PART I
ITEM 1. BUSINESS
(a) General Development of Business
Hampton Industries, Inc. and its subsidiaries and divisions (herein
referred to as "Hampton" or "Company") are engaged in the business of
manufacturing and selling wearing apparel.
Hampton, a North Carolina Corporation, is the successor of several
predecessor corporations, the first of which was incorporated in 1925 in
the State of New York under the name of Hampton Shirt Co.
(b) Financial Information About Industry Segments
Hampton has been engaged in one line of business in excess of five
years; reference is made to the financial statements included herein under
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
(c ) Narrative Description of Business
Hampton's principal products consist of men's and boy's shirts and
men's and women's sleepwear, which are produced domestically and in Central
America. In addition, sport and dress shirts, sweaters, activewear,
outerwear and swimtrunks, for both men and boys are imported from
unaffiliated sources located primarily in the Far East.
Hampton's products are principally sold at retail under private
labels. However, the company also manufactures and sells apparel under the
"Nautica for Boy's" and "Rawlings" trademarks as licensees and under the
Company owned tradenames, "Le Tigre" and "Campus" for men and boys
and the "Kaynee" for boys, which are. Branded apparel is becoming a
more important part of the success of the Company's business.
New license agreements have been entered into with "Ron Chereskin" for
men's sleepwear and loungewear, "Bugle Boy" for men's and boy's
loungewear, "Apex" for activewear, "Dickies" for casual/rugged sportswear
and Warner Brothers for novelty apparel. The "Rawlings" license has been
expanded to include boy's activewear. These new lines will contribute
moderately to sales in 1997.
Hampton designs its line of apparel. The Company's products are
manufactured from various combinations of man-made and natural fibers which
are readily available from a number of sources both domestically and
imported. Hampton has no long-term contracts with any supplier. The
average domestic production cycle is approximately five weeks from the time
the fabric is scheduled for cutting until the finished product is received
at the Company's distribution centers. The production cycle for goods
imported or manufactured in Central America is approximately ten weeks,
while the lead time for goods imported from the Far East can be as long as
six months. The design and production specifications for imported products
are provided to the manufacturers by Hampton.
I-1
Hampton's products are sold throughout the United States, to
approximately 2,750 customers including most of the country's leading
national and regional retail chains and department stores. Sales are made
by a nationwide sales staff of 70 salesmen, including 39 field
representatives at the end of 1996. Sales offices are located in New York,
and at the Company's executive and administrative headquarters in Kinston,
North Carolina. As of December 28, 1996 the Company had approximately 960
full-time associates domestically and approximately 405 associates in the
Caribbean. Hampton is not a party to any collective bargaining agreements,
has never experienced a strike or work stoppage, and believes that it
maintains satisfactory relationships with its associates.
<TABLE>
Hampton's largest customers accounted for approximately 31% and 34% of
consolidated sales volume in 1996 and 1995, respectively. Wal-Mart Stores,
Inc. and J.C. Penney Co. are large multi-outlet retail chains which
purchase a broad range of Hampton's products through a variety of their
merchandising departments. There have been no contracts with either
customer for continued business. The following is a breakdown of their
respective sales volume:
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Wal-Mart Stores, Inc. 16% 18% 17%
J.C. Penney Co. 15% 16% 18%
</TABLE>
<TABLE>
The following is a breakdown of sales by product categories:
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Men's shirts and sportswear 40% 50% 60%
Boy's shirts and sportswear 26% 19% 13%
Ladies' sleepwear 13% 9% 10%
Men's sleepwear 12% 13% 11%
Activewear 7% 7% 2%
Other 2% 2% 4%
</TABLE>
Products sold under "License" accounted for 23%, 14% and 3% of the
consolidated sales for 1996 and the prior two years, respectively.
<TABLE>
The following reflects the Company's sourcing of its products:
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Imports 56% 47% 43%
Caribbean 24% 24% 16%
Domestic 20% 29% 41%
All foreign purchases are contracted for in U.S. Dollars; therefore,
there is no currency risk.
As of March 5, 1997, Hampton's backlog of orders was approximately
$86,701,000 as compared to $86,471,000 on the same date in 1995. The
orders are believed to be firm and are expected to be shipped during the
current fiscal year.
I-2
The apparel industry is highly competitive as to style, quality and
price. Hampton competes with many other manufactures and suppliers as to
each of its products.
</TABLE>
<TABLE>
EXECUTIVE OFFICERS OF REGISTRANT
<CAPTION>
Name and age Office First year
elected
<S> <C> <C>
David Fuchs (72) Chairman and Chief Executive Officer 1975
Steven Fuchs (37) President 1996
Paul Chused (53) Vice President 1996
Roger M. Eichel (48) Vice President and Secretary 1993
Robert J. Stiehl, Jr. (61) Executive Vice President - Operations,
Chief Financial Officer, Treasurer
and Assistant Secretary 1995
Frank Simms (48) Vice President of Finance 1995
Leo Tutak (57) Vice President - Import Operations 1995
</TABLE>
Each of the above named was elected for one year or until the election
of a successor. The next election shall take place immediately following
the Annual Meeting of Shareholders to be held on May 22, 1997. There is no
arrangement or understanding between any of the above pursuant to which
they were elected as Officers.
All of the Executive Officers above named, except Robert J. Stiehl,
Jr., Frank Simms and Leo Tutak, are related family members. Steven Fuchs
is the son of David Fuchs, Roger Eichel is David Fuchs' son-in-law and Paul
Chused is the nephew of David Fuchs and the cousin of Steven Fuchs.
Mr. David Fuchs has held his current executive position for in excess
of five years. Mr. Steven Fuchs was elected to his present position in
January, 1996. From 1993 to January 1996, Mr. Steven Fuchs was the
President of Hampton Shirt Co. ( a subsidiary). Prior to 1993, he held
various positions with the Company. Paul Chused was elected Vice President
in January, 1996. From May, 1994 to January, 1996, Mr. Chused was
President. From August, 1993 to May, 1994, he was Senior Vice President
and Assistant Secretary and prior thereto, he was Vice President -
Operations of the Company. Mr. Roger Eichel was elected to his present
position in May, 1993 and prior thereto, he was Secretary of the Company.
