<TABLE>
HAMPTON INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
<CAPTION>
March 28, March 29, December 27,
1998 1997 1997
(Unaudited) (Unaudited)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash $ 149,835 $ 285,440 $ 171,944
Accounts receivable - net 23,084,873 21,565,065 24,313,827
Inventories 37,390,785 32,820,424 30,356,997
Deferred income tax assets 546,595 547,078 405,145
Refundable income taxes - 905,820 -
Other current assets 527,702 186,181 514,303
----------- ----------- -----------
Total current assets 61,699,790 56,310,008 55,762,216
Property, plant and
equipment - net 17,553,476 18,811,344 17,702,668
Assets held for disposal - net 1,197,542 1,245,335 1,200,387
Investments in and advances to
unconsolidated affiliates 707,974 736,664 703,155
Other assets 2,724,429 1,737,781 2,673,453
----------- ----------- -----------
$ 83,883,211 $ 78,841,132 $ 78,041,879
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable - banks and
current maturities of
long-term debt $ 11,799,178 $ 6,493,548 $ 5,701,573
Accounts payable 7,043,222 6,695,690 5,642,107
Accrued liabilities 2,563,167 2,342,231 3,702,083
Income taxes 46,000 392,400 68,346
----------- ----------- -----------
Total current liabilities 21,451,567 15,923,869 15,114,109
Deferred income tax liabilities 996,793 1,050,519 996,793
Long-term debt 3,961,682 4,555,014 4,110,015
Retirement plan obligations 3,822,313 3,871,784 3,913,480
----------- ----------- -----------
30,232,355 25,401,186 24,134,397
Stockholders' equity 53,650,856 53,439,946 53,907,482
----------- ----------- -----------
$ 83,883,211 $ 78,841,132 $ 78,041,879
=========== =========== ===========
</TABLE>
Note: The consolidated balance sheet at December 27, 1997 has been
taken from the audited financial statements and condensed.
See notes to consolidated financial statements.
- -1-
<TABLE>
HAMPTON INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Thirteen Weeks Ended
March 28, March 29,
1998 1997
<S> <C> <C>
Net sales $ 34,310,616 $ 36,356,322
Cost of products sold 25,407,361 27,415,835
------------ ------------
Gross Margin 8,903,255 8,940,487
Selling, general and administrative 9,017,275 7,529,452
Rental income - net (249,571) (174,924)
Equity in earnings of unconsolidated
affiliates (19,409) (46,649)
(Loss) gain on disposal of fixed assets 5,585 (7,235)
Other (income) expense - net (18,467) 53,884
------------ ------------
Operating income 167,842 1,585,959
Interest expense 581,920 522,645
------------ ------------
(Loss) earnings before income tax
(benefit) provision (414,078) 1,063,314
Income tax (benefit) provision: (148,000) 443,000
------------ ------------
Net (loss) earnings $ (266,078) $ 620,314
============ ============
Basic (loss) earnings per common share $(.06) $.14
====== =====
Weighted average common shares
outstanding 4,587,829 4,585,629
========= =========
Diluted (loss) earnings per share $(.06) $.13
====== =====
Weighted average common shares
outstanding and common share equivalents 4,587,829 4,636,690
========= =========
</TABLE>
See notes to consolidated financial statements
- -2-
<TABLE>
HAMPTON INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Thirteen Weeks Ended
March 28, March 29,
1998 1997
<S> <C> <C>
OPERATING ACTIVITIES:
Net (loss) earnings $ (266,078) $ 620,314
Adjustments to reconcile net (loss)
earnings to net cash used in operating
activities:
Amortization 190,760 92,221
Depreciation 472,721 541,225
Deferred income taxes (141,450) 1,000
Reserve for doubtful accounts
and allowances (768,000) (47,000)
Retirement plan obligations (91,167) (152,777)
Loss (gain) on sale of fixed
assets 5,585 (7,235)
Equity in earnings of
unconsolidated affiliates (19,409) (46,649)
Changes in current assets and current
liabilities:
Accounts receivable 1,996,954 (2,550,618)
Inventories (7,033,788) (2,072,292)
Other current assets (13,399) (53,235)
Accounts payable 1,401,115 (1,717,039)
Accrued liabilities (1,138,913) (90,543)
Income taxes (22,346) 392,400
----------- -----------
NET CASH USED IN OPERATING ACTIVITIES (5,427,415) (5,090,228)
----------- -----------
INVESTING ACTIVITIES:
Additions to fixed assets (343,914) (177,371)
Proceeds received from sale of
fixed assets 17,644 5,492
Decrease in investments in and
advances to unconsolidated
subsidiaries 14,590 28,239
Increase in other assets (241,736) (143,451)
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (553,416) (287,091)
----------- -----------
FINANCING ACTIVITIES:
Stock options exercised 9,450 -
Additions to debt - Banks - net 6,097,605 5,500,572
Payments on debt - Other (148,333) (148,333)
----------- -----------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 5,958,722 5,352,239
----------- -----------
DECREASE IN CASH (22,109) (25,080)
CASH AT BEGINNING OF PERIOD 171,944 310,520
----------- -----------
CASH AT END OF PERIOD $ 149,835 $ 285,440
=========== ===========
Cash paid during the period
- Interest $ 624,506 $ 560,000
=========== ===========
- Income taxes $ 41,000 $ 49,600
=========== ===========
</TABLE>
See notes to consolidated financial statements.
