NEW YORK — Flat fourth-quarter sales and a write-off from the Kmart bankruptcy decimated Delta Galil Industries Ltd.’s yearend and fiscal 2001 earnings.

The Tel Aviv, Israel-based intimate apparel maker reported a 78.6 percent contraction in fourth-quarter net income to $1.34 million, or 7 cents a diluted share, from $6.3 million, or 34 cents, from the year-ago period.

For the three months ended Dec. 31, the company reported a 0.4 percent increase in sales to $138.3 million from $137.8 million in the comparable 2000 period.

Delta made a provision of $3.4 million to write off doubtful accounts receivable from Kmart Corp. as a result of that company’s filing for Chapter 11 bankruptcy protection. Excluding the charge, Delta would have reported a less-dramatic drop in quarterly net income to $3.4 million, or 18 cents.

As part of its response to the disappointing results, Delta will make certain organizational changes to improve efficiencies.

“As a result of our explosive sales growth over the past few years and changes in today’s dynamic marketplace, Delta needs to reposition itself to improve potential growth with customers,” said chairman Dov Lautman. “The reorganization will include a new managerial structure divided geographically, instead of by product category. This change will contribute to building the infrastructure for Delta’s future growth by enabling us to answer the complexity and flexibility demanded by today’s marketplace and improve operating margins and profitability.”

Overall, in fiscal 2001, the company reported a 48.7 percent decline in net income to $11.4 million, or 60 cents, compared with $22.3 million, or $1.25, the previous year. Excluding the aforementioned Kmart charge, Delta would have reported net income of $14 million, or 73 cents. Sales rose 28.6 percent to $558.8 million from $434.4 million the previous year.

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