Mr. Robert J. Stiehl, Jr. Was elected to his present position in January
1995. For in excess of five years prior thereto, he was Vice President -
Finance. Mr. Frank Simms was elected Vice President of Finance in May
1995. Prior to joining Hampton he was the Chief Financial Officer of
Riverside Manufacturing Co. for in excess of five years. Mr. Tutak was
elected to his present position in January, 1995. For in excess of five
years prior thereto, he was Vice President of one of the Company's
subsidiaries.
David Fuchs, Steven Fuchs and Paul Chused are also Directors of the
Company.
I-3
ITEM 2. PROPERTIES
Hampton operates three domestic manufacturing plants, one
manufacturing plant in the Caribbean and three domestic distribution
centers. The Company's sales and merchandising personnel occupy a building
located in New York city. Hampton's principal executive and administrative
offices are located in North Carolina. All of these properties are owned
by the Company. The New York office is subject to a mortgage loan. The
purchase of the executive and administrative office located in North
Carolina was financed through an Industrial Revenue Bond issued through a
state governmental agency. All bonds and mortgages are
guaranteed by the Company and are secured by the underlying assets.
The Company believes that its plants and facilities are in good repair
and adequate in respect to its foreseeable needs. The machinery and
equipment utilized in its facilities are considered by management to be
modern and efficient.
ITEM 3. LEGAL PROCEEDINGS
None significant
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
(a) Principal Market
The principal market on which Hampton's Common Stock is traded is the
American Stock Exchange under the symbol HAI.
(b) Stock Price and Dividend Information
<TABLE>
The table below presents the high and low market prices for Hampton's
Common Stock.
<CAPTION>
QUARTER ENDED
1996 1995
3/30 6/29 9/28 12/28 4/1 7/1 9/30 12/30
<S> <C> <C> <C> <C> <C> <C> <C> <C>
High 5 1/8 4 7/8 5 3/8 5 7/8 7 3/8 6 7/8 6 1/4 5 7/8
Low 4 5/16 4 1/4 4 1/4 4 3/4 4 3/4 5 3/4 4 7/8 4 7/8
</TABLE>
The Company has not paid a cash dividend on its common stock since
1973. The present credit agreement includes restrictive covenants which,
among other things, prevent the payment of cash dividends.
I-4
( c) Approximate Number of Holders of Common Stock
The number of holders of record of Hampton's Common Stock as of
December 28, 1996 was approximately 372, including, as a single holder of
record, brokerage firms having more than one stockholder account.
<TABLE>
ITEM 6. SELECTED FINANCIAL DATA
(In thousands except per common share amounts)
<FN>
<CAPTION>
1996 1995 1994(1)F1> 1993 1992
<S> <C> <C> <C> <C> <C>
YEAR ENDED:
Net Sales $160,684 $184,593 $172,024 $196,438 $203,736
Net earnings (loss) 2,709 (2,164) 1,002 (2,433) 1,438
Earnings (loss) per
common share $.59 $(.47) $.22 $(.53) $.31
AT YEAR END:
Total assets $74,421 $94,271 $90,616 $90,168 $118,942
Long-term debt 5,103 5,305 17,002 20,722 20,993
Working capital 40,158 37,501 49,206 48,642 49,501
Stockholders' equity $52,820 $50,111 $52,275 $51,273 $53,707
<F1>
(1) 53 Weeks
</TABLE>
The Company has not paid cash dividends on its common stock since
1973.
The Company uses the LIFO method of costing principally all of its
inventories to more fairly present the results of operations by matching
current costs with current revenues. The LIFO method had the effect of
increasing net earnings by $504,800 ($.11 per share) in 1996, $153,800
($.03 per share) in 1995 and $64,400 ($.01 per share) in 1994. The income
realized as a result of inventory liquidation was $668,200 ($.15 per share)
in 1996, was not significant in 1995 and $510,400 ($.11 per share) in 1994.
I-5
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analyses of the consolidated results of
operations and financil conditions should be read in conjunction with the
accompanying financial statements and related notes to provide additional
information concerning the Company's financial activities and conditions.
Results of Operations
<TABLE>
The following table summarizes the operating data for the periods
indicated:
<CAPTION>
YEAR ENDED
December December December
28, 30, 31,
1996 1995 1994(1)<F2>
<S> <C> <C> <C>
Net sales 100.0% 100.0% 100.0%
Cost of products sold 78.2 83.1 81.4
Selling, general and
administrative 18.2 16.4 16.6
Net rental income ( 0.4) ( 0.4) ( 0.3)
Gain on asset sales ( 0.4) ( 0.4) ( 0.2)
Provision for restructuring
costs - 0.7 1.3
Net other income ( 0.1) ( 1.1)
Equity in loss of unconsolidated
subsidiaries - - 0.1
Operating income 4.5 0.6 2.2
Interest 2.0 2.2 1.4
Earnings (loss) before income
taxes 2.5 (1.6) 0.8
Net earnings (loss) 1.7% (1.2)% 0.6%
<F2>
(1) 53 weeks
</TABLE>
Fiscal 1996 Versus Fiscal 1995
Net sales for 1996 declined by 13.0%. A decline of 17.4% in units
shipped was partially offset by an increase of 5.5% in the average selling
price. The increase in average selling price is primarily due to the
greater influence of the "branded" product sales.
Gross profit margins increased by $3,806,000 for 1996. As a percent
of sales this represented a increase of 4.9% from 16.9% in 1995 to 21.8% in
1996. Two programs that generated approximately $16,000,000 in sales during
1995 were discontinued by the Company. These programs were not profitable
and their elimination contributed to the improvement in the margin.
Selling, general and administrative expenses declined by $957,000 in
1996. However, as a percent of sales, there was an increase to 18.2% in
1996 from 16.4% in 1995. "Barnded" products, for which royalty and
advertising expenses are recorded, increased to 23.3% in 1996 from 14.2% of
sales in 1995 and, as a result, royalty and advertising expenses were 2.1%
of sales in 1996 and 1.4% in 1995 increasing by $823,000 in 1996.
I-6
In 1995 the Company closed two manufacturing facilities which
completed the Company's program of reducing excess domestic production
capacity begun in 1991. The closing costs related thereto are included in
the statement of operations as Provision for restructuring costs. The
restructuring reduced the work force by approximately 400 associates or 25%
of total employees. Plant closing costs totaled approximately $1,211,000
representing severance pay, payroll taxes and a noncash charge of $610,000
relating to the write-down of manufacturing equipment to estimated
realizable value.
