

 
9,493

Reconciliation of segment operating income to consolidated income before income taxes 
The following reconciles the segment operating income to the consolidated income (loss) before provision for (benefit from) income taxes (in thousands):
 
Fiscal Year Ended
 
October 1, 2016
 
October 3, 2015
 
September 27, 2014
Segment operating income
$
29,257

 
$
25,439

 
$
9,855

Unallocated corporate expenses
12,925

 
9,320

 
11,516

Unallocated interest expense
5,287

 
6,021

 
5,792

Consolidated income (loss) before provision for (benefit from) income taxes
$
11,045

 
$
10,098

 
$
(7,453
)
Supplemental information regarding revenues by geographic area 
Supplemental information regarding our revenues by geographic area based on the location of the customer is as follows (in thousands):
 
Fiscal Year Ended
 
October 1, 2016
 
October 3, 2015
 
September 27, 2014
United States
$
418,627

 
$
442,207

 
$
442,062

Foreign
6,622

 
6,935

 
10,839

Total net sales
$
425,249

 
$
449,142

 
$
452,901

Summarized financial information by geographic area 
Summarized financial information by geographic area is as follows (in thousands):
 
As of
 
October 1, 2016
 
October 3, 2015
 
 
 
 
United States
$
18,523

 
$
22,302

 
 
 
 
Honduras
19,650

 
13,072

El Salvador
4,215

 
3,276

Mexico
1,115

 
1,003

All foreign countries
24,980

 
17,351

 
 
 
 
Total long-lived assets, excluding goodwill and intangibles
$
43,503

 
$
39,653

Repurchase of Common Stock (Tables)
Schedule of shares repurchased
The following table summarizes the purchases of our common stock for the quarter ended October 1, 2016:

Period
 
Total Number of Shares Purchased
 
Average Price Paid per Share
 
Total Number of Shares Purchased as Part of Publicly Announced Plans
 
Dollar Value of Shares that May Yet Be Purchased Under the Plans
July 3 to August 6, 2016
 
—

 
$
—

 
—

 

$10.8
 million
August 7 to September 3, 2016
 
16,093

 
$
18.43

 
16,093

 

$10.5
 million
September 4 to October 1, 2016
 
87,685

 
$
16.30

 
87,685

 

$9.1
 million
Total
 
103,778

 
$
16.63

 
103,778

 

$9.1
 million
Commitments and Contingencies (Tables)
Minimum payments under purchase contracts 
At October 1, 2016, minimum payments under these contracts were as follows (in thousands):
Yarn
$
13,823

Finished fabric
6,952

Finished products
22,130

 
$
42,905

Outstanding financial instruments 
The following financial instruments were outstanding as of October 1, 2016:
 
Effective Date
 
Notational
Amount
 
LIBOR Rate
 
Maturity Date
Interest Rate Swap
September 9, 2013
 
$15 million
 
1.6480
%
 
September 11, 2017
Interest Rate Swap
September 19, 2013
 
$15 million
 
1.4490
%
 
September 19, 2017
Financial liabilities measure at fair value on a recurring basis 
The following financial 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
 
 
 
 
 
 
 
October 1, 2016
$
(182
)
 
—

 
$
(182
)
 
—

October 3, 2015
$
(697
)
 
—

 
$
(697
)
 
—

September 27, 2014
$
(438
)
 
—

 
$
(438
)
 
—

 
 
 
 
 
 
 
 
Contingent Consideration
 
 
 
 
 
 
 
October 1, 2016
$
(2,500
)
 
—

 
—

 
$
(2,500
)
October 3, 2015
$
(3,100
)
 
—

 
—

 
$
(3,100
)
September 27, 2014
$
(3,600
)
 
—

 
—

 
$
(3,600
)
Summary of fair value and presentation in the consolidated balance sheets for derivatives 
The following table summarizes the fair value and presentation in the Consolidated Balance Sheets for derivatives as of October 1, 2016, and October 3, 2015.
 
October 1,
2016
 
October 3,
2015
 
Accrued expenses
$
(182
)
 
$
(519
)
 
Deferred tax liabilities
70

 
269

 
Other liabilities
—

 
(179
)
 
Accumulated other comprehensive loss
$
(112
)
 
$
(429
)
 
Schedule of Future Minimum Payments 
Future minimum lease payments under non-cancelable operating leases as of October 1, 2016, were as follows (in thousands):
Fiscal Year
Amount

2017
$
7,177

2018
6,595

2019
6,237

2020
5,897

2021
3,633

Thereafter
10,396

 
$
39,935

At October 1, 2016, based on minimum sales requirements, future minimum royalty payments required under these license agreements were as follows (in thousands):
Fiscal Year
Amount

2017
$
1,132

2018
178

2019
—

2020
—

2021 and thereafter
—

 
$
1,310

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 October 1, 2016, and October 3, 2015 (in thousands, except per share amounts):
 
2016 Quarter Ended
 
2015 Quarter Ended
 
January 2,
2016
 
April 2,
2016
 
July 2,
2016
 
October 1,
2016
 
December 27,
2014
 
March 28,
2015
 
June 27,
2015
 
October 3,
2015
Net sales
$
90,171

 
$
109,160

 
$
111,552

 
$
114,366

 
$
93,381

 
$
115,042

 
$
120,525

 
$
120,194

Gross profit
18,879

 
25,726

 
24,986

 
23,908

 
15,326

 
21,235

 
25,484

 
26,274

Operating income (loss)
2,227

 
5,931

 
4,227

 
3,947

 
(3,217
)
 
7,328

 
6,897

 
5,111

Net earnings (loss)
681

 
3,436

 
2,542

 
2,305

 
(4,211
)
 
3,646

 
4,418

 
4,240

 
 
 


 


 


 
 
 
 
 
 
 
 
Basic EPS
$
0.09

 
$
0.44

 
$
0.33

 
$
0.30

 
$
(0.53
)
 
$
0.46

 
$
0.56

 
$
0.54

Diluted EPS
$
0.09

 
$
0.43

 
$
0.32

 
$
0.29

 
$
(0.53
)
 
$
0.46

 
$
0.55

 
$
0.53

As discussed in Note 4, gross profit and operating income in the quarters ended July 2, 2016, and October 1, 2016, included restructuring expenses related to the manufacturing realignment, and as discussed in Note 3, operating income for the quarter ended March 28, 2015, included a gain from the sale of The Game.
Significant Accounting Policies (Details) (USD $)
12 Months Ended
Oct. 1, 2016
operating_segment
Oct. 3, 2015
Sep. 27, 2014
Sep. 28, 2013
operating_segment
Significant Accounting Policies [Line Items]
 
 
 
 
Number of business segments
2 
 
 
2 
Accounts Receivable
 
 
 
 
Net accounts receivable
$ 63,013,000 
$ 61,921,000 
 
 
Reserves
2,000,000 
3,000,000 
 
 
Accumulated other comprehensive loss
112,000 
429,000 
 
 
Impairment of Goodwill
 
 
 
 
Self-insurance reserves
100,000 
100,000 
 
 
Contingent Consideration
 
 
 
 
Contingent consideration
2,500,000 
3,100,000 
3,600,000 
 
Advertising Costs
 
 
 
 
Percentage of net purchases available for advertising, minimum
2.00% 
 
 
 
