UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-K
(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of The Securities
Exchange Act of 1934
For the fiscal year ended January 1, 2000
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of The Securities
Exchange Act of 1934
For the transition period from __________________ to ___________________
Commission file number 1-6105
Hampton Industries, Inc.
(Exact name of registrant as specified in its charter)
North Carolina 56-0482565
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2000 Greenville Hwy., P.O. Box 614, Kinston, NC 28502-0614
(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code: (252)527-8011
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock $1.00 par value per share American Stock Exchange
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of The Securities
Exchange Act of 1934 during the preceding 12 months, and (2) has been
subject to such filing requirements for the past 90 days.
YES __X__ NO _____
On March 8, 2000, the aggregate market value of the common shares
(based upon the closing prices of these shares on the American Stock
Exchange) of Hampton Industries, Inc. held by non-affiliates was
approximately $8,029,000.
There were 5,553,374 shares of Common Stock outstanding as of
March 8, 2000.
Documents Incorporated by Reference
Portions of the Registrant's Proxy Statement for the Annual Meeting of
Shareholders to be held on May 23, 2000 are incorporated by reference
into Part III.
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 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
The Company is engaged in the business of manufacturing and
selling apparel and operates in one industry segment. Substantially
all sales to third party customers are made to destinations in the
United States. The products consist principally of men's and boys'
shirts and men'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 licensed and
Company owned brands. Branded apparel is becoming an increasingly
important part of the Company's business and is manufactured and sold
under the following licenses:
LICENSE PRODUCT CATEGORY
Nautica for Children Boys', girl's, and infant's apparel
Rawlings Men's and boys' activewear
Spalding (1) Men's activewear
Dickies Men's casual and rugged sportshirts
Justin (1) Men's western wear
Bugle Boy Men's and boys' sleepwear and robes
Joe Boxer (2) Boys', girls' and children's apparel
Warner Brothers Men's sleepwear and robes and children's
robes and novelty apparel
(1) Initial sales occurred in 1998.
(2) Initial sales occurred in 1999.
Hampton owns the following trademarks:
TRADEMARK PRODUCT CATEGORY
Kaynee Boys' and girl's school uniforms
Le Tigre Men's and boys' sportswear
Campus Men's and boys' sportswear
Flipbox Young men's sportswear
- -1-
Hampton designs its line of apparel, which is manufactured from
various combinations of man-made and natural fibers that 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.
Hampton's products are sold throughout the United States, to
approximately 2,570 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 75 salesmen, including 56 field
representatives at the end of 1999. Sales offices are located in New
York, and the Company's executive and administrative headquarters are
in Kinston, North Carolina. As of January 1, 2000 the Company had
approximately 989 full-time associates domestically and approximately
543 associates in the Caribbean. Hampton is not a party to any
collective bargaining agreements, has never experienced a strike, and
believes that it maintains satisfactory relationships with its associates.
<TABLE>
Hampton's largest customers accounted for approximately 33% and
32% of consolidated sales volume in 1999 and 1998, respectively. J.C.Penney
Co., K-Mart and Wal-Mart Stores, Inc. are large multi-outlet
retail chains who purchase a broad range of Hampton's products through
a variety of their merchandising departments. There are no contracts
with either customer for continued business. The following is a
breakdown of their respective sales volume:
<CAPTION>
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
J.C. Penney Co. 13% 14% 16%
K-Mart 12% 6% 4%
Wal-Mart Stores, Inc. 8% 12% 15%
</TABLE>
<TABLE>
The following is a breakdown of sales by apparel categories:
<CAPTION>
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Men's shirts and sportswear 28% 31% 34%
Boys' shirts and sportswear 31% 31% 30%
Activewear 15% 12% 9%
Men's sleepwear 14% 13% 12%
Ladies' sleepwear 11% 12% 13%
Other 1% 1% 1%
</TABLE>
Sales of licensed products accounted for 55%, 41% and 31% of the
consolidated sales for 1999 and the prior two years, respectively.
<TABLE>
The following reflects the Company's sourcing of its products:
<CAPTION>
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Imports 64% 58% 51%
Caribbean 22% 24% 29%
Domestic 14% 18% 20%
</TABLE>
All foreign purchases are contracted for in U.S. Dollars;
therefore, there is no currency risk.