A portion of the Company's corporate office building in New York is
leased to third parties. Rental income (net of related expenses) is
classified separately.
Interest expense decreased by $908,000 from 1995. This decline is the
result of a lower level of borrowing during the year which occurred from
better management of receivables and inventory levels.
The effective tax rate increased to 31.6% in 1996 from a benefit rate
of 24.9% in 1995. The effective rate in 1995 was impacted by the loss of
certain future state tax benefits. The 1996 effective rate is less than
the statutory rate due primarily to the utilization of certain carryover
job tax credits and alternative minimum tax carryovers.
Fiscal 1995 Versus Fiscal 1994
Net sales for 1995 increased by approximately 7%. A decline of 4% in
units shipped was offset by an increase of 12% in average selling price.
The increase in average selling price is primarily due to the greater
influence of the "branded" product sales.
Profit margin declined by $871,000 for 1995. As a percent of sales
this represented a decline of 1.7%. Two specific customer programs were no
longer profitable and have been discontinued. These two programs generated
approximately $16,000,000 of sales in 1995 and will not be replaced in
1996. In addition, certain sales divisions were discontinued that resulted
in the liquidation and mark down of certain inventories.
Selling, general and administrative expenses declined to 16.4% of
sales for 1995 from 16.7% in 1994.
In 1995 the Company closed two manufacturing facilities which
completed the Company's program of reducing excess domestic production
capacity begun in 1991. The closing costs related thereto are included in
the statement of operations as a provision for restructuring costs. The
restructuring reduced the work force by approximately 400 associates or 25%
of total employees. Plant closing costs totaled approximately $1,211,000
representing severance pay, payroll taxes and a noncash charge of $610,000
relating to the write-down of the manufacturing equipment to estimated
realizable value.
Interest expense increased by $1,638,000 from 1994. Approximately two
thirds of this increase was due to a higher level of borrowing with the
remainder due to higher effective interest rates. The higher level of
borrowing was the result of certain delays in order delivery dates from our
customers which increased inventory levels during the course of the year,
as well as, the higher level of inventory required to support the growing
sales volume of the "Branded" products.
The effective tax benefit rate decreased to 24.9% in 1995 from the
effective tax rate expense of 30.6% in 1994 primarily as a result of the
loss of future state tax benefits that were generated in the current year.
I-7
Liquidity and Capital Resources
On May 3, 1996, Hampton entered into a credit facility with BNY
Financial Corporation, as Agent ("New Facility"). The New Facility
provides for a maximum line of credit of $100,000,000, which includes both
direct loans and letters of credit. The initial proceeds of the New
Facility were used to repay the outstanding indebtedness under the
Company's previously existing bank line of credit.
Availability under the New Facility is based on a formula of eligible
accounts receivable and eligible inventory and provides for a seasonal
overadvance of up to $17,000,000 within the $100,000,000 maximum line of
credit. Direct borrowings bear interest at the London Interbank Offered
Rate plus the applicable margin (as defined in the New Facility) or the
Prime Rate, at the option of the Company. Borrowings are collateralized by
accounts receivable, inventory and general intangibles of the Company and
its subsidiaries. The New Facility expires in May 1999.
The New Facility contains financial covenants, including but not
limited to, tangible net worth and interest coverage, limits fixed asset
purchases and does not allow for the payment of cash dividends. The
Company is not rrequired to maintain compensating balances, however, it is
required to pay a fee off 1/4 of 1% per annum on the unused portion of the
total facility plus certain other administrative costs.
Outstanding borrowings under the New Facility amounted to $400,000 at
December 28, 1996 as compared to $19,600,000 in 1995. Net working capital
as of the end of 1996 was $40,158,000 as compared to $37,501,000 in 1995.
The working capital ratio as of the end of 1996 was 4.5:1 as compared to
2.1:1 in 1995.
During 1996, cash provided by operations totaled approximately
$22,000,000 compared to $9,600,000 being used in 1995. The reduction of
inventory levels, improved earnings and better management of receivables
contributed to this positive result.
Additions to plant, property and equipment which represented normal
replacement and upgrading of equipment were approximately $600,000 in both
1996 and 1995. Capital expenditures for 1997 are expected to be higher
than 1996 and will be financed from operations.
The increase in other assets is due to deferred financing costs
associated with the New Facility, which is being amortized over the life of
the credit agreement and unamortized in-store fixture cost which are being
amortized over 36 months.
In 1993, the Company entered into two joint ventures in Central
America for the purpose of producing apparel under the Caribbean Basin
Incentive program or as imports. Effective December 1, 1996
purchased the 50% ownership interest of its joint venture partner in one of
the ventures for $1,267,000. This entity has been consolidated since the
date of acquisition. This transaction resulted in recording goodwill of
$240,000 which is being amortized over 10 years. The Company continues to
maintain a 50% interest in the other joint venture.
I-8
The positive cash flow generated from operating activities enabled the
Company to reduce its bank debt by approximately $20,221,000.
At December 28, 1996, the Company had unused lines of credit of
$21,110,000 for direct borrowings or this issuance of letters of credit.
This availability is in addition to the outstanding direct borrowings of
$400,000 and letters of credit of $21,908,000 outstanding at the end of
1996.
The credit that is available under the New Facility, together with the
cash expected to be provided from operations, is adequate to meet the
Company's financing needs for the foreseeable future.
I-9
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders of Hampton Industries, Inc.
We have audited the accompanying consolidated balance sheets of Hampton
Industries, Inc. and subsidiaries as of December 28, 1996 and December 30,
1995, and the related consolidated statements of operations, shareholders'
equity and cash flows for the years ended December 28, 1996, December 30,
1995 and December 31, 1994. Our audits also included the financial
statement schedule listed in the index at Item 14 (a)(2). These financial
statements and financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Hampton Industries, Inc. and
subsidiaries as of December 28, 1996 and December 30, 1995, and the results
of their operations and their cash flows for the years ended December 28,
1996, December 30, 1995 and December 31, 1994 in conformity with generally
accepted accounting principles. Also, in our opinion, the financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, present fairly in all material
respects the information set forth therein.