Percent of net purchases allowable for advertisement of products, high range
5.00% 
 
 
 
Advertising costs
4,400,000 
4,700,000 
3,600,000 
 
Cooperative advertising programs costs
1,100,000 
 
 
 
Derivatives
 
 
 
 
Debt conversion amount
115,795,000 
102,212,000 
 
 
AOCI gain (loss)
300,000 
200,000 
300,000 
 
Gross deferred tax assets
15,858,000 
16,628,000 
 
 
Selling, general and administrative expenses
 
 
 
 
Impairment of Goodwill
 
 
 
 
Distribution costs
15,100,000 
16,800,000 
16,900,000 
 
Interest Rate Swap
 
 
 
 
Derivatives
 
 
 
 
Number of instruments held
 
4 
 
 
Minimum
 
 
 
 
Accounts Receivable
 
 
 
 
Estimated useful life
 
 
 
3 years 
Goodwill, estimated economic life
 
 
 
4 years 
Maximum
 
 
 
 
Significant Accounting Policies [Line Items]
 
 
 
 
Ownership percentage (percent)
50.00% 
 
 
 
Accounts Receivable
 
 
 
 
Estimated useful life
 
 
 
25 years 
Goodwill, estimated economic life
 
 
 
20 years 
Computers and software |
Minimum
 
 
 
 
Accounts Receivable
 
 
 
 
Intangibles, economic life (in years)
 
 
 
3 years 
Computers and software |
Maximum
 
 
 
 
Accounts Receivable
 
 
 
 
Intangibles, economic life (in years)
 
 
 
10 years 
Maturity Date 9/9/2016
 
 
 
 
Derivatives
 
 
 
 
Notional amount
15,000,000 
 
 
 
LIBOR Rate
1.17% 
 
 
 
Maturity Date 9/11/2017
 
 
 
 
Derivatives
 
 
 
 
Notional amount
15,000,000 
 
 
 
LIBOR Rate
1.648% 
 
 
 
Maturity Date 9/19/2016
 
 
 
 
Derivatives
 
 
 
 
Notional amount
15,000,000 
 
 
 
LIBOR Rate
1.003% 
 
 
 
Maturity Date 9/19/2017
 
 
 
 
Derivatives
 
 
 
 
Notional amount
15,000,000 
 
 
 
LIBOR Rate
1.449% 
 
 
 
Salt Life Acquisition
 
 
 
 
Contingent Consideration
 
 
 
 
Contingent consideration
2,500,000 
3,100,000 
 
 
Accounting Standards Update 2015-17 |
Deferred Tax Assets, Current
 
 
 
 
Derivatives
 
 
 
 
Deferred tax asset
 
7,300,000 
 
 
Accounting Standards Update 2015-17 |
Deferred Tax Liabilities, Non-current
 
 
 
 
Derivatives
 
 
 
 
Gross deferred tax assets
 
(7,000)
 
 
Reclassification of Current Portion of Interest Rate Swaps From other Liabilities to Accrued Liabilities
 
 
 
 
Significant Accounting Policies [Line Items]
 
 
 
 
Reclassification adjustment
300,000 
 
 
 
Reclassification of Deposits From Prepaid Expenses and Other Current Asset to Other Assets
 
 
 
 
Significant Accounting Policies [Line Items]
 
 
 
 
Reclassification adjustment
$ 1,300,000 
 
 
 
Sale of The Game (Details) (Discontinued Operations, Disposed of by Sale, The Game, USD $)
In Millions, unless otherwise specified
0 Months Ended 12 Months Ended
Mar. 2, 2015
Oct. 3, 2015
Mar. 2, 2015
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
 
 
 
Sale of business
$ 14.9 
 
 
Disposal Group, Including Discontinued Operation, Balance Sheet Disclosures [Abstract]
 
 
 
Inventory
 
 
6.0 
Fixed assets
 
 
0.4 
Other assets
 
 
0.1 
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract]
 
 
 
Legal fees
0.3 
 
 
Selling costs
0.4 
 
 
Inventory devaluation
0.8 
 
 
Incentive related costs
1.4 
1.4 
 
Gain on sale of asset
 
5.6 
 
Other expenses
 
0.8 
 
David Peyser Sportswear
 
 
 
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
 
 
 
Sale of business
 
14.9 
 
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract]
 
 
 
Gain on sale of asset
 
$ 7.7 
 
Restructuring Plan (Details) (USD $)
12 Months Ended 1 Months Ended 12 Months Ended
Oct. 1, 2016
Oct. 3, 2015
Sep. 27, 2014
Sep. 30, 2016
Facility Closing
Oct. 1, 2016
Cost of goods sold
Oct. 1, 2016
Restructuring Charges
Oct. 1, 2016
Restructuring Charges
Employee Severance
Oct. 1, 2016
Restructuring Charges
Other Restructuring
Oct. 1, 2016
Inventory and supply part
Restructuring Charges
Facility Closing
Oct. 1, 2016
Fixed Asset
Restructuring Charges
Facility Closing
Restructuring Cost and Reserve [Line Items]
 
 
 
 
 
 
 
 
 
 
Proceeds from sale of assets, per agreement
 
 
 
$ 1,700,000 
 
 
 
 
 
 
Restructuring costs
1,741,000 
0 
0 
 
1,096,000 
1,741,000 
597,000 
393,000 
144,000 
607,000 
Total manufacturing realignment expenses
2,837,000 
 
 
 
 
 
 
 
 
 
Payments for restructuring
400,000 
 
 
 
 
 
 
 
 
 
Restructuring reserve
$ 200,000 
 
 
 
 
 
 
 
 
 
Inventories (Details) (USD $)
Oct. 1, 2016
Oct. 3, 2015
Inventory Disclosure [Abstract]
 
 
Inventory reserves
$ 8,800,000 
$ 8,400,000 
Inventories, net of reserves:
 
 
Raw materials
11,442,000 
11,412,000 
Work in process
18,158,000 
19,071,000 
Finished goods
134,647,000 
117,889,000 
Inventories, net
$ 164,247,000 
$ 148,372,000 
Property, Plant and Equipment (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended
Oct. 1, 2016
Oct. 3, 2015
Sep. 28, 2013
Minimum
Sep. 28, 2013
Maximum
Oct. 1, 2016
Land and land improvements
Oct. 3, 2015
Land and land improvements
Oct. 1, 2016
Buildings
Oct. 3, 2015
Buildings
Oct. 1, 2016
Machinery and equipment
Oct. 3, 2015
Machinery and equipment
Oct. 1, 2016
Computers and software
Oct. 3, 2015
Computers and software
Oct. 1, 2016
Computers and software
Minimum
Oct. 1, 2016
Computers and software
Maximum
Oct. 1, 2016
Furniture and fixtures
Oct. 3, 2015
Furniture and fixtures
Oct. 1, 2016
Leasehold improvements
Oct. 3, 2015
Leasehold improvements
Oct. 1, 2016
Leasehold improvements
Minimum
Oct. 1, 2016
Leasehold improvements
Maximum
Oct. 1, 2016
Vehicles and related equipment
Oct. 3, 2015
Vehicles and related equipment
Oct. 1, 2016
Construction in progress
Oct. 3, 2015
Construction in progress
Property, Plant and Equipment [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Estimated useful life
 