- -3-
HAMPTON INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information as of March 28, 1998 and March 29, 1997 is unaudited.)
1. BASIS OF PRESENTATION
The consolidated balance sheets as of March 28, 1998 and March
29, 1997 and the consolidated statements of operations and cash flows
for the thirteen week period then ended have been prepared by the
Company, without audit. In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to present
fairly the financial position, results of operations and cash flows at
March 28, 1998 and March 29, 1997 have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested
that these condensed consolidated financial statements be read in
conjunction with the audited financial statements and notes thereto
included in the Company's December 27, 1997 Annual Report to
shareholders. The results of operations for the period ended March
28, 1998 are not necessarily indicative of the operating results for
the full year.
Certain reclassifications have been made to the consolidated
financial statements of March 29, 1997 to conform to classifications
used at March 28, 1998.
2. CREDIT FACILITY
The credit facility between Hampton Industries, Inc. and BNY
Financial Corporation, as Agent, ("Credit Facility") provides for
a maximum line of credit of $100,000,000, which includes both direct
loans and letters of credit. Availability under the Credit Facility
is based on a formula of eligible accounts receivable and eligible
inventory and provides for seasonal overadvances of up to $13,500,000
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 Credit 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 expires in May 1999.
The Credit Facility contains financial covenants, including but
not limited to EBITDA, 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.
- -4-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
<TABLE>
Results of Operations
The following table summarizes the operating data for the periods
indicated:
<CAPTION>
Thirteen Weeks Ended
March 28, March 29,
1998 1997
<S> <C> <C>
Net sales 100.0% 100.0%
Cost of products sold 74.1 75.4
------ ------
Gross profit 25.9 24.6
Selling, general and administrative 26.3 20.7
Net rental income ( .7) ( .5)
Equity in earnings of unconsolidated subsidiaries ( .1) ( .1)
Gain on asset sales - -
Net other expense ( .1) .2
------- ------
Operating income .5 4.3
Interest 1.7 1.4
------- ------
Earnings (loss) before income taxes ( 1.2) 2.9
Net earnings (loss) ( .8)% 1.7%
======= ======
</TABLE>
THIRTEEN WEEKS ENDED MARCH 28, 1998 AS COMPARED TO
THE THIRTEEN WEEKS ENDED MARCH 29, 1997
Net sales decreased by $2,046,000 or 5.6% for the quarter. Sales
of branded product increased from 35.1% in the prior years quarter to
37.2% in the current year. Late delivery of imported products
was the primary factor related to this decrease in sales.
Gross profit decreased in absolute dollars by $37,000 during the
quarter ended March 28, 1998. Gross margin percent improved to 25.9%
from 24.6% for the respective periods. This improvement in margins
continues to reflect the emphasis on sales of branded product. Also,
a contributing factor was the improvement in the operating
efficiencies of the Company's factories.
Selling, general and administrative expenses increased by
$1,488,000 or 19.8% during the quarter ended March 28, 1998, as
compared to the prior year. As a percent of sales it increased to
26.3% from 20.7% for the respective periods. Increased compensation
expense for associates hired after March 1997 along with advertising,
sample and travel expenses account for the majority of this increase.
Interest expense increased by $59,000 due to higher levels of
borrowing in 1998.
- -5-
The effective tax rate for 1998 was 35.7% as compared to 41.7% in
the prior period. This reduction is primarily related to earnings of
a foreign subsidiary whose income is not subject to tax.
Liquidity and Capital Resources
Outstanding borrowings under the Credit Facility amounted to
$11,206,000 at March 28, 1998 as compared to $5,900,000 at March 29,
1997 and $5,108,000 at December 27, 1997. Outstanding letters of
credit amounted to $36,859,000 at March 28, 1998 as compared to
$25,498,000 at March 29, 1997 and $33,402,000 at December 27, 1997.