- -2-
As of March 5, 2000 Hampton's backlog of orders was approximately
$101,272,000 as compared to $91,666,000 on the same date in 1999. The
orders are believed to be firm and are expected to be shipped during
the current fiscal year.
The apparel industry is highly competitive as to style, quality
and price. Hampton competes with many other manufacturers and
suppliers in each of its products.
<TABLE>
EXECUTIVE OFFICERS OF REGISTRANT
<CAPTION>
First year
appointed to
Name and age Office current office
- -------------------- ------------------------------------ --------------
<S> <C> <C>
David Fuchs (75) Chairman and Chief Executive Officer 1975
Steven Fuchs (40) President 1996
Roger M. Eichel (51) Senior Vice President and Secretary 1993
Frank E. Simms (51) Chief Financial Officer, Vice President of
Finance, and Treasurer 1997
</TABLE>
Each of the above named was appointed for one year or until the
election of a successor. Immediately following the Annual Meeting of
Shareholders to be held on May 23, 2000, the board will elect officers
for the following year term. There is no arrangement or understanding
between any of the above pursuant to which they were appointed as
Officers. Steven Fuchs has an employment contract that, among other
things, determines compensation due to separation of employment.
All of the Executive Officers above, except Frank Simms, are
related family members. Steven Fuchs is the son of David Fuchs, and
Roger Eichel is David Fuchs' son-in-law.
David Fuchs has held his current executive position in excess of
five years. Steven Fuchs was elected to his present position in
January, 1996. From 1993 to January 1996, Steven Fuchs was the
President of Hampton Shirt Co. (a subsidiary). Prior to 1993, he held
various positions with the Company. Roger Eichel was elected to his
present position in May 1993, and prior thereto, he was Secretary of
the Company. Frank Simms was elected Chief Financial Officer in
November 1997, Treasurer in 1999, and had previously been Vice
President of Finance since May 1995. Prior to joining Hampton he was
the Chief Financial Officer of Riverside Manufacturing Co. in excess
of five years.
David Fuchs, Steven Fuchs and Roger Eichel are also Directors of
the Company.
ITEM 2. PROPERTIES
Hampton operates three domestic manufacturing plants, one
manufacturing plant in the Caribbean and three domestic distribution
centers. Plans have been made to close, and susequently sale, two of the
domestic manufacturing plants in the first quarter of the year 2000. 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. This mortgage is secured by the underlying assets, and is not
guaranteed by the Company.
- -3-
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
There are no significant legal proceedings.
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
---------------------------------------------------------------------
1999 1998
3/27 6/26 9/25 1/1 3/28 6/27 9/26 12/26
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
High 6 5 3/8 4 1/2 3 1/2 7 1/2 6 3/16 6 13/16 6 15/16
Low 5 1/8 3 3/4 3 5/8 2 5 3/4 5 7/16 5 9/16 5 1/2
</TABLE>
The Company has not paid a cash dividend on its common stock
since 1973. The Board of Directors declared a 10% stock dividend in
1999 and 1998. Market prices per share have been restated for all
periods presented to reflect the stock dividends. The present credit
agreement includes restrictive covenants which, among other things,
prevent the payment of cash dividends.
(c) Approximate Number of Holders of Common Stock
The number of holders of record of Hampton's Common Stock as of
January 1, 2000 was approximately 276, including, as a single holder
of record, brokerage firms having more than one stockholder account.
- -4-
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
(In thousands except per common share amounts)
<CAPTION>
YEAR ENDED: 1999* 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net sales $192,561 $190,330 $163,040 $160,684 $184,593
Net (loss)
earnings (4,756) 2,416 1,083 2,709 (2,164)
Basic (loss)
earnings per
common share $(.86) $.44 $.20 $.54 $(.39)
Diluted (loss)
earnings per
common share** $(.86) $.43 $.19 $.54 $(.39)
AT YEAR END:
Total assets $118,135 $ 94,321 $ 78,042 $ 74,421 $ 94,271
Long-term debt 11,201 302 4,110 5,103 5,305
Working capital 43,997 40,255 40,648 40,158 37,501
Stockholders'
equity $ 51,585 $ 56,342 $ 53,907 $ 52,820 $ 50,111
* 53 Weeks
**Diluted earnings per share common share equivalents for 1999 and 1995 have
been excluded because they are anti-dilutive.