 
3 years 
25 years 
25 years 
 
20 years 
 
10 years 
 
 
 
3 years 
10 years 
7 years 
 
 
 
3 years 
10 years 
5 years 
 
 
 
Property, plant and equipment, gross
$ 107,088 
$ 121,028 
 
 
$ 572 
$ 996 
$ 3,369 
$ 8,706 
$ 72,068 
$ 80,843 
$ 20,889 
$ 20,635 
 
 
$ 1,977 
$ 3,126 
$ 3,686 
$ 2,645 
 
 
$ 808 
$ 821 
$ 3,719 
$ 3,256 
Less accumulated depreciation and amortization
(63,585)
(81,375)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment, net
$ 43,503 
$ 39,653 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Goodwill and Intangible Assets (Details) (USD $)
12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 1 Months Ended
Oct. 1, 2016
Oct. 3, 2015
Sep. 27, 2014
Oct. 1, 2016
Tradename/trademarks
Oct. 3, 2015
Tradename/trademarks
Oct. 1, 2016
Tradename/trademarks
Minimum
Oct. 1, 2016
Tradename/trademarks
Maximum
Oct. 1, 2016
Customer relationships
Oct. 3, 2015
Customer relationships
Oct. 1, 2016
Technology
Oct. 3, 2015
Technology
Oct. 1, 2016
License Agreements
Oct. 3, 2015
License Agreements
Oct. 1, 2016
License Agreements
Minimum
Oct. 1, 2016
License Agreements
Maximum
Oct. 1, 2016
Non-compete agreements
Oct. 3, 2015
Non-compete agreements
Oct. 1, 2016
Non-compete agreements
Minimum
Oct. 1, 2016
Non-compete agreements
Maximum
Aug. 31, 2016
Cost Apparel
Goodwill and Finite-Lived Intangible Assets [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Goodwill, Cost
$ 36,729,000 
$ 36,729,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Goodwill, Net Value
36,729,000 
36,729,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Intangibles, Cost
29,447,000 
29,357,000 
 
17,620,000 
17,530,000 
 
 
7,220,000 
7,220,000 
1,220,000 
1,220,000 
2,100,000 
2,100,000 
 
 
1,287,000 
1,287,000 
 
 
 
Intangibles, Accumulated Amortization
(8,525,000)
(7,195,000)
 
(2,514,000)
(1,896,000)
 
 
(4,016,000)
(3,664,000)
(826,000)
(703,000)
(320,000)
(216,000)
 
 
(849,000)
(716,000)
 
 
 
Intangibles, Net Value
20,922,000 
22,162,000 
 
15,106,000 
15,634,000 
 
 
3,204,000 
3,556,000 
394,000 
517,000 
1,780,000 
1,884,000 
 
 
438,000 
571,000 
 
 
 
Intangibles, economic life (in years)
 
 
 
 
 
20 years 
30 years 
20 years 
 
10 years 
 
 
 
15 years 
30 years 
 
 
4 years 
8 years 6 months 
 
Goodwill, Cumulative impairment loss
600,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Combination, Consideration Transferred
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
313,000 
Finite-lived Intangible Assets Acquired
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
90,000 
Amortization of intangible assets
1,330,000 
1,338,000 
1,337,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amortization expense estimate for 2017
1,300,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amortization expense estimate for 2018
1,300,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amortization expense estimate for 2019
1,300,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amortization expense estimate for 2020
1,200,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amortization expense estimate for 2021
$ 1,100,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accrued Expenses (Accrued Expenses) (Details) (USD $)
In Thousands, unless otherwise specified
Oct. 1, 2016
Oct. 3, 2015
Payables and Accruals [Abstract]
 
 
Accrued employee compensation and benefits
$ 12,899 
$ 10,704 
Taxes accrued and withheld
1,003 
1,455 
Accrued insurance
263 
349 
Accrued advertising
256 
363 
Accrued royalties
1,653 
2,173 
Accrued commissions
460 
512 
Accrued freight
1,105 
1,501 
Other
4,067 
3,939 
Total accrued expenses
$ 21,706 
$ 20,996 
Accrued Expenses (Restructuring) (Details) (USD $)
3 Months Ended 12 Months Ended
Sep. 27, 2014
Oct. 1, 2016
Oct. 3, 2015
Sep. 27, 2014
Restructuring Cost and Reserve [Line Items]
 
 
 
 
Restructuring costs
 
$ 1,741,000 
$ 0 
$ 0 
Fixed asset impairment charge
 
607,000 
0 
913,000 
Strategic Initiative
 
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
 
Restructuring costs
4,000,000 
0 
500,000 
4,021,000 
Severance costs
2,200,000 
 
 
 
Other restructuring costs
900,000 
 
 
 
Fixed asset impairment charge
1,000,000 
 
 
 
Cost of goods sold
 
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
 
Restructuring costs
 
1,096,000 
 
 
Cost of goods sold |
Strategic Initiative
 
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
 
Restructuring costs
 
 
 
868,000 
Selling, general and administrative expenses |
Strategic Initiative
 
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
 
Restructuring costs
 
 
 
2,169,000 
Other expense |
Strategic Initiative
 
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
 
Restructuring costs
 
 
 
$ 984,000 
Long-Term Debt (Schedule of Debt Instruments) (Details) (USD $)
In Thousands, unless otherwise specified
Oct. 1, 2016
Oct. 3, 2015
Debt Instrument [Line Items]
 
 
Long-term Debt
$ 115,795 
$ 102,212 
Less current installments
(9,192)
(8,340)
Long-term debt, excluding current installments
106,603 
93,872 
Loans Payable |
Term Loan
 
 
Debt Instrument [Line Items]
 
 
Long-term Debt
1,459 
2,432 
Interest rate (as a percentage)
7.00% 
 
Loans Payable |
Banco Ficohsa, Loan 1
 
 
Debt Instrument [Line Items]
 
 
Interest rate (as a percentage)
7.50% 
 
Loans Payable |
Banco Ficohsa, Loan 2
 
 
Debt Instrument [Line Items]
 
 
Interest rate (as a percentage)
8.00% 
 
Loans Payable |
Banco Ficohsa, Loan Due in April 2022
 
 
Debt Instrument [Line Items]
 
 
Interest rate (as a percentage)
8.00% 
 
Term Loan |
Banco Ficohsa, Loan 1
 
 
Debt Instrument [Line Items]
 
 
Long-term Debt
2,600 
3,150 
Term Loan |
Banco Ficohsa, Loan 2
 
 
Debt Instrument [Line Items]
 
 
Long-term Debt
1,650 
1,881 
Term Loan |
Banco Ficohsa, Loan Monthly Installments beginning June 2016
 
 
Debt Instrument [Line Items]
 
 
Long-term Debt
4,833 
0 
Interest rate (as a percentage)
8.00% 
 
Notes Payable, Other Payables |
Promissory Note, Maturity Date June 30, 2016
 
 
Debt Instrument [Line Items]
 
 
Long-term Debt
0 
2,979 
Interest rate (as a percentage)
1.92% 
 
Notes Payable, Other Payables |
Promissory Note, Maturity Date June 30, 2019
 
 
Debt Instrument [Line Items]
 
