Delta Woodside, a South Carolina textile company that spun off its apparel business Duck Head in 1999 to focus on fabric manufacturing, filed for bankruptcy in October 2006 and is shutting down operations. Rising imports, particularly from China after it joined the WTO, hurt Delta Woodside's commercial fabric business. While military camouflage fabric sales provided some revenue, cuts to the defense budget and issues with customers transitioning to new camouflage patterns further damaged the business. By mid-December, all 600 remaining employees will be laid off as Delta Woodside's assets are liquidated.

1. THE STATE
DELTA WOODSIDE'S BUSINESS UNRAVELS
FABRIC MAKER'S STOCK DELISTED TODAY; FINAL LAYOFFS
COMING NEXT MONTH
Published on: 11/21/2006
Section: BUSINESS
Edition: FINAL
Page: B6
By BEN WERNER bwerner@thestate.com
BEGINNING OF THE END
Sept. 1: Delta Woodside fails to make a $1.4 million interest payment due
on
some of its corporate bonds.
Sept. 6: A deal worth $2.25 million to sell
a Delta Woodside plant falls through.
Oct. 13: Delta Woodside files for bankruptcy.
Oct. 17: Delta Woodside announces its remaining workers will be laid off
by Dec. 12, affecting about 600
employees.
Today: Delta Woodside shares no longer are listed.
Preppy or camouflage -- that was the decision Delta Woodside executives
contemplated seven years ago.
The Fountain Inn-based textile company chose camouflage -- spinning off
its Duck Head Apparel business -- and for a while made a go at surviving
solely as a fabric producer during a challenging time for the industry.
But earlier this year, government spending on uniforms was slashed,
sending a tear through the ripstop fabric maker's business plan. As some
key Delta Woodside contracts were cut, the company tried selling off
assets, and filed for bankruptcy.

2. As of today, the company no longer is able to list its stock on any
exchange, including the overthe- counter market. And by mid- December,
the last of the company's 600 employees will be out of work and the name
Delta Woodside will exist only in the filings of bankruptcy court.
An October notification from the National Association of Securities Dealers
warned Delta Woodside that delisting was imminent because of failure to
file required financial reports.
In statement two weeks ago, Delta Woodside said that because of its
bankruptcy filing, the company "will not appeal any NASD decision to
remove the company's common stock."
The end result: A quarter-century after being formed through a series of
mergers and being heralded as a maverick newcomer to the almost-
century-old Southern textile industry, Delta Woodside is winding down.
Delta Woodside officials did not respond to several requests for comment.
Meanwhile, the Duck Head brand now is a strong seller for its current
owner, Goody's Family Clothing.
After being spun off by Delta Woodside, Duck Head at first was a stand-
alone business, then was bought by Tropical Sportswear International
Corp. In 2003, Goody's spent $4.1 million to purchase the brand.
In 2005, Goody's estimated the Duck Head brand brought in an estimated
$135 million in sales for the company.
All of Delta Woodside that year reported $157.9 million in
sales -- about half coming from the sale of camouflage fabric used to make
military uniforms and the other half from sale of fabrics to manufacturers.
But Delta Woodside also recorded a $27.4 million loss in 2005.
Year-to-date sales figures are not available for Goody's, which went private
at the end of 2005. Delta Woodside ceased reporting financial results after
filing for bankruptcy in October.
Back in 1999, when Delta Woodside's executives decided to focus solely

3. on manufacturing fabric, company executives sounded upbeat about the
plan:
--* Manufacturing the camouflage
fabric for U.S. military uniforms would provide a solid sales base for the
company as it tried cutting costs in its other divisions.
--* Getting out of the apparel business
would help the bottom line ahead. Company officials anticipated a raft of
foreign competition to arrive soon after China joined the World Trade
Organization in early 2001 and after some trade quotas were lifted in 2004.
By joining the WTO, China received increased access to member markets,
such as the United States, said Gary Adams, chief economist for the
National Cotton Council. Today, he estimates about a quarter of all cotton
imports come from China.
Other cotton-producing countries also have increased their textile
shipments to the United States after the lifting of quotas in 2004, Adams
said.
During this time, Delta Woodside's military business did its job, helping
tamp down the losses incurred as the company's commercial fabric
business continued hemorrhaging sales to cheaper foreign competition.
Instead of seeking the government contracts itself, Delta Woodside
marketed itself to the companies that won the government contracts as the
manufacturer who quickly could adapt to changing demand for more
orders.
Delta Woodside pushed the fact that its fabric was made in the United
States -- a strong selling point to some companies. Federal rules required
military uniform manufacturers to use fabric made in the United States.
But even what Delta Woodside reported as "near historic high" camouflage
sales last year could not save the company.
Cheap imports and a growing glut of khakis hurt commercial manufacturing
sales and increased losses -- exactly the scenario that worried Delta

4. Woodside officials in 1999.
A further blow was leveled when some Delta Woodside customers
experienced problems switching to the military's new style of camouflage.
Perhaps the final kick came last fall when the Department of Defense said
it would spend less on uniforms in 2006.
The Delta Woodside 2005 annual report provided a stark message to
shareholders.
"Our industry is operating in a fragile environment and there is no
assurance that all of our problems are behind us," it said. "Fiscal year 2006
will be a transition year that will set the stage for the future of the
company."
While not as severe, the company still lost an average of $1 million per
month this year. When a proposed sale of a plant fizzled, Delta Woodside
failed to raise some much-needed cash to pay down its debt.
The transition of 2006 turned into a date in bankruptcy court.
Reach Werner at (803) 771-8509.
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