Deloitte & Touche LLP
March 12, 1997
New York, New York
I-10
<TABLE>
HAMPTON INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
<CAPTION>
December December
28, 30,
1996 1995
------------ -----------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 310,520 $ 351,982
Accounts receivable, less reserves
for doubtful accountS and allowances of
$819,000 in 1996 and $1,200,000 in 1995. 18,967,447 22,283,271
Inventories (Note B)<F3> 30,748,132 46,314,931
Deferred income tax assets (Note D)<F4> 532,078 1,106,963
Refundable income taxes 905,833 1,083,075
Other current assets 132,933 207,748
------------ -----------
Total current assets 51,596,943 71,347,970
Property, plant and equipment - net
(Notes C<F5> and E<F6>) 19,185,350 19,601,188
Assets held for disposal
- net (Note J)<F10> 1,200,684 937,916
Investments in and advances to
unconsolidated affiliates 823,771 1,675,853
Other assets 1,613,792 707,998
------------ -----------
$ 74,420,540 $94,270,925
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable - banks and current
maturities of long-term debt
(Note E)<F6> $593,332 $20,612,673
Accounts payable 8,412,730 10,896,560
Accrued liabilities (Note L)<F8> 2,432,776 2,289,907
Income taxes (Note D)<F4> 48,183
------------ -----------
Total current liabilities 11,438,838 33,847,323
Deferred income tax liabilities
(Note D)<F4> 1,034,519 948,662
Long-term debt (Note E)<F6> 5,102,991 5,304,540
Retirement plan obligations
(Note G)<F7> 4,024,561 4,059,287
------------ -----------
21,600,909 44,159,812
Commitments and
contingencies (Note E)<F6>
Stockholders' equity (Notes E<F6>
and F<F9>) Common stock, $1 par value
- authorized 10,000,000 shares; issued
5,191,454 shares 5,191,454 5,191,454
Additional paid-in capital 34,018,908 34,018,908
Retained earnings 18,486,613 15,778,095
------------ -----------
57,696,975 54,988,457
Less cost of common stock held in
treasury - 605,825 shares 4,877,344 4,877,344
------------ -----------
Total stockholders' equity 52,819,631 50,111,113
------------ -----------
$ 74,420,540 $94,270,925
=========== ===========
</TABLE>
See notes to consolidated financial statements.
I-11
<TABLE>
HAMPTON INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
YEAR ENDED
December 28, December 30, December 31,
1996 1995 1994<F12>
------------ ------------ ------------
<S> <C> <C> <C>
Net sales $160,683,890 $184,592,840 $172,024,161
Cost and expenses:
Cost of products sold (Note B)<F3> 125,703,090 153,418,347 139,979,052
Selling, general and
administrative 29,264,129 30,221,234 28,659,164
Provision for restructuring
cost (Note J)<F10> - 1,211,077 2,278,480
Equity in loss (earnings) of
unconsolidated affiliates 12,574 (116,618) 186,412
Rental income - net (666,181) (632,869) (600,834)
Gain on disposal of fixed assets (656,191) (683,102) (384,832)
Other income - net (108,638) - -
Customs duty refunds (Note K)<F11> - (27,925) (1,982,791)
------------ ------------ ------------
153,548,783 183,390,144 168,134,651
------------ ------------ ------------
Operating income 7,135,107 1,202,696 3,889,510
Interest 3,176,589 4,084,949 2,446,486
------------ ------------ ------------
Earnings (loss) before income tax
provision (benefit) 3,958,518 (2,882,253) 1,443,024
Income tax provision (benefit)
(Note D)<F4>: 1,250,000 (718,400) 441,300
------------ ------------ ------------
Net earnings (loss) $ 2,708,518 $(2,163,853) $ 1,001,724
============ ============ ============
Earnings (loss) per common share $.59 $(.47) $.22
=== ==== ===
Average common shares outstanding 4,585,629 4,585,629 4,585,629
======= ======= =======
<F12>
(1) 53 weeks
</TABLE>
See notes to consolidated financial statements.
I-12
<TABLE>
HAMPTON INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<CAPTION>
Common stock Additional
paid-in Retained
Shares Amount capital earnings
--------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Balance, December 25, 1993 5,191,454 $5,191,454 $34,018,908 $16,940,224
Net earnings 1,001,724
--------- ---------- ---------- -----------
Balance, December 31, 1994 5,191,454 5,191,454 34,018,908 17,941,948
Net loss (2,163,853)
--------- ---------- ---------- -----------
Balance, December 30, 1995 5,191,454 5,191,454 34,018,908 15,778,095
Net earnings 2,708,518
--------- ---------- ---------- -----------
Balance, December 28, 1996 5,191,454 $5,191,454 $34,018,908 $18,486,613
<CAPTION>
Treasury stock
at cost
Shares Amount
------- ----------
<S> <C> <C>
Balance, December 25, 1993 605,825 $4,877,344
Net earnings
------- ----------
Balance, December 31, 1994 605,825 4,877,344
Net loss
------- ----------
Balance, December 30, 1995 605,825 4,877,344
Net earnings
------- ----------
Balance, December 28, 1996 605,825 $4,877,344
======= ==========
</TABLE>
See notes to consolidated financial statements.