 
Long-term Debt
8,116 
7,830 
Interest rate (as a percentage)
3.62% 
 
Revolving Credit Facility |
Line of Credit |
Revolving Credit Facility, due May 2021
 
 
Debt Instrument [Line Items]
 
 
Long-term Debt
92,137 
0 
Revolving Credit Facility |
Line of Credit |
Revolving Credit Facility, due May 2017
 
 
Debt Instrument [Line Items]
 
 
Long-term Debt
0 
79,550 
Revolving Credit Facility |
Line of Credit |
Revolving Credit Facility, due March 2019
 
 
Debt Instrument [Line Items]
 
 
Long-term Debt
$ 5,000 
$ 4,390 
Long-Term Debt (Narrative) (Details) (USD $)
0 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 0 Months Ended 12 Months Ended 0 Months Ended 1 Months Ended
Dec. 6, 2013
Oct. 1, 2016
Oct. 3, 2015
Sep. 27, 2014
Dec. 28, 2013
Oct. 1, 2016
Notes Payable, Other Payables
Promissory Note, Maturity Date June 30, 2016
Oct. 3, 2015
Notes Payable, Other Payables
Promissory Note, Maturity Date June 30, 2016
Oct. 1, 2016
Notes Payable, Other Payables
Promissory Note, Maturity Date June 30, 2019
Oct. 3, 2015
Notes Payable, Other Payables
Promissory Note, Maturity Date June 30, 2019
Oct. 1, 2016
Term Loan
Banco Ficohsa, Loan Monthly Installments beginning June 2016
Oct. 3, 2015
Term Loan
Banco Ficohsa, Loan Monthly Installments beginning June 2016
Oct. 1, 2016
Revolving Credit Facility
Revolving Credit Facility, due May 2017
Oct. 3, 2015
Revolving Credit Facility
Revolving Credit Facility, due May 2017
Oct. 1, 2016
Revolving Credit Facility
Revolving Credit Facility, due May 2017
Minimum
Oct. 1, 2016
Revolving Credit Facility
Revolving Credit Facility, due May 2017
Maximum
Oct. 1, 2016
Revolving Credit Facility
Revolving Credit Facility, due May 2017
Federal Funds
Oct. 1, 2016
Revolving Credit Facility
Revolving Credit Facility, due May 2017
LIBOR
Oct. 1, 2016
Revolving Credit Facility
Revolving Credit Facility, due May 2017
Prime Rate
Oct. 1, 2016
Revolving Credit Facility
Revolving Credit Facility, due May 2021
Oct. 1, 2016
Revolving Credit Facility
Revolving Credit Facility, due March 2019
May 10, 2016
Revolving Credit Facility
Revolving Credit Facility, due May 2016
Oct. 1, 2016
Revolving Credit Facility
Revolving Credit Facility, due May 2016
Aug. 27, 2013
Salt Life Acquisition
Notes Payable, Other Payables
debt_instrument
Oct. 1, 2016
Salt Life Acquisition
Notes Payable, Other Payables
Aug. 27, 2013
Salt Life Acquisition
Notes Payable, Other Payables
Promissory Note, Maturity Date June 30, 2016
Aug. 27, 2013
Salt Life Acquisition
Notes Payable, Other Payables
Promissory Note, Maturity Date June 30, 2019
May 10, 2016
Letter of Credit
Line of Credit
Mar. 31, 2011
Revolving Credit Facility
Line of Credit
May 10, 2016
Revolving Credit Facility
Line of Credit
Oct. 1, 2016
Revolving Credit Facility
Line of Credit
Revolving Credit Facility, due May 2017
Oct. 3, 2015
Revolving Credit Facility
Line of Credit
Revolving Credit Facility, due May 2017
Oct. 1, 2016
Revolving Credit Facility
Line of Credit
Revolving Credit Facility, due May 2021
Oct. 3, 2015
Revolving Credit Facility
Line of Credit
Revolving Credit Facility, due May 2021
Oct. 1, 2016
Revolving Credit Facility
Line of Credit
Revolving Credit Facility, due March 2019
Oct. 3, 2015
Revolving Credit Facility
Line of Credit
Revolving Credit Facility, due March 2019
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Line of credit facility, average excess availability, base amount
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 145,000,000 
 
 
 
 
 
 
Maximum borrowing capacity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
25,000,000 
 
200,000,000 
 
 
 
 
 
 
Payment of financing fees
 
1,018,000 
42,000 
384,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
100,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basis spread on variable rate (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0.50% 
1.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Variable rate basis
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
federal funds 
LIBOR 
prime rate 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Monthly installment payment
 
 
 
 
 
 
 
 
 
 
 
200,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual facility fee (as a percentage)
 
 
 
 
 
 
 
 
 
 
 
 
 
0.25% 
0.375% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amount in excess of average daily principal
 
 
 
 
 
 
 
 
 
 
 
145,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding under credit facility
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
92,100,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average interest rate (as a percentage)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.70% 
 
 
 
 
 
 
 
 
 
 
 
 
 
Remaining borrowing capacity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
32,800,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed charge coverage ratio period
 
 
 
 
 
 
 
 
 
 
 
12 months 
 
 
 
 
 
 
 
 
 
12 months 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed charge coverage ratio (FCCR)
 
 
 
 
 
 
 
 
 
 
 
 
 
1.1 
 
 
 
 
 
 
 
1.1 
 
 
 
 
 
 
 
 
 
 
 
 
 
Payment for termination of contract, per agreement
3,500,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Escrow deposit
 
 
 
 
3,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Payment for contract termination
 
 
800,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Royalty payment, remaining per installment
 
 
200,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accrued Royalties
 
600,000 
600,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Availability requirement, for dividends and stock repurchases (as a percentage)
 
 
 
 
 
 
 
 
 
 
 
15.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average period for availability requirement, for dividends and stock repurchases (in days)
 
 
 
 
 
 
 
 
 
 
 
30 days 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Aggregate amount of dividends and stock repurchases, benchmark
 
 
 
 
 
 
 
 
 
 
 
10,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 repurchases
 
 
 
 
 
 
 
 
 
 
 
10,700,000 
7,300,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of promissory notes issued (debt instruments)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, face amount
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
22,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
One-time installment payment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
Imputed interest (as a percentage)
 
 
 
 
 
 
 
 
 
 
 
2.70% 
 
 
 
 
 
 
2.70% 
 
 
 
 
 
1.92% 
3.62% 
 
 
 
 
 
 
 
 
 
Discounted value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8,100,000 
 
 
 
 
 
 
 
 
 
 
 
Interest rate (as a percentage)
 
 
 
 
 
1.92% 
 
3.62% 
 
8.00% 
 
 
 
 
 
 
 
 
 
8.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Payment term (in years)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
18 months 
 
 
 
 
 
 
 
Outstanding borrowings
 
$ 115,795,000 
$ 102,212,000 
 
 
$ 0 
$ 2,979,000 
$ 8,116,000 
$ 7,830,000 
$ 4,833,000 
$ 0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 0 
$ 79,550,000 
$ 92,137,000 
$ 0 
$ 5,000,000 
$ 4,390,000 
Periodic payment term (in months)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6 months 
 
 
 
 
 
 
 