</TABLE>
The Company has not paid cash dividends on its common stock since
1973. The Board of Directors declared a 10% common stock dividend in
1999 and 1998. The dividends were payable on July 2nd to stockholders
of record on June 2nd of both years. Basic and diluted earnings per
share and outstanding stock options have been restated for all periods
presented to reflect the stock dividends.
The Company uses the LIFO method of costing on principally all of
its inventories to more fairly present the results of operations by
matching current cost with current revenues. The LIFO method had the
effect of decreasing the loss by $635,000 ($.11 per share) in 1999,
increasing earnings by $514,500 ($.09 per share) in 1998, and
decreasing earnings by $404,900 ($.07 per share) in 1997. Inventories
increased in 1999 and 1998. Income realized as a result of inventory
liquidation was not significant in 1997.
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 financial 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.
- -5-
Results of Operations
- ---------------------
<TABLE>
The following table summarizes the operating data (as a percent
of net sales) for the periods indicated:
<CAPTION>
YEAR ENDED
----------------------------------------
January 1, December 26, December 27,
2000* 1998 1997
---------- ------------ ------------
<S> <C> <C> <C>
Net sales 100.0% 100.0% 100.0%
Cost of products sold 75.6 76.5 77.3
-------- -------- -------
Gross margin 24.4 23.5 22.7
Selling, general and administrative 25.8 20.2 20.8
Equity in earnings of unconsolidated
affiliates - (0.1) (0.1)
Restructuring charge 0.5 - -
-------- --------- --------
Operating (loss) income (1.9) 3.4 2.0
Other (income) expense:
Rental income - net (0.5) (0.5) (0.6)
Other expense (income) - net 0.1 - (0.1)
Interest expense 2.2 1.9 1.7
-------- --------- --------
(Loss)earnings before (benefit)
provision for income tax (3.7) 2.0 1.0
Net (loss) earnings (2.5)% 1.3% 0.7%
======== ========= ========
* 53 Weeks
</TABLE>
The Company is engaged in the business of manufacturing and
selling apparel and operates in one industry segment. Substantially
all sales to third party customers are made to destinations in the
United States. The products consist principally of men's and boys'
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 swim trunks, for both men
and boys are imported from unaffiliated sources located primarily in
the Far East.
Fiscal 1999 Versus Fiscal 1998
- ------------------------------
The year ending for 1999 had two distinct events that had not
occurred in prior years in addition to the charge for restructuring.
The conversion to new operating and distribution systems was made at
the end of March 1999. This conversion resulted in higher expenses
for training and consulting along with significant inefficiencies in
the distribution operations. In September 1999, Hurricane Floyd hit
eastern North Carolina and essentially resulted in no shipments to
customers for a period of over two weeks. This resulted in additional
expenses in distribution, cancellation of orders and a significant increase
in allowances.
- -6-
Net sales for 1999 increased by $2,230,000 or 1.2%. Sales of
branded product increased by $29,251,000 to 55.4% of total sales in
1999 from 40.7% in 1998. Increased sales of the Spalding, Nautica,
Dickies, and Kaynee Brands were the principal contributors to the
increased sales volume. Non branded product sales decreased by
$27,021,000.
Gross profit increased by $2,262,000 for 1999. As a percent of
sales this represented an increase of 0.9%, from 23.5% in 1998 to
24.4% in 1999. The improvement in the gross profit was due primarily
to the increased sales of branded products, which generally have
higher margins than non-branded products. However, gross profit was
negatively impacted by an increase in allowances of approximately
$5,406,000, which was primarily due to late deliveries of product resulting
from the flood and the conversion process. These two events are estimated to
represent approximately $2,500,000, and $750,000 respectively.
During September, Hurricane Floyd and the resulting flood
significantly affected the Company's operations. Beginning a week
prior to the arrival of the hurricane, the ports from Miami to Norfolk
began to close as the hurricane neared. These closures caused delays
in clearing product through customs. For the two and a half days that
Kinston was directly affected by the hurricane no associates could
report to work, nor could any product be shipped. Subsequently,
Kinston and Eastern North Carolina were affected by the worst flooding
in recorded history. For approximately one week most roads in and
around Kinston were closed which impacted our associates' ability to
come to work and also interrupted both receiving and shipping of
product by trucking lines. It is estimated that delays in shipments
amounted to approximately $10,000,000 as a direct result of the
Hurricane and subsequent flooding.