I-13
<TABLE>
HAMPTON INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
YEAR ENDED
December 28, December 30, December 31,
1996 1995 1994(1)<F13>
------------ ------------ ------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net earnings (loss) $ 2,708,518 $(2,163,853) $ 1,001,724
Adjustments to reconcile net
earnings (loss) to net cash
provided (used in) operating
activities:
Amortization 264,751 108,293 59,982
Depreciation 2,326,723 2,855,091 3,143,827
Deferred income taxes 660,742 (16,343) (600,658)
LIFO credit (737,743) (204,800) ( 92,747)
Reserve for doubtful accounts and
allowances (381,002) 1,210,678 249,428
Retirement plan obligations (34,726) (132,503) 650,674
Gain on sale of fixed assets (656,191) (683,102) (779,581)
Equity in loss (earnings) of
unconsolidated affiliates 12,574 (116,618) 186,412
Provision for restructuring
costs (587,000) 45,083 1,665,170
Changes in current assets and
current liabilities:
Accounts receivable 3,756,816 (1,233,862) 1,107,534
Inventories on a FIFO basis 16,348,512 (7,137,886) (3,830,152)
Other current assets 259,986 (439,667) 94,105
Accounts payable (2,550,235) 716,803 1,072,197
Accrued liabilities 729,867 (1,334,993) 516,889
Income taxes (48,183) (1,066,987) 827,082
------------ ------------ ------------
NET CASH (USED IN) PROVIDED BY
OPERATING ACTIVITIES 22,073,409 (9,594,666) 5,271,886
------------ ------------ ------------
INVESTING ACTIVITIES:
Additions to fixed assets (582,009) (619,524) (1,077,567)
Proceeds received from sale of
fixed assets 1,183,222 1,645,124 1,658,357
Increase in investments in and
advances to unconsolidated
subsidiaries (185,835) (26,708) (1,445,292)
Increase in other assets (1,042,359) (34,791) (332,708)
Joint venture purchase (1,267,000) - -
------------ ------------ -----------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES: (1,893,981) 964,101 (1,197,210)
------------ ------------ -----------
FINANCING ACTIVITIES:
Additions to debt - Banks - 48,295,000 24,675,000
- Other - - 3,900,000
Payments on debt - Banks (19,200,356) (39,380,000) (31,230,000)
- Other (1,020,534) (1,064,658) (981,767)
------------ ------------ ------------
NET CASH (USED IN) PROVIDED BY
FINANCING ACTIVITIES (20,220,890) 7,850,342 (3,636,767)
------------ ------------ -----------
(DECREASE) INCREASE IN CASH (41,462) (780,223) 437,909
CASH AT BEGINNING OF PERIOD 351,982 1,132,205 694,296
------------ ------------ -----------
CASH AT END OF PERIOD $ 310,520 $ 351,982 $1,132,205
========= ========= ==========
Cash paid during the period
-Interest $ 2,700,000 $ 3,901,000 $2,431,000
========= ========== =========
-Income taxes $ 1,485,000 $ 1,544,000 $ 177,000
========= ========== =========
<F13>
(1) 53 Weeks
</TABLE>
See notes to consolidated financial statements.
I-14
HAMPTON INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED
DECEMBER 28, 1996, DECEMBER 30, 1995 AND DECEMBER 31, 1994
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business
The Company is engaged in the business of manufacturing and selling
wearing apparel. The principal products consist of men's and boy's shirts
and men's and women's sleepwear, which are produced domestically and in
Central America. In addition, Sport and dress shirts, sweaters,
activewear, outerwear and swimtrunks, for both men and boys are imported
from unaffiliated sources located primarily in the Far East.
Principles of Consolidation
The consolidated financial statements include the accounts of the
Company and its subsidiaries, all of which are wholly-owned. All
significant intercompany profits, transactions and balances have been
eliminated.
The Company has an investment in a 50% owned but not controlled entity
which is accounted for by the equity method.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Inventories
Inventories are carried at the lower of cost or market value. As
described in Note B, the cost of substantially all inventory is determined
by the last-in, first-out (LIFO) method.
Property, Plant and Equipment
Expenditures for buildings, equipment and improvements are capitalized
and depreciated or amortized on a straight-line basis over their estimated
useful lives. Estimated useful lives of assets are based upon the
following ranges: land improvements, 30 years, buildings and leasehold
improvements, 30 to 35 years, machinery and equipment, 3 to 15 years and
furniture and fixtures, 5 to 10 years.
In-Store Displays
The costs for in-store displays for certain customers are borne by the
Company in whole or in part. Such cost are capitalized and amortized over
a thirty-six month period.
Deferred Financing Costs
The costs associated with obtaining and closing the Company's New
Credit facility have been deferred and are being amortized over the term of
the agreement (Note E)<F6>.
I-15
Long-Lived Assets
In March 1995, the Financial Accounting Standards Board issued
Statement Number 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of." This statement is effective
for fiscal years beginning after December 15, 1995. The Company has
adopted this statement and the impact has not been significant.
Revenue Recognition
Sales revenue is recognized upon shipment of product, which is when
title to the product passes to the customer.
Income Taxes
Deferred income taxes are provided to reflect the tax effect of
temporary differences between financial statement income and taxable income
in accordance with the provisions of Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes".
Earnings (Loss) per Common Share
Earnings (loss) per common share is computed by dividing net earnings
(loss) by the weighted average number of common shares outstanding during
each period.
Stock Options and Warrants
In October 1995, the Financial Accounting Standards Board issued SFAS
No. 123, "Accounting for Stock-Based Compensation". The standard
encourages, but does not require, companies to recognize compensation
expense of grants for stock, stock options and other equity instruments to
employees based on fair value accounting rules. The Company has elected to
continue to follow the provisions of APB Opinion 25 and related
Interpretations in accounting for employee stock options (Note F)<F9>.
Fair Value of Financial Instruments
During October 1994, the Financial Accounting Standards Board issued
SFAS 107, "Disclosure about Fair Value of Financial Instruments". This
statement requires the disclosure of estimated fair values for all
financial instruments for which it is practicable to estimate fair value.
For financial instruments including cash, accounts receivable and
payable, accruals, notes payable - banks and current maturities of long-
term debt, it was assumed that the carrying amount approximated fair value
because of their short maturity.
The carrying amount of the non-current portion of mortgage notes due
through the year 2000, all of which bear interest at floating rates, are
also assumed to approximate their fair values.
Investments In and Advances to Unconsolidated Affiliates
The investment in the remaining joint venture is carried on the equity
basis, which approximates the Company's equity in the unconsolidated
entity's underlying net book value. Advances receivable from the
unconsolidated entity were $478,764 at December 28, 1996.
I-16
<TABLE>
<F3>
B. INVENTORIES
<CAPTION>
1996 1995
<S> <C> <C>
Finished goods $ 22,295,109 $ 37,092,349
Work-in-process 3,840,966 4,041,951
Piece goods 3,734,936 4,118,109
Supplies and other 877,121 1,062,522
------------- ------------
$ 30,748,132 $ 46,314,931
========== ==========
</TABLE>
Principally all inventories are valued at the lower of last-in, first-
out (LIFO) cost or market. Information related to the first-in, first-out
(FIFO) method may be useful in comparing operating results to those of
companies not on the LIFO method. On a supplemental basis, if inventories
had been valued at the lower of FIFO cost or market, inventories at
December 28, 1996 and December 30, 1995 would have been approximately
$35,100,000 and $51,400,000, respectively. The LIFO valuation method had
the effect of increasing net earnings by $504,800 ($.11 per share) in 1996,
$153,800 ($.03 per share) in 1995 and $64,400 ($.01 per share) in 1994.
The income realized as a result of inventory liquidation approximated
$668,200 ($.15 per share) in 1996, was not significant in 1995 and
$510,400($.11 per share) in 1994.