Long-Term Debt (Schedule of Aggregate Maturities) (Details) (USD $)
In Thousands, unless otherwise specified
Oct. 1, 2016
Maturities of Long-term Debt [Abstract]
 
2017
$ 9,192 
2018
7,955 
2019
10,835 
2020
4,469 
2021
83,149 
Thereafter
195 
Long-term Debt
$ 115,795 
Income Taxes (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Oct. 1, 2016
Oct. 3, 2015
Sep. 27, 2014
Current:
 
 
 
Federal
$ 36 
$ 0 
$ 0 
State
78 
60 
79 
Foreign
179 
186 
158 
Total current
293 
246 
237 
Deferred:
 
 
 
Federal
1,462 
1,320 
(5,807)
State
326 
439 
(923)
Total deferred
1,788 
1,759 
(6,730)
Provision for (benefit from) income taxes
2,081 
2,005 
(6,493)
Income (Loss) from Continuing Operations, Before Income Taxes [Abstract]
 
 
 
United States
3,966 
3,434 
(16,832)
Foreign
7,079 
6,664 
9,379 
Earnings (loss) before provision for (benefit from) income taxes
11,045 
10,098 
(7,453)
Income Tax Expense (Benefit), Continuing Operations, Income Tax Reconciliation [Abstract]
 
 
 
Income tax expense at the statutory rate
3,755 
3,433 
(2,533)
State income tax expense, net of federal income tax effect
447 
374 
(893)
Impact of state rate changes
116 
0 
0 
Rate difference and nondeductible items in foreign jurisdictions
54 
(30)
(55)
Impact of foreign earnings in tax-free zone
(2,319)
(2,168)
(3,098)
Valuation allowance adjustments
(71)
0 
4 
Nondeductible compensation
0 
335 
0 
Nondeductible amortization and other permanent differences
96 
81 
76 
Other
3 
(20)
6 
Deferred tax assets:
 
 
 
Federal net operating loss carryforwards
6,256 
7,842 
 
State net operating loss carryforwards
1,784 
2,362 
 
Charitable donation carryforward
0 
28 
 
Derivative — interest rate contracts
70 
268 
 
Alternative minimum tax credit carryforward
135 
99 
 
Currently nondeductible accruals
7,613 
6,029 
 
Gross deferred tax assets
15,858 
16,628 
 
Less valuation allowance — state net operating loss
(131)
(202)
 
Net deferred tax assets
15,727 
16,426 
 
Deferred tax liabilities:
 
 
 
Depreciation
(2,868)
(2,941)
 
Goodwill and intangibles
(7,463)
(6,024)
 
Other
(150)
(167)
 
Gross deferred tax liabilities
(10,481)
(9,132)
 
Net deferred tax asset
$ 5,246 
$ 7,294 
 
Income Taxes (Narrative) (Details) (USD $)
12 Months Ended
Oct. 1, 2016
Oct. 3, 2015
Sep. 27, 2014
Operating Loss Carryforwards [Line Items]
 
 
 
Federal statutory income tax rate
34.00% 
 
 
Undistributed earnings of our foreign subsidiaries where the earnings are considered to be permanently reinvested
$ 66,300,000 
 
 
Gross deferred tax assets
15,858,000 
16,628,000 
 
Change in deferred tax assets valuation allowance
(71,000)
0 
4,000 
Domestic Tax Authority
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
Operating loss carryforwards
18,300,000 
23,100,000 
 
Gross deferred tax assets
6,300,000 
7,800,000 
 
State and Local Jurisdiction
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
Operating loss carryforwards
$ 45,400,000 
$ 58,500,000 
 
Leases (Details) (USD $)
12 Months Ended
Oct. 1, 2016
Oct. 3, 2015
Sep. 27, 2014
Operating Leased Assets [Line Items]
 
 
 
Rent expense
$ 9,300,000 
$ 9,400,000 
$ 9,800,000 
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
 
 
 
2017
7,177,000 
 
 
2018
6,595,000 
 
 
2019
6,237,000 
 
 
2020
5,897,000 
 
 
2021
3,633,000 
 
 
Thereafter
10,396,000 
 
 
Total future minimum due
$ 39,935,000 
 
 
Land and Building |
Minimum
 
 
 
Operating Leased Assets [Line Items]
 
 
 
Renewal period, years
5 years 
 
 
Land and Building |
Maximum
 
 
 
Operating Leased Assets [Line Items]
 
 
 
Renewal period, years
10 years 
 
 
Employee Benefit Plans (Details) (USD $)
12 Months Ended
Oct. 1, 2016
Oct. 3, 2015
Sep. 27, 2014
Compensation and Retirement Disclosure [Abstract]
 
 
 
Contributions to 401(k) Plan
$ 1,100,000 
$ 1,100,000 
$ 1,300,000 
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
412,000 
443,000 
 
Interest expense
6,000 
1,000 
 
Benefits paid
(81,000)
(32,000)
 
Actuarial adjustment
7,000 
0 
 
Balance at end of year
$ 344,000 
$ 412,000 
$ 443,000 
Stock-based Compensation (Narrative) (Details) (USD $)
12 Months Ended 0 Months Ended 12 Months Ended
Oct. 1, 2016
Oct. 3, 2015
Sep. 27, 2014
Oct. 1, 2016
Restricted Stock Units (RSUs)
Oct. 3, 2015
Restricted Stock Units (RSUs)
Oct. 1, 2016
Performance Stock Units
Oct. 3, 2015
Performance Stock Units
Oct. 3, 2015
Performance Awards
Oct. 3, 2015
One year vesting period
Oct. 3, 2015
Two year vesting period
Oct. 1, 2016
2010 Stock Plan
Oct. 3, 2015
2010 Stock Plan
Sep. 27, 2014
2010 Stock Plan
Oct. 1, 2016
2010 Stock Plan
Restricted Stock Units and Performance Stock Units
Oct. 3, 2015
2010 Stock Plan
Restricted Stock Units and Performance Stock Units
Sep. 27, 2014
2010 Stock Plan
Restricted Stock Units and Performance Stock Units
Sep. 27, 2014
2010 Stock Plan
One year vesting period
Oct. 3, 2015
Option Plan
Sep. 27, 2014
Option Plan
Oct. 1, 2016
Management
Option Plan
Oct. 1, 2016
Management
Option Plan
Minimum
Oct. 1, 2016
Management
Option Plan
Maximum
Oct. 1, 2016
Upon Filing of Annual Report in 2016
Restricted Stock Units (RSUs)
Oct. 3, 2015
Upon Filing of Annual Report in 2016
Performance Stock Units
Oct. 1, 2016
Upon Filing of Annual Report in 2017
Restricted Stock Units (RSUs)
Oct. 3, 2015
Upon Filing of Annual Quarterly Report for the Period Ending June Twenty Seven Twenty Fifteen
Restricted Stock Units (RSUs)
Oct. 1, 2016
Upon Filing of Annual Quarterly Report for the Period Ending June Twenty Seven Twenty Fifteen
Performance Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Compensation expense recorded
$ 2,000,000 
$ 1,900,000 
$ (90,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tax benefits associated with compensation costs
800,000 
700,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tax expense from reduction of compensation expense
 
 
(35,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Aggregate number of shares that may be delivered
 
 
 
 
 
 
 
 
 
 
500,000 
 
 
 
 
 