In April, The Company converted to new operating and
distribution systems. This conversion caused delays in shipments to
customers, which are estimated to be approximately $8,000,000. Due to
inefficiencies experienced in the distribution centers as a result of
the conversion, shipping expenses increased by approximately
$2,369,000 in 1999. This increase was primarily the result of
additional payroll expenses and consulting fees.
Selling, general and administrative expenses increased by
$11,324,000 in 1999, including the increased shipping costs mentioned
above. As a percent of sales, there was an increase from 20.2% in
1998 to 25.8% in 1999. Increases in royalty expense of $1,743,000 and
advertising expenses of $775,000 were primarily due to the increase in
sales of branded product. During 1999, compensation and related
fringe benefits increased by approximately $2,620,000, mainly due to
additional personnel needed in the conversion of the operating and
distribution systems. Freight, amortization (store fixtures and software
costs), and outlet store rental expenses increased by $602,000, $506,000,
and $312,000 respectively in 1999.
A portion of the Company's corporate office building in New York
is leased to third parties. Operations related to this are classified
as Rental Income - net.
Other expense was $167,000 in 1999 as compared to income of
$57,000 in 1998. This change is primarily due to a loss on the sales
of assets in 1999 of $91,000 as compared to a gain of $2,000 in the
prior year.
- -7-
In November of 1999, the Board of Directors of the Company
approved a restructuring plan that resulted in the announcement to
close two of the three current domestic sewing factories, due to an
increasing shift to sales of branded product which is primarily imported.
This plan also included the elimination of certain positions within the
selling and administrative functions of the Company. The Restructuring
charge amounted to $936,000, which includes only the direct termination
benefits along with the related fringe benefits. This plan will
result in the reduction of approximately 298 full time associates or
30% of the domestic work force at the end of 1999. This plan will be
completed by the end of the first quarter of 2000. The two properties
affected by this closure are classified as "Assets held for resale" on
the Balance Sheet and are being actively marketed by Management. In
addition, this plan included the decision to no longer offer for sale
the ladies sleepwear product line. This product line contributed
approximately $20,314,000 in net sales for 1999 and $23,686,000 in
1998. This product line was primarily private label and was the only
ladies offerings by the Company.
Interest expense increased by $686,000 from 1998. This is the
result of an increased level of borrowing during the year in order to
support higher levels of receivables and inventory.
The effective tax benefit rate was 34% in 1999 as compared to
an effective tax rate of 36.7% in 1998.
Fiscal 1998 Versus Fiscal 1997
- ------------------------------
Net sales for 1998 increased by $27,290,000 or 16.7%. An increase
of 1.9% in the average selling price per dozen is primarily reflective
of a small change in product mix. Total dozens shipped increased by
14.6%. Branded product represented 40.7% of net sales in 1998 as
compared to 31.2% in 1997. The increase in sales of branded product
was $26,606,000 for 1998.
Gross profit increased by $7,602,000 for 1998. As a percent of
sales this represented an increase of 0.8%, from 22.7% in 1997 to
23.5% in 1998. The improvement in the gross profit was due primarily
to the increased sales. Sales of branded products generally have
higher margins than non-branded products. However, gross profit was
negatively impacted by an increase in allowances of approximately
$859,000. Late deliveries of product resulted in an increase of
allowances of approximately $400,000 and the unseasonable warm weather
resulted in an additional increase of approximately $275,000 to major
department stores.
Selling, general and administrative expenses increased by
$4,426,000 in 1998. As a percent of sales, there was a decrease from
20.8% in 1997 to 20.2% in 1998. Increases in royalty expense of
$1,223,000 and advertising expenses of $849,000 were primarily due to
the increase in sales of branded product. As a result of the
introduction of new brands for 1998 and planned expanded offerings in
1999, sample expense increased by $940,000 during 1998. During 1998,
compensation and related fringe benefits increased by approximately
$1,556,000. This was a result of the Company expanding its management
team in a variety of supporting roles, and the effect of the costs
related to certain individuals that were hired in 1997 who were on the
payroll for the full year of 1998.