Included in finished goods are inventory in transit of $4,453,000 in
1996 and $7,139,300 in 1995.
<TABLE>
<F5>
C. PROPERTY, PLANT AND EQUIPMENT
<CAPTION.
1996 1995
<S> <C> <C>
Land and land improvements $ 2,851,282 $ 2,591,277
Buildings and leasehold improvements 23,249,576 21,341,229
Machinery and equipment 15,247,345 16,004,034
Furniture and fixtures 1,411,016 1,405,014
---------- ----------
42,759,219 41,341,554
Less accumulated depreciation and
amortization 23,573,869 21,740,366
---------- ----------
$19,185,350 $19,601,188
========== ==========
</TABLE>
I-17
<TABLE>
<F4>
D. INCOME TAXES
Components of income tax provision (benefit) reflected in the
consolidated statements of operations are as follows:
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Current:
Federal $ 491,700 $ (874,400) $ 947,000
State and local 97,600 172,300 95,000
----------- ----------- -----------
589,300 (702,100) 1,042,000
Deferred:
Federal 665,200 (132,800) (380,000)
State and local (4,500) 116,500 (220,700)
----------- ----------- -----------
660,700 ( 16,300) (600,700)
----------- ----------- -----------
$ 1,250,000 $ (718,400) $ 441,300
========== ======== ========
</TABLE>
The following is a reconciliation of the statutory federal income tax
rate applied to pre-tax accounting earnings (loss), with the income tax
provision (benefit) in the consolidated statements of operations:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Income tax expense (benefit) at
the statutory rate (34%) $1,345,900 $(980,000) $490,600
Increase (decrease) resulting
from:
State and local income taxes,
net of federal income tax 61,400 190,600 (73,600)
Utilization of jobs credit
carryovers (216,100) - -
Non-deductible expenses 31,000 - -
Prior year over accruals (82,400) - -
Other, net 110,200 71,000 24,300
---------- ---------- --------
Total income tax provision $1,250,000 $(718,400) $441,300
========== ========= ========
</TABLE>
I-18
<TABLE>
The components of deferred taxes included in the balance sheet as of
December 28, 1996 and December 30, 1995 are as follows:
<CAPTION>
1996 1995
<S> <C> <C>
Deferred income tax assets:
Net operating loss carryforwards $ 753,438 $ 927,964
Restructuring costs 104,607 281,914
Allowance for doubtful accounts 27,229 203,425
Inventory 251,843 456,906
Charitable contribution carryforwards 17,852 84,176
Other (2,686) (1,154)
----------- ------------
1,152,283 1,953,231
Valuation allowance (620,206) (846,268)
----------- ------------
$ 532,077 $ 1,106,963
=========== ============
Deferred income tax liabilities:
Depreciation $2,818,053 $3,046,797
Deferred compensation (1,573,704) (1,560,637)
Alternative minimum tax credit - ( 226,648)
Trademarks (156,922) ( 161,067)
Equity in profit (loss) of joint
venture (54,174) ( 98,474)
Jobs credit carryforwards - ( 52,556)
Other 1,252 1,247
----------- -----------
$1,034,505 $ 948,662
=========== ===========
</TABLE
Net operating loss carryforwards for state income tax
purposes expire as follows: $2,242,800 in 1997, $3,085,300 in
1998, $1,091,400 in 1999, $3,505,300 in 2000, $1,508,500 in 2001,
$442,200 in 2007, $667,300 in 2008 and $429,200 in 2010.
I-19
<F6>
E. LONG TERM DEBT
</TABLE>
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Revolving credit facility (i)<F14> $ 399,644 $19,600,000
8 1/4% mortgage notes, due monthly
to 1996 (ii)<F15> - 395,993
Capitalized lease obligations (iii)<F16> 1,916,679 2,250,011
Mortgage note, due quarterly
to 2000 (iii)<F16> 3,380,000 3,640,000
Other 31,209
---------- -----------
5,696,323 25,917,213
Less amount due in one year 593,332 20,612,673
---------- -----------
$5,102,991 $ 5,304,540
========== ===========
</TABLE>
<TABLE>
Annual maturities of debt are as follows:
<S> <C>
1997 _______ $ 593,332
1998 _______ 593,332
1999 _______ 1,909,659
2000 _______ 2,600,000
$ 5,696,323
=========
</TABLE>
<F14>
(i) On May 3, 1996, the Company entered into a new credit facility with
BNY Financial Corporation, as Agent ("New Facility"). The New facility
provides for a maximum line of credit of $100,000,000, which includes both
direct loans and letters of credit. The initial proceeds of the New
Facility were used to repay the outstanding indebtedness under the
Company's previously existing bank line of credit.
Availability under the New Facility is based on a formula of eligible
accounts receivable and eligible inventory and provides for a seasonal
overadvance of up to $17,500,000 within the $100,000,000 maximum line of
credit. Direct borrowings bear interest at the London Interbank Offered
Rate, plus the applicable margin (as defined in the New Facility) or the
Prime Rate, at the option of the Company. Borrowings are collateralized by
accounts receivable, inventory and general intangibles of the Company and
its subsidiaries and the New Facility expires in May 1999.
The New Facility contains financial covenants, including but not
limited to, tangible net worth and interest coverage, restricts fixed asset
purchases and does not allow for the payment of cash dividends. The
Company is not required to maintain compensating balances, however, it is
required to pay a fee of 1/4% of 1% per annum on the unused portion of the
total facility and certain other administrative costs.
<F15>
(ii) The 8 1/4% mortgage notes were payable primarily to principal
stockholders of the Company and members of their families.
I-20
<F16>
(iii) The mortgage notes and capitalized lease obligations are
collateralized by building and property having a carrying value at December
28, 1996 of $8,178,867. The effective interest rate on the aggregate amount
of capitalized leases at December 28, 1996 was 5.34%. The effective
interest rate on the mortgage note due in 2000 at December 28, 1996 was
7.98%.
At December 28, 1996, letters of credit amounting to approximately
$21,908,300 were outstanding which relate to purchase commitments issued to
foreign suppliers of approximately $30,970,500.
<F9>
F. STOCKHOLDERS' EQUITY
Preferred Stock
The Company has authorized 14,140.5 shares of $7 cumulative First
Preferred Stock, par value of $100, none of which is issued.