 
 
 
2,000,000 
 
 
 
 
 
 
 
Awards granted in the period (shares)
 
 
 
83,788 
 
75,350 
 
 
 
 
 
 
 
159,138 
524,000 
0 
 
 
 
 
 
 
8,438 
 
75,350 
 
 
Equity instruments granted in the period (shares)
 
 
 
355,000 
 
 
169,000 
 
52,000 
52,000 
0 
0 
0 
 
 
 
 
 
 
 
 
 
 
65,000 
 
69,657 
49,529 
Vested in period, fair value
 
1,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity instruments forfeited (shares)
 
5,200 
 
 
12,019 
 
 
133,676 
 
 
 
 
 
42,771 
150,895 
133,500 
 
 
 
 
 
 
 
 
 
 
 
Unrecognized compensation cost related to non-vested awards
2,900,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unrecognized compensation cost related to non-vested awards (period of recognition)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2 years 2 months 12 days 
 
 
 
 
 
 
 
 
 
 
Exercise term, from dates of grant
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10 years 
 
 
 
 
 
 
 
Award vesting period
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3 years 
4 years 
 
 
 
 
 
Intrinsic value of options exercised
 
300,000 
0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tax benefit realized from exercise of stock options
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 700,000 
$ 27,000 
 
 
 
 
 
 
 
 
Stock-based Compensation (Summary of Stock Option Activity) (Details) (USD $)
12 Months Ended
Oct. 1, 2016
Oct. 3, 2015
Sep. 27, 2014
2010 Stock Plan
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
 
 
 
Outstanding at end of period, Shares
10,000 
50,000 
50,000 
Granted, Shares
0 
0 
0 
Exercised, Shares
0 
0 
0 
Forfeited, Shares
0 
(40,000)
0 
Outstanding at end of period, Shares
10,000 
10,000 
50,000 
Exercisable at end of year, Shares
10,000 
10,000 
50,000 
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 (usd per share)
$ 13.07 
$ 13.47 
$ 13.47 
Granted, Weighted Average Exercise Price (usd per share)
$ 0.00 
$ 0.00 
$ 0.00 
Exercised, Weighted Average Exercise Price (usd per share)
$ 0.00 
$ 0.00 
$ 0.00 
Forfeited, Weighted Average Exercise Price (usd per share)
$ 0.00 
$ 13.56 
$ 0.00 
Outstanding at end of year, Weighted Average Exercise Price (usd per share)
$ 13.07 
$ 13.07 
$ 13.47 
Exercisable at end of year, Weighted Average Exercise Price (usd per share)
$ 13.07 
$ 13.07 
$ 13.47 
Option Plan
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
 
 
 
Outstanding at end of period, Shares
86,000 
502,000 
584,500 
Exercised, Shares
0 
(350,000)
(82,500)
Forfeited, Shares
0 
(66,000)
0 
Outstanding at end of period, Shares
86,000 
86,000 
502,000 
Exercisable at end of year, Shares
86,000 
86,000 
502,000 
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 (usd per share)
$ 8.30 
$ 12.27 
$ 12.13 
Exercised, Weighted Average Exercise Price (usd per share)
$ 0.00 
$ 13.12 
$ 11.28 
Forfeited, Weighted Average Exercise Price (usd per share)
$ 0.00 
$ 12.94 
$ 0.00 
Outstanding at end of year, Weighted Average Exercise Price (usd per share)
$ 8.30 
$ 8.30 
$ 12.27 
Exercisable at end of year, Weighted Average Exercise Price (usd per share)
$ 8.30 
$ 8.30 
$ 12.27 
Stock-based Compensation (Summary of Nonvested Options) (Details) (USD $)
12 Months Ended
Oct. 1, 2016
Oct. 3, 2015
Sep. 27, 2014
Number of Units
 
 
 
Units forfeited (shares)
 
(5,200)
 
Restricted Stock Units and Performance Stock Units |
2010 Stock Plan
 
 
 
Number of Units
 
 
 
Units outstanding, beginning of fiscal year (shares)
518,800 
215,352 
348,852 
Units granted (shares)
159,138 
524,000 
0 
Units issued (shares)
(49,529)
(69,657)
0 
Units forfeited (shares)
(42,771)
(150,895)
(133,500)
Units outstanding, end of fiscal year (shares)
585,638 
518,800 
215,352 
Weighted average grant date fair value
 
 
 
Units outstanding, beginning of fiscal year (usd per share)
$ 10.80 
$ 14.31 
$ 14.25 
Units granted (usd per share)
$ 14.03 
$ 10.81 
$ 0.00 
Units issued (usd per share)
$ 12.32 
$ 14.31 
$ 0.00 
Units forfeited (usd per share)
$ 10.87 
$ 14.26 
$ 14.16 
Units outstanding, end of fiscal year (usd per share)
$ 11.54 
$ 10.80 
$ 14.31 
(Stock-based Compensation-Exercise Price Range) (Details) (USD $)
Oct. 1, 2016
Restricted Stock Units (RSUs) |
2010 Stock Plan |
Exercise Price Range One
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Number of Units (shares)
95,000 
Grant-Date Fair Value (usd per share)
$ 10.52 
Restricted Stock Units (RSUs) |
2010 Stock Plan |
Exercise Price Range Two
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Number of Units (shares)
230,000 
Grant-Date Fair Value (usd per share)
$ 10.73 
Performance Awards |
2010 Stock Plan |
Exercise Price Range Three
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Number of Units (shares)
52,000 
Grant-Date Fair Value (usd per share)
$ 10.52 
Performance Awards |
2010 Stock Plan |
Exercise Price Range Four
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Number of Units (shares)
52,000 
Grant-Date Fair Value (usd per share)
$ 10.52 
Performance Awards |
2010 Stock Plan |
Exercise Price Range Five
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Number of Units (shares)
8,438 
Grant-Date Fair Value (usd per share)
$ 14.04 
Performance Awards |
2010 Stock Plan |
Exercise Price Range Seven
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Number of Units (shares)
74,100 
Grant-Date Fair Value (usd per share)
$ 14.03 
Performance Awards |
2010 Stock Plan |
Exercise Price Range Six
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Number of Units (shares)
74,100 
Grant-Date Fair Value (usd per share)
$ 14.03 
Restricted Stock Units and Performance Stock Units |
2010 Stock Plan
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Number of Units (shares)
585,638 
Stock Options |
2010 Stock Plan
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Number of Units (shares)
10,000 
Stock Options |
2010 Stock Plan |
Exercise Price Range Two
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Number of Units (shares)
10,000 
Exercise Price (usd per share)
$ 13.07 
Grant-Date Fair Value (usd per share)
$ 6.35 
Stock Options |
Option Plan
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Number of Units (shares)
86,000 
Stock Options |
Option Plan |
Exercise Price Range Four
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Number of Units (shares)
86,000 
Exercise Price (usd per share)
$ 8.30 
Grant-Date Fair Value (usd per share)
$ 2.95 
Business Segments (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 12 Months Ended
Oct. 1, 2016
Jul. 2, 2016
Apr. 2, 2016
Jan. 2, 2016
Oct. 3, 2015
Jun. 27, 2015
Mar. 28, 2015
Dec. 27, 2014
Oct. 1, 2016
operating_segment
Oct. 3, 2015
Sep. 27, 2014
Sep. 28, 2013
operating_segment
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
Number of business segments
 