A portion of the Company's corporate office building in New York
is leased to third parties. Operations related to this are classified
as Rental Income - net.
Interest expense increased by $878,000 from 1997. This is the
result of an increased level of borrowing during the year in order to
support higher levels of receivables and inventory to support the
increased sales volume.
- -8-
The effective tax rate increased to 36.7% in 1998 from 34.0% in
1997. The rate in 1997 was favorable impacted by the utilization of
net operating loss carryforwards for which reserves had been
previously established in 1996.
Liquidity and Capital Resources
- -------------------------------
On May 5, 1999, the Company entered into a new credit facility
with The Chase Manhattan Bank, as Agent ("The Facility"). The
Facility provides for a maximum line of credit of $80,000,000 which
includes both direct loans and letters of credit. The initial
proceeds of The Facility were used to repay the outstanding
indebtedness under the Company's previously existing bank line of
credit.
Availability under The Facility is based on a formula of eligible
accounts receivable and eligible inventory, determined monthly, and
provides for a seasonal over-advance of up to $10,000,000 within the
$80,000,000 maximum line of credit. Direct borrowings bear interest
at the London Interbank Offered Rate plus the applicable margin (as
defined in The Facility) or the Prime Rate, at the option of the
Company. The applicable margin is determined by a ratio of adjusted
E.I.B.I.T.A. to interest expense. Borrowings are collateralized by
accounts receivable, inventory and general intangibles of the Company
and its subsidiaries. The Facility expires in May 2002.
The Facility contains financial covenants relating to minimum
levels of net income, interest coverage, capital expenditures,
leverage, 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 up to .50 of 1% per annum on the unused
portion of the total facility plus certain other administrative costs.
Outstanding borrowings under the current facility amounted to
$35,000,000 at January 1, 2000 as compared to $14,708,000 at the same
time in 1998, under the previous facility. The increased borrowings
were primarily used to finance the increased level of accounts
receivable and inventories. At January 1, 2000, the Company had
unused lines of credit of $5,785,000 for direct borrowing or the
issuance of letter of credit. This availability is in addition to the
outstanding direct borrowing of $35,000,000 and letters of credit of
$16,645,000 outstanding at the end of 1999. Net working capital as of
the end 1999 was $43,997,000 as compared to $38,737,000 in 1998. The
working capital ratio at the end of 1999 was 1.9:1 as compared to
2.3:1 in 1998.
At the end of December 1999, the Company was in violation of
convenants related to interest coverage and total operation loss.
Waivers were received in March 2000 and the agreement was amended to
reflect the expected operations for 2000.
During 1999, the Company entered into a new collateralized
mortgage loan agreement with the Chase Manhattan Bank acting as agent
on the New York office building. The proceeds were used to pay off the
Industrial Revenue Bond on the Kinston Facility as well as the
mortgage on the New York building. The remaining proceeds were used
in operating activities. The mortgage note was collateralized by
building and property having a carrying value at January 1, 2000 of
approximately $6,558,238 and is not guaranteed by the Company. The
mortgage note has a twenty-five year amortization period, is payable
monthly, is due in 2009, and has an effective interest rate of 8.45%.
- -9-
During 1999, cash used in operations approximated $21,309,000,
which primarily related to higher levels of inventories. In 1998,
cash used by operations was approximately $5,600,000. In 1998, an
increase in inventory levels and accounts receivables were the primary
reasons for the use of funds.
Additions to fixed assets, which represented normal replacement
and upgrading of equipment, were approximately $287,000 funded from
operations in 1999 as compared to $1,700,000 in 1998. Expenditures for
software costs and related payroll activities were approximately
$1,447,000 in 1999 as compared to $2,100,000 in the prior year. The 1999
amount is comprised of $330,000 of personnel cost related to the new
computer systems and $1,117,000 of software cost. In 1998, the amounts were
$1,061,000 and $1,039,000 respectively. These costs will be amortized
over a period of five years beginning in 1999. Capital expenditures
for fixed assets in 2000 are expected to be equal to the 1999 levels
while expenditures for software and related personnel costs are
expected to decrease substantially. Management anticipates such
expenditures will be financed from operations.