In addition, the Company has authorized 1,000,000 shares of Second
Preferred Stock, par value of $1, none of which has been issued. The Board
of Directors is authorized to fix designations, relative rights,
preferences and limitations on the stock at the time of issuance.
Common Stock
In 1992, the stockholders approved a non-qualified stock option plan
(the "Plan") under which it has reserved 363,000 shares of common stock and
expires in 2002. The Plan is administered by a committee designated by the
board of directors. Options granted to eligible employees are exercisable
in increments of 20% annually. Stock to be offered under the Plan consists
of shares, whether authorized but unissued or reacquired by the Company, of
the common stock of the Company.
On May 30, 1996, options were granted for 279,500 shares at $4.50 per
share, the fair market value on the date of grant. The exercise price may
be paid in cash, common stock of the Company, or a combination thereof.
A summary of the changes in common stock options during 1996 is as
follows:
<TABLE>
<CAPTION>
Number of Price per
Shares Share
<S> <C> <C>
Outstanding at December 30, 1995 0 -
Granted 279,500 $4.50
Exercised - -
Canceled 4,500 -
-------- ------
Outstanding At December 28, 1996 275,000 $4.50
======== ======
</TABLE>
None of the stock options were exercisable at December 28, 1996.
I-21
The Company applies the provisions of APB Opinion 25 and related
Interpretations in accounting for its stock options. Accordingly, no
compensation cost has been recognized for the foregoing options. The
excess, if any, of the fair market value of shares on the measurement date
over the exercise price is charged to operations each year as the options
become exercisable. Had compensation cost for these options been
determined using the Black-Scholes option-pricing model described in FASB
Statement 123, the Company would have recorded aggregate compensation
expense of approximately $490,100 which would be expensed at the rate of
20% per annum over the option's vesting period. The assumptions used in
the option-pricing model include a risk-free interest rate of 6.7%,
expected life of 3 years and ten months and expected volatility of 39.25%.
The pro forma impact of following the provisions of FASB Statement 123 on
the Company's operations and income per share would be as follows:
<TABLE>
<CAPTION>
Fifty-two Weeks Ended
December 28, 1996
<S> <C>
Net income - as reported $ 2,708,518
============
- pro forma $ 2,670,038
============
Net income per common share
- as reported $.59
====
- pro forma $.58
====
</TABLE>
Net income per share has been calculated using the weighted average
shares outstanding during the periods.
<F7>
G. PROFIT SHARING PLANS
On December 31, 1995, the Company merged two qualified profit sharing
plans into a single plan (the Plan) that is in compliance with the
regulations of the Internal Revenue Service Code for qualification as a
401-K plan. The Plan covers all associates of the Company. During 1996,
the Company made a matching contribution of 40% of the deferral amount that
the associates elect to make (as limited by the Internal Revenue Service
Code) and has set the matching contribution rate for 1997 at 40%. The
Company has the option of changing the matching contribution each year, the
right to amend, modify or terminate the Plan. Company contributions to the
plan were $160,475 for 1996. Under the predecessor plans, the Company
contributions aggregated $248,000 and $446,000 for 1995 and 1994,
respectively.
The Company also maintains a Supplemental Retirement Plan for Key
Employees (the Supplemental Plan) to permit certain key associates to defer
receipt of current compensation in order to provide retirement and death
benefits on behalf of such associates. Company profit sharing credits are
determined at the discretion of the Board of Directors. Amounts of profit
sharing credits are vested in the same manner as vesting occurs under the
Company's Qualified Profit Sharing and Retirement Savings Plan. An annual
return equal to the Moody's AAA Corporate bond rate is added to each
participant deferred compensation account balance and employer profit
sharing credit account balance. The Company may provide supplemental
profit sharing credits to one or more active participants in the
Supplemental Plan, the amount of which shall be determined by the Board of
Directors in its sole and absolute discretion.
I-22
As of January 1, 1996, the participants in this Supplemental Plan were
no longer able to make salaried deferrals. The Company credited interest
and profit sharing credits to the participants as follows:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Interest $ 287,000 $ 285,000 $ 282,000
Profit sharing credits - $ 137,000 $ 224,000
</TABLE>
The Supplemental Plan is not intended to be a qualified plan under the
provisions of the Internal Revenue Code. It is intended to be unfunded
and, therefore, all compensation deferred under the Supplemental Plan is
held by the Company and commingled with its general assets.
H. SELECTED QUARTERLY DATA (UNAUDITED)
The following table sets forth selected quarterly financial
information for the fiscal years 1996 and 1995 (in thousands of dollars,
except per share amounts):
<TABLE>
<CAPTION>
NET EARNINGS
(LOSS)
NET GROSS PER
QUARTER ENDED SALES MARGIN AMOUNT SHARE
<S> <C> <C> <C> <C>
3-30-96 $ 35,936 $ 7,699 ($ 264) ($.06)
6-29-96 25,295 4,567 (1,184) (.26)
9-28-96 54,226 13,030 2,718 .59
12-28-96 45,227 9,685 1,438 .32
-------- -------- -------- ------
Y E A R $160,684 $ 34,981 $ 2,709 $.59
======= ======= ====== ====
<CAPTION>
NET EARNINGS
(LOSS)
NET GROSS PER
QUARTER ENDED SALES MARGIN AMOUNT SHARE
<S> <C> <C> <C> <C>
4-1-95 $ 40,082 $ 7,908 ($ 186) ($.04)
7-1-95 25,055 3,779 (3,496) (.76)
9-30-95 64,095 12,334 1,751 .38
12-30-95 55,351 7,153 (233) (.05)
-------- -------- -------- ------
Y E A R $184,593 $31,174 $(2,164) $(.47)
======= ======= ====== ====
</TABLE>
I. CONCENTRATION OF CREDIT RISK
Trade receivables potentially subject the Company to credit risk. The
Company extends credit to its customers based upon an evaluation of the
customer's financial condition and credit history and generally does not
require collateral. The Company has historically incurred minimal credit
losses.
The Company's broad range of customers includes many large multi-
outlet retail chains, two of which account for a significant percentage of
sales volume, as follows:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Wal-Mart Stores, Inc. 16% 18% 17%
J.C. Penney Co., Inc. 15% 16% 18%
</TABLE>
I-23
<F10>
J. RESTRUCTURING COSTS
In 1995 the Company closed two manufacturing facilities which
completed the Company's program of reducing excess domestic production
capacity begun in 1991. The closing costs related thereto are in the
statement of operations as Provision for restructuring costs. The
restructuring reduced the work force by approximately 400 associates or 25%
of total employees. Plant closing costs totaled approximately $1,211,000
representing severance pay, payroll taxes and a noncash charge of $610,000
relating to the write-down of manufacturing equipment to estimated
realizable value.