 
 
 
 
 
 
 
2 
 
 
2 
Net sales
$ 114,366 
$ 111,552 
$ 109,160 
$ 90,171 
$ 120,194 
$ 120,525 
$ 115,042 
$ 93,381 
$ 425,249 
$ 449,142 
$ 452,901 
 
Segment operating income
3,947 
4,227 
5,931 
2,227 
5,111 
6,897 
7,328 
(3,217)
16,332 
16,119 
(1,661)
 
Purchases of property and equipment
 
 
 
 
 
 
 
 
12,315 
7,773 
8,894 
 
Depreciation and amortization
 
 
 
 
 
 
 
 
9,625 
9,542 
9,493 
 
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Segment operating income
3,947 
4,227 
5,931 
2,227 
5,111 
6,897 
7,328 
(3,217)
16,332 
16,119 
(1,661)
 
Unallocated interest expense
 
 
 
 
 
 
 
 
12,925 
9,320 
11,516 
 
Unallocated interest expense
 
 
 
 
 
 
 
 
5,287 
6,021 
5,792 
 
Consolidated income (loss) before provision for (benefit from) income taxes
 
 
 
 
 
 
 
 
11,045 
10,098 
(7,453)
 
Segment assets
344,652 
 
 
 
324,903 
 
 
 
344,652 
324,903 
 
 
Equity investment in joint venture
 
 
 
 
 
 
 
 
3,593 
3,195 
 
 
Geographic Areas, Long-Lived Assets [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Total long-lived assets, excluding goodwill and intangibles
43,503 
 
 
 
39,653 
 
 
 
43,503 
39,653 
 
 
United States
 
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
 
 
 
 
 
 
 
418,627 
442,207 
442,062 
 
Geographic Areas, Long-Lived Assets [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Total long-lived assets, excluding goodwill and intangibles
18,523 
 
 
 
22,302 
 
 
 
18,523 
22,302 
 
 
Foreign
 
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
 
 
 
 
 
 
 
6,622 
6,935 
10,839 
 
Geographic Areas, Long-Lived Assets [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Total long-lived assets, excluding goodwill and intangibles
24,980 
 
 
 
17,351 
 
 
 
24,980 
17,351 
 
 
Honduras
 
 
 
 
 
 
 
 
 
 
 
 
Geographic Areas, Long-Lived Assets [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Total long-lived assets, excluding goodwill and intangibles
19,650 
 
 
 
13,072 
 
 
 
19,650 
13,072 
 
 
El Salvador
 
 
 
 
 
 
 
 
 
 
 
 
Geographic Areas, Long-Lived Assets [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Total long-lived assets, excluding goodwill and intangibles
4,215 
 
 
 
3,276 
 
 
 
4,215 
3,276 
 
 
Mexico
 
 
 
 
 
 
 
 
 
 
 
 
Geographic Areas, Long-Lived Assets [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Total long-lived assets, excluding goodwill and intangibles
1,115 
 
 
 
1,003 
 
 
 
1,115 
1,003 
 
 
Basics
 
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
 
 
 
 
 
 
 
277,146 
282,467 
265,882 
 
Segment operating income
 
 
 
 
 
 
 
 
22,307 
13,060 
6,785 
 
Purchases of property and equipment
 
 
 
 
 
 
 
 
10,734 
6,037 
6,436 
 
Depreciation and amortization
 
 
 
 
 
 
 
 
6,437 
6,208 
6,096 
 
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Segment operating income
 
 
 
 
 
 
 
 
22,307 
13,060 
6,785 
 
Segment assets
178,347 
 
 
 
160,902 
 
 
 
178,347 
160,902 
 
 
Equity investment in joint venture
 
 
 
 
 
 
 
 
3,593 
3,195 
 
 
Branded
 
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
 
 
 
 
 
 
 
148,103 
166,675 
187,019 
 
Segment operating income
 
 
 
 
 
 
 
 
6,950 
12,379 
3,070 
 
Purchases of property and equipment
 
 
 
 
 
 
 
 
1,501 
689 
1,458 
 
Depreciation and amortization
 
 
 
 
 
 
 
 
2,772 
2,902 
2,948 
 
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Segment operating income
 
 
 
 
 
 
 
 
6,950 
12,379 
3,070 
 
Segment assets
156,119 
 
 
 
152,210 
 
 
 
156,119 
152,210 
 
 
Equity investment in joint venture
 
 
 
 
 
 
 
 
0 
0 
 
 
Corporate
 
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
Purchases of property and equipment
 
 
 
 
 
 
 
 
80 
1,047 
1,000 
 
Depreciation and amortization
 
 
 
 
 
 
 
 
416 
432 
449 
 
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Segment assets
10,186 
 
 
 
11,791 
 
 
 
10,186 
11,791 
 
 
Segment operating income
 
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
Segment operating income
 
 
 
 
 
 
 
 
29,257 
25,439 
9,855 
 
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Segment operating income
 
 
 
 
 
 
 
 
29,257 
25,439 
9,855 
 
Unallocated interest expense
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Unallocated interest expense
 
 
 
 
 
 
 
 
$ 5,287 
$ 6,021 
$ 5,792 
 
Repurchase of Common Stock (Narrative) (Details) (USD $)
12 Months Ended 39 Months Ended 51 Months Ended
Oct. 1, 2016
Oct. 3, 2015
Sep. 27, 2014
Oct. 3, 2015
Oct. 1, 2016
Equity [Abstract]
 
 
 
 
 
Shares authorized for repurchase
$ 40,000,000.0 
 
 
 
$ 40,000,000.0 
Total Number of Shares Purchased
217,568 
140,336 
78,674 
 
2,480,150 
Shares repurchased, value
$ 3,500,000 
$ 2,100,000 
$ 1,200,000 
$ 30,900,000 
 
Repurchase of Common Stock (Shares Repurchased) (Details) (USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended 51 Months Ended 1 Months Ended 3 Months Ended 1 Months Ended 3 Months Ended
Oct. 1, 2016
Oct. 3, 2015
Sep. 27, 2014
Oct. 1, 2016
Oct. 1, 2016
Common Stock
Sep. 3, 2016
Common Stock
Aug. 6, 2016
Common Stock
Oct. 1, 2016
Common Stock
Oct. 1, 2016
Common Stock
Publicly Announced Plan
Sep. 3, 2016
Common Stock
Publicly Announced Plan
Aug. 6, 2016
Common Stock
Publicly Announced Plan
Oct. 1, 2016
Common Stock
Publicly Announced Plan
Equity, Class of Treasury Stock [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
Total Number of Shares Purchased
217,568 
140,336 
78,674 
2,480,150 
87,685 
16,093 
0 
103,778 
87,685 
16,093 
0 
103,778 
Average Price Paid per Share
 
 
 
 
$ 16.30 
$ 18.43 
$ 0.00 
$ 16.63 
 
 
 
 
Dollar Value of Shares that May Yet Be Purchased Under the Plans
$ 9.1 
 
 
$ 9.1 
$ 9.1 
$ 10.5 
$ 10.8 
$ 9.1 
 
 
 