The increase in other assets in 1999 is due to unamortized in-
store fixture costs, which are being amortized over 36 months. During
1999, $1,464,000 was spent on fixtures as compared to $496,000 in
1998. Amortization of these costs was $831,000 in 1999 as compared to
$731,000 in 1998. In order to provide funding for the Supplemental
Retirement Plan for Key Employees, the Company began a program of
purchasing life insurance policies on the lives of the participants.
Beginning January 1998 the Company instituted a Nonqualified Deferred
Compensation Plan for Key Executive Employees. A similar Nonqualified
Deferred Compensations Plan for certain other Key Employees was
started in January 1999. Both Nonqualified Plans are funded by
Company owned life insurance policies. The cash surrender value of
these policies was $1,218,000 at January 1, 2000.
During 1999, the Company granted 34,950 common stock options at
an average exercise price of $4.14 per option. The Board of Directors
declared a 10% stock dividend, which was paid on July 2, 1999 to
stockholders of record on June 2, 1999. For the fifty-three weeks
ended January 1, 2000, no options have been exercised and 153,142
options were cancelled. As of January 1, 2000, 274,428 options were
exercisable.
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, the
Company 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.
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.
- -10-
New Financial Accounting Standards
- ----------------------------------
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); and Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related Information"
(SFAS No. 131). The Company adopted SFAS No. 130 and SFAS No. 131
in the last fiscal year. Neither standard has had a material
impact on the Company.
Forward-Looking Statements
- --------------------------
This report contains forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934 as
amended. As such, final results could differ from estimates or
expectations due to factors such as: information currently available
is preliminary and incomplete, government regulation and policies may
change from that anticipated in present business decisions, business
conditions in the retail environment and market prices for raw
materials may change to a degree that existing plans may have to be
substantially revised. For any of these factors, the Company claims
the protection of the safe harbor for forward-looking statements
contained in the Private Securities Litigation Reform Act of 1995, as
amended.
- -11-
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEPENDENT AUDITORS' 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 January 1, 2000 and
December 26, 1998, and the related consolidated statements of
operations, shareholders' equity and cash flows for each of the three years
in the period ended January 1, 2000. Our audits also included the financial
statement schedule listed in the index at Item 14 (a)(2). These consolidated
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 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, the consolidated financial statements and the schedule
referred to above, present fairly, in all material respects, the consolidated
financial position of Hampton Industries, Inc. and subsidiaries as of
January 1, 2000, and December 26, 1998, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
January 1, 2000, in conformity with generally accepted accounting principles.
Also, in our opinion, the related consolidated financial statement schedule,
when considered in relation to the basic consolidated financial statements
taken as a whole, presents fairly, in all material respects the information
set forth therein.
S/Deloitte & Touche LLP
March 24, 2000
New York, New York
- -12-
<TABLE>
HAMPTON INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
January 1, December 26,
2000 1998
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 627,179 $ 282,375
Accounts receivable, less reserves
for doubtful accounts and
allowances of $4,501,000 in 1999
and $2,389,000 in 1998. 32,229,509 32,322,955
Inventories (Note B) 54,714,782 35,593,471
Income tax receivable (Note G) 1,181,132 -
Deferred income tax assets (Note G) 3,048,718 1,879,612
Other current assets 848,335 944,952
------------ ------------
Total current assets 92,649,655 71,023,365
Fixed assets - net (Notes C and H) 18,901,529 19,866,851
Assets held for disposal - net 1,842,389 566,849
Investments in and advances to
unconsolidated affiliates 711,084 761,384
Other assets (Note F) 4,030,178 2,103,008
------------ ------------
$118,134,835 $ 94,321,457
============ ============
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Notes payable - banks and current
maturities of long-term debt (Note H) $ 35,269,433 $ 18,923,100
Uncleared checks 2,910,146 2,110,149
Accounts payable 5,996,976 6,164,437
Accrued liabilities (Note N) 4,408,307 3,570,372
Income tax payable (Note G) 67,480 -
------------ ------------
Total current liabilities 48,652,342 30,768,058
Deferred income tax liabilities (Note G) 2,721,283 2,920,466
Long-term debt (Note H) 11,201,058 302,420
Retirement plan obligations (Note J) 3,975,382 3,988,847
------------ ------------
66,550,065 37,979,791
Commitments and contingencies
(Notes H,I,J,L, and M)
Stockholders' equity (Note I)
Common stock, $1 par value -
authorized 10,000,000 shares;
issued 6,286,419 6,286,418 5,715,069
Additional paid-in capital 39,148,350 37,220,042
Retained earnings 11,027,346 18,283,899
------------ ------------
56,462,114 61,219,010
Less cost of common stock held in
treasury - 733,045 shares 4,877,344 4,877,344
------------ ------------
Total stockholders' equity 51,584,770 56,341,666
------------ ------------
$118,134,835 $ 94,321,457
============ ============
See notes to consolidated financial statements.