<F11>
K. CUSTOMS DUTY REFUNDS
In 1994, the Company received funds of countervailing customs duties
assessed by the U. S. Customs in 1990 and 1991 on certain imported products
which were determined not to be subject to anti-dumping provisions.
<F8>
L. ACCRUED LIABILITIES
<TABLE>
Accrued liabilities consist of the following:
<CAPTION>
1996 1995
<S> <C> <C>
Accrued payroll $1,369,818 $ 771,955
Accrued restructuring costs - 587,000
Accrued expenses 626,700 556,172
Other 436,258 374,780
---------- ----------
$2,432,776 $2,289,907
========== ==========
</TABLE>
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
I-24
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
See "Election of Directors" on page 2 of the Proxy Statement for
Registrant's 1997 Annual Meeting of Shareholders, which information is
incorporated herein by reference. Also see information contained under the
caption "Executive Officers of Registrant" on page 3 hereof.
ITEM 11. EXECUTIVE COMPENSATION
See "Compensation of Officers and Directors" on page 4 of the
Registrant's 1997 Proxy Statement, which information is incorporated herein
by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
See "Voting Securities" on page 1 of the Registrant's 1997 Proxy
Statement, which information is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See "Certain Transactions with Management" on page 11 of the
Registrant's 1997 Proxy Statement, which information is incorporated herein
by reference.
I-25
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A)1. Financial Statements
The following consolidated financial statements of Hampton Industries,
Inc. and its subsidiaries are included in Part II, Item 8:
Independent Auditors' Report ______________________ 10
Consolidated balance sheets - December 28, 1996 and December 30, 1995
__________________________________________________ 11
Consolidated statements of operations - years ended December 28, 1996,
December 30, 1995 and December 31, 1994 _____ 12
Consolidated statements of stockholders' equity - years ended
December 28, 1996,
December 30, 1995 and December 31, 1994 _____ 13
Consolidated statements of cash flows - years ended December 28, 1996,
December 30, 1995 and December 31, 1994 _____ 14
Notes to consolidated financial statements _______ 15-24
(a)2. Financial Statement Schedule
Schedule II - Valuation and qualifying accounts _ 27
All other schedules have been omitted because they are inapplicable or
not required, or the information is included elsewhere in the financial
statements or notes thereto.
(a)3. Exhibits
Exhibit No. 21 - Subsidiaries of the Company _____ 28
(b) Reports on Form 8-K
None
I-26
HAMPTON INDUSTRIES, INC.
<TABLE>
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
<CAPTION>
Balance at Charged to Charged to
beginning costs and other
Description of period expenses accounts
---------------------------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
DEDUCTED FROM ASSETS TO
WHICH THE APPLY:
RESERVE FOR DOUBTFUL
ACCOUNTS AND ALLOWANCES:
Year ended December 28, 1996 $1,200,000 $ 393,465 $ 7,183 (A)<F17>
======== ========= =========
Year ended December 30, 1995 $1,238,000 $1,210,678 - (A)<F17>
======== ========= =========
Year ended December 31, 1994 $1,623,200 $ 246,537 $ 2,891 (A)<F17>
======== ========= =========
<CAPTION>
Balance at
Deductions end
Description of period
---------------------------- ---------- ----------
<S> <C> <C> <C>
DEDUCTED FROM ASSETS TO
WHICH THE APPLY:
RESERVE FOR DOUBTFUL
ACCOUNTS AND ALLOWANCES:
Year ended December 28, 1996 $ 781,648 (B)<F18> $ 819,000
========= =========
Year ended December 30, 1995 $1,248,678 (B)<F18> $1,200,000
========= =========
Year ended December 31, 1994 $ 634,628 (B)<F18> $1,238,000
========= =========
</TABLE>
NOTES:
<F17>
(A) Recoveries of accounts previously written off.
<F18>
(B) Uncollectible accounts written off.
I-27
Exhibit 21
HAMPTON INDUSTRIES, INC.
Subsidiaries
Name State of Incorporation
Production Link, Ltd. New York
Samsons Inc. North Carolina
Samsons Manufacturing Corp. North Carolina
Kinston Shirt Company North Carolina
Samsons Apparel Corp. North Carolina
(wholly-owned subsidiary of Samsons
Manufacturing Corp.)
Kinston Paper Box Co., Inc. North Carolina
Kinston Die Cutting Corp. North Carolina
Hampco Apparel, Inc. Maryland
Hampton Shirt Co., Inc. New York
Hampton Shirt Co., Inc. North Carolina
Snow Hill Apparel Co., Inc. North Carolina
Hamptex, Inc. North Carolina
IGM Corp., S.A. de C.V. El Salvador
Hampton owns 100% of the outstanding stock of each subsidiary, except
as indicated, and all are included in the consolidated financial
statements. Subsequent to the end of the year, all of the subsidiaries,
except Hamptex, Inc. and IGM Corp., S.A. de C.V. were merged into Hampton
Industries, Inc.
I-28
SIGNATURES
Pursuant to requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Hampton Industries, Inc. has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
HAMPTON INDUSTRIES, INC.
S/DAVID FUCHS
_____________________________________
David Fuchs, Chairman and Director
S/STEVEN FUCHS
_____________________________________
Steven Fuchs, President and Director
S/ROBERT J. STIEHL, JR.
_____________________________________
Robert J. Stiehl, Jr., Executive Vice
President - Operations, Chief Financial
Officer and Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report had been signed below by the following persons on behalf of the
Company and in the capacities and on the dates indicated:
S/HERBERT L. ASH S/SOL SCHECHTER
_______________________________ _______________________________
Herbert L. Ash, March 19, 1997 Sol Schechter, March 19, 1997
(Director) (Director)
S/GERALD FRIEDER S/PAUL CHUSED
_______________________________ _______________________________
Gerald Frieder, March 19, 1997 Paul Chused, March 19, 1997
(Director) (Director)
The Company's annual report to stockholders and proxy material is to
be furnished to its security holders subsequent to the filing of the annual
report on this form. Copies of such material will be furnished to the
Commission when it is sent to security holders.
I-29