 
Commitments and Contingencies (Litigation) (Details) (USD $)
0 Months Ended 0 Months Ended
Sep. 17, 2015
California Wage and Hour Litigation
Oct. 1, 2016
California Wage and Hour Litigation
Pending Litigation
Sep. 17, 2015
Delta Apparel, Soffe and Junkfood
California Wage and Hour Litigation
Oct. 1, 2016
Minimum
Oct. 1, 2016
Maximum
Loss Contingencies [Line Items]
 
 
 
 
 
Possible loss
 
$ 900,000 
 
$ 0 
$ 3,300,000.0 
Settlement amount
$ 200,000 
 
$ 300,000 
 
 
Commitments and Contingencies (Purchase Contracts) (Details) (USD $)
In Thousands, unless otherwise specified
Oct. 1, 2016
Long-term Purchase Commitment [Line Items]
 
Minimum payments
$ 42,905 
Yarn
 
Long-term Purchase Commitment [Line Items]
 
Minimum payments
13,823 
Finished fabric
 
Long-term Purchase Commitment [Line Items]
 
Minimum payments
6,952 
Finished products
 
Long-term Purchase Commitment [Line Items]
 
Minimum payments
$ 22,130 
Commitments and Contingencies (Letters of Credit) (Details) (Standby Letters of Credit, USD $)
In Millions, unless otherwise specified
Oct. 1, 2016
Standby Letters of Credit
 
Line of Credit Facility [Line Items]
 
Letters of credit
$ 0.4 
Commitments and Contingencies (Derivatives and Contingent Consideration) (Details) (USD $)
12 Months Ended
Oct. 1, 2016
Oct. 3, 2015
Sep. 27, 2014
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract]
 
 
 
Interest Rate Swap
$ (182,000)
$ (697,000)
$ (438,000)
Contingent Consideration
(2,500,000)
(3,100,000)
(3,600,000)
Change in fair value of contingent consideration
(600,000)
(500,000)
200,000 
Accrued expenses
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract]
 
 
 
Derivative liabilities, fair value
(182,000)
(519,000)
 
Deferred tax liabilities
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract]
 
 
 
Derivative liabilities, fair value
70,000 
269,000 
 
Other liabilities
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract]
 
 
 
Derivative liabilities, fair value
0 
(179,000)
 
Accumulated other comprehensive loss
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract]
 
 
 
Derivative liabilities, fair value
(112,000)
(429,000)
 
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract]
 
 
 
Interest Rate Swap
0 
0 
0 
Contingent Consideration
0 
0 
0 
Significant Other Observable Inputs (Level 2)
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract]
 
 
 
Interest Rate Swap
(182,000)
(697,000)
(438,000)
Contingent Consideration
0 
0 
0 
Significant Unobservable Inputs (Level 3)
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract]
 
 
 
Interest Rate Swap
0 
0 
0 
Contingent Consideration
(2,500,000)
(3,100,000)
(3,600,000)
Maturity Date 9/9/2016
 
 
 
Interest Rate Derivatives [Abstract]
 
 
 
Notional amount
15,000,000 
 
 
LIBOR Rate
1.17% 
 
 
Maturity Date 9/11/2017
 
 
 
Interest Rate Derivatives [Abstract]
 
 
 
Notional amount
15,000,000 
 
 
LIBOR Rate
1.648% 
 
 
Maturity Date 9/19/2016
 
 
 
Interest Rate Derivatives [Abstract]
 
 
 
Notional amount
15,000,000 
 
 
LIBOR Rate
1.003% 
 
 
Maturity Date 9/19/2017
 
 
 
Interest Rate Derivatives [Abstract]
 
 
 
Notional amount
15,000,000 
 
 
LIBOR Rate
1.449% 
 
 
Salt Life Acquisition
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract]
 
 
 
Contingent Consideration
(2,500,000)
(3,100,000)
 
Change in fair value of contingent consideration
$ (600,000)
 
 
Commitments and Contingencies (License Agreements) (Details) (USD $)
12 Months Ended
Oct. 1, 2016
Oct. 3, 2015
Sep. 27, 2014
Commitments and Contingencies Disclosure [Abstract]
 
 
 
Royalty expense
$ 8,200,000 
$ 10,100,000 
$ 11,100,000 
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
 
 
 
2017
1,132,000 
 
 
2018
178,000 
 
 
2019
0 
 
 
2020
0 
 
 
2021 and thereafter
0 
 
 
Total future minimum due
$ 1,310,000 
 
 
Quarterly Financial Information (Unaudited) (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Oct. 1, 2016
Jul. 2, 2016
Apr. 2, 2016
Jan. 2, 2016
Oct. 3, 2015
Jun. 27, 2015
Mar. 28, 2015
Dec. 27, 2014
Oct. 1, 2016
Oct. 3, 2015
Sep. 27, 2014
Selected Quarterly Financial Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Net sales
$ 114,366 
$ 111,552 
$ 109,160 
$ 90,171 
$ 120,194 
$ 120,525 
$ 115,042 
$ 93,381 
$ 425,249 
$ 449,142 
$ 452,901 
Gross profit
23,908 
24,986 
25,726 
18,879 
26,274 
25,484 
21,235 
15,326 
93,499 
88,319 
85,741 
Operating income
3,947 
4,227 
5,931 
2,227 
5,111 
6,897 
7,328 
(3,217)
16,332 
16,119 
(1,661)
Net earnings (loss)
$ 2,305 
$ 2,542 
$ 3,436 
$ 681 
$ 4,240 
$ 4,418 
$ 3,646 
$ (4,211)
$ 8,964 
$ 8,093 
$ (960)
Basic EPS ( usd per share)
$ 0.30 
$ 0.33 
$ 0.44 
$ 0.09 
$ 0.54 
$ 0.56 
$ 0.46 
$ (0.53)
$ 1.16 
$ 1.03 
$ (0.12)
Diluted EPS (usd per share)
$ 0.29 
$ 0.32 
$ 0.43 
$ 0.09 
$ 0.53 
$ 0.55 
$ 0.46 
$ (0.53)
$ 1.12 
$ 1.00 
$ (0.12)
Schedule II - Consolidated Valuation and Qualifying Accounts (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Oct. 1, 2016
Oct. 3, 2015
Sep. 27, 2014
Allowance For Doubtful Accounts
 
 
 
Movement in Valuation Allowances and Reserves [Roll Forward]
 
 
 
Beginning Balance
$ 1,470 
$ 1,047 
$ 851 
Expense
195 
771 
467 
Deductions
(1,096)
(348)
(271)
Ending Balance
569 
1,470 
1,047 
Returns and Allowances
 
 
 
Movement in Valuation Allowances and Reserves [Roll Forward]
 
 
 
Beginning Balance
1,515 
2,113 
2,108 
Expense
7,822 
12,173 
12,425 
Deductions
(7,928)
(12,771)
(12,420)
Ending Balance
1,409 
1,515 
2,113 
Total Reserves For Allowances
 
 
 
Movement in Valuation Allowances and Reserves [Roll Forward]
 
 
 
Beginning Balance
2,985 
3,160 
2,959 
Expense
8,017 
12,944 
12,892 
Deductions
(9,024)
(13,119)
(12,691)
Ending Balance
$ 1,978 
$ 2,985 
$ 3,160