The Company had unused lines of credit of $3,436,000 at March 28, 1998
for either direct borrowings or letters of credit.
At March 22, 1998, the Company's working capital approximated
$40,248,000 as compared to $40,386,000 in the prior year. The current
ratio was 2.88 in the current period as compared to 3.54 in the prior
year.
The credit facility between Hampton Industries, Inc. and BNY
Financial Corporation, as Agent, ("Credit Facility") provides for
a maximum line of credit of $100,000,000, which includes both direct
loans and letters of credit. Availability under the Credit Facility
is based on a formula of eligible accounts receivable and eligible
inventory and provides for seasonal overadvances of up to $13,500,000
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 Credit 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 expires in May 1999.
The Credit Facility contains financial covenants, including but
not limited to EBITDA, 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.
Net cash used in operating activities increased by $337,000 in
the current thirteen week period as compared to the same period in the
prior year. Inventories increased by $7,034,000 in the current period
as compared to an increase of $2,072,000 in the prior period.
Net cash used in investing activities increased by $266,000 in
the current thirteen week period as compared to the same period in the
prior year. Additions to fixed assets was the primary reason for this
increase.
Net cash provided by financing activities increased by $606,000
to $5,959,000 in the current period. These proceeds were primarily
used for the increase in inventories.
The Company's backlog of orders at May 2, 1998 was approximately
$120,275,000 as compared to $93,975,000 at the same time in the prior
year. Management believes that the sales to date, the order backlog
and anticipated new orders will be sufficient to meet the Company's
goal of an increase in total sales in excess of 10% for the
full year.
- -6-
Management believes that the credit available under the Credit
Facility together with the cash expected to be generated from
operations, is adequate to meet the Company's financing requirements
for the foreseeable future.
Impact of Inflation
General inflation in the economy has increased operating expenses
of most businesses. The Company has provided compensation increases
generally in line with the inflation rate and incurred higher prices
for materials, goods and services. The Company continually seeks
methods of reducing cost and streamlining operations while maximizing
efficiency through improved internal operating procedures and
controls. While the Company is subject to inflation as described
above, management believes that inflation currently does not have a
material effect on the Company's operating results, but there can be
no assurance that this will continue to be so in the future.
New Accounting Principles
During Fiscal 1997, the Financial Accounting Standards Board
issued the following accounting standards: Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" (SFAS
No. 130), Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related Information"
(SFAS No. 131) and Statement of Financial Accounting Standards No. 132
"Employers Disclosures about Pension and other Post retirement Benefit
Plans" (SFAS No. 132). The Company does not expect any material
effect from adoption of SFAS No. 131 and 132. The Company will report
comprehensive income as a component of equity. During the quarter
ended March 28, 1998, the Company does not have any items that would
be reportable as a component of comprehensive income other than its
loss from operations.
Except for the historical information contained herein, the
matters outlined in the management's discussion and analysis include
forward looking statements that involve risks and uncertainties,
including quarterly fluctuation in results, retail sell rates for the
Company's products which may result in more or less orders than those
anticipated and the impact of competitive products and pricing. In
addition, other risks and uncertainties are detailed from time to time
in the Company's SEC reports, including the report on Form 10-K for
the year ended December 27, 1997.
- -7-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunder duly authorized.
HAMPTON INDUSTRIES, INC.
Registrant
S/STEVEN FUCHS
_____________________________________
Steven Fuchs, President
S/FRANK E. SIMMS
_____________________________________
Frank E. Simms, Chief Financial Officer
Date: May 8, 1998
- -8-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-26-1998
<PERIOD-END> MAR-28-1998
<CASH> 149,835
<SECURITIES> 0
<RECEIVABLES> 23,084,873
<ALLOWANCES> 0
<INVENTORY> 37,390,785
<CURRENT-ASSETS> 61,699,790
<PP&E> 17,553,476
<DEPRECIATION> 0
<TOTAL-ASSETS> 83,883,211
<CURRENT-LIABILITIES> 21,451,567
<BONDS> 0
0
0
<COMMON> 5,192,254
<OTHER-SE> 53,335,946
<TOTAL-LIABILITY-AND-EQUITY> 83,883,211
<SALES> 34,310,616
<TOTAL-REVENUES> 34,310,616
<CGS> 25,407,361
<TOTAL-COSTS> 25,407,361
<OTHER-EXPENSES> 8,735,413
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 581,920
<INCOME-PRETAX> (414,078)
<INCOME-TAX> (148,000)
<INCOME-CONTINUING> (266,078)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (266,078)
<EPS-PRIMARY> (.06)
<EPS-DILUTED> (.06)
</TABLE>