</TABLE>
- -13-
<TABLE>
HAMPTON INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
YEAR ENDED
------------------------------------------
January 1, December 26, December 27,
2000* 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Net sales $192,560,527 $190,330,346 $163,040,212
Cost of products sold (Note B) 145,623,169 145,654,492 125,966,826
------------ ------------ ------------
Gross margin 46,937,358 44,675,854 37,073,386
Selling, general and administrative 49,711,314 38,387,710 33,962,059
Equity in earnings of
unconsolidated affiliates (88,721) (103,355) (164,633)
Restructuring charge (Note E) 935,627 - -
------------ ------------- ------------
Operating (loss) income (3,620,862) 6,391,499 3,275,960
Other (income) expense:
Rental income: (923,467) (929,210) (935,216)
Loss on disposal of fixed assets 90,980 1,751 64,279
Other loss (income)- net 167,286 (56,748) (182,853)
Interest expense 4,245,548 3,559,961 2,681,664
------------ ----------- ------------
3,580,347 2,575,754 1,627,874
------------ ------------ ------------
(Loss) earnings before (benefit)
provision for income tax (7,201,209) 3,815,745 1,648,086
------------ ------------ ------------
(Benefit) provision for income
tax (Note E) (2,445,000) 1,400,000 565,000
------------ ------------ ------------
Net (loss) earnings $ (4,756,209) $ 2,415,745 $ 1,083,086
============ ============ ============
Basic (loss) earnings per common share $(.86) $.44 $.20
====== ====== ====
Weighted average common
shares outstanding 5,553,374 5,552,313 5,548,782
========= ========= =========
Diluted (loss) earnings per share** $(.86) $.43 $.19
====== ====== ====
Weighted average common shares
outstanding and other potential
common shares** 5,553,374 5,645,724 5,619,045
========= ========= =========
*53 Weeks
**Diluted earnings per share common share equivalents for 1999 have
been excluded because they are anti-dilutive.
See notes to consolidated financial statements.
</TABLE>
- -14-
<TABLE>
HAMPTON INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<CAPTION>
Common Stock Additional
----------------------- paid-in Retained
Shares Amount Capital Earnings
--------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Balance, December 28,1996 5,191,454 $5,191,454 $34,018,908 $18,486,613
Stock options exercised 800 800 3,965
Net earnings 1,083,086
--------- ---------- ----------- -----------
Balance, December 27,1997 5,192,254 5,192,254 34,022,873 19,569,699
Stock options exercised 3,450 3,450 16,058
Stock dividend 519,365 519,365 3,181,111 (3,701,545)
Net earnings 2,415,745
--------- ---------- ----------- -----------
Balance, December 26,1998 5,715,069 5,715,069 37,220,042 18,283,899
Stock dividend 571,349 571,349 1,928,308 (2,500,344)
Net loss* (4,756,209)
--------- ---------- ----------- -----------
Balance, January 1,2000 6,286,418 $6,286,418 $39,148,350 $11,027,346
========= ========== =========== ===========
<CAPTION>
Treasury Stock
at cost Total
------------------------ Stockholder's
Shares Amount Equity
--------- ----------- -----------
<S> <C> <C> <C>
Balance, December 28,1996 (605,825) $(4,877,344) $52,819,631
Stock options exercised 4,765
Net earnings 1,083,086
--------- ----------- -----------
Balance, December 27,1997 (605,825) (4,877,344) 53,907,482
Stock options exercised 19,508
Stock dividend (60,581) (1,069)
Net earnings 2,415,745
--------- ----------- -----------
Balance, December 26,1998 (666,406) (4,877,344) 56,341,666
Stock dividend (66,639) (687)
Net loss* (4,756,209)
--------- ----------- -----------
Balance, January 1,2000 (733,045) $(4,877,344) $51,584,770
========= =========== ===========
*53 Weeks
See notes to consolidated financial statements
</TABLE>
- -15-
<TABLE>
HAMPTON INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
YEAR ENDED
-------------------------------------------
January 1, December 26, December 27,
2000* 1998 1997
------------- ------------ ------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net (loss) earnings $ (4,756,209) $ 2,415,745 $ 1,083,086
Adjustments to reconcile net
(loss) earnings to net cash
used in operating activities:
Amortization 888,338 806,538 549,555
Depreciation 2,513,303 2,007,424 2,210,009
Deferred income tax (1,368,289) 449,206 89,207
Reserve for doubtful
accounts and allowances 2,113,000 192,000 1,030,000
Retirement plan obligations (13,465) 75,367 (111,081)
Loss on sale of fixed assets 90,980 1,751 64,279
Equity in earnings of
unconsolidated affiliates (88,721) (103,355) (164,633)
Change in current assets and
current liabilities:
Accounts receivable (2,019,554) (8,201,128) (6,376,380)
Inventories (19,121,311) (5,236,474) 391,135
Income tax receivable (1,181,132) - -
Other current assets 96,618 (430,649) 524,463
Uncleared checks 799,997 765,926 535,479
Accounts payable (167,461) 1,866,552 (3,306,102)
Accrued liabilities 837,247 (131,711) 1,269,308
Income taxes 67,480 (68,346) 68,346
------------ ------------ ------------
NET CASH USED IN OPERATIONS: (21,309,179) (5,591,154) (2,143,329)
------------ ------------ ------------
INVESTING ACTIVITIES:
Additions to fixed assets (287,076) (1,702,924) (1,033,327)
Additions to software (1,447,183) (2,099,073) -
Additions to building (1,084,231) - (294,684)
Proceeds received from
sale of fixed assets 74,898 669,802 211,043
Decrease in investments in
and advances to unconsolidated
subsidiaries 139,020 45,126 202,963
Increase in other assets (2,815,508) (236,093) (1,201,273)
------------ ------------ ------------
NET CASH USED IN INVESTING
ACTIVITIES: (5,420,080) (3,323,162) (2,115,278)
------------ ------------ ------------
FINANCING ACTIVITIES:
Additions - long-term
credit facility 20,300,356 9,599,640 4,708,597
Additions - mortgage 11,000,000 - -
Payments on debt-long-term debt (4,226,292 (593,332) (593,332)
Exercise of stock options - 18,439 4,766
------------ ------------ ------------
NET CASH PROVIDED BY FINANCING
ACTIVITIES: 27,074,064 9,024,747 4,120,031
------------ ------------ ------------
INCREASE (DECREASE) IN CASH 344,805 110,431 (138,576)
CASH - BEGINNING OF PERIOD 282,375 171,944 310,520
CASH - END OF PERIOD $ 627,180 $ 282,375 $ 171,944
============ ============ ============
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period
- Interest $ 4,032,530 $ 3,222,788 $ 2,480,000
============ ============ ============
- Income tax $ 2,122,610 $ 1,248,650 $ 412,390
============ ============ ============
NON-CASH INVESTING AND FINANCING
ACTIVITIES:
Aquisition of property and
equipment through capital lease $ 170,908 $ 407,623 -
============ ============ ============
*53 Weeks
See notes to consolidated financial statements.
</TABLE>
- -16-
HAMPTON INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED
JANUARY 1, 2000, DECEMBER 26, 1998, AND DECEMBER 27, 1997
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business
The consolidated financial statements of the Company include the
accounts of all 100% owned subsidiaries. The company has an investment in
H & H Corporation (a 50% owned but not controlled entity) which is
accounted for on the equity method. All material intercompany profits,
transactions, and balances have been eliminated.
The Company is engaged in the business of manufacturing and
selling apparel and operates in one industry segment. Substantially
all sales to third party customers are made to destinations in the
United States. The products consist principally of men's and boys'
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.
Fiscal Year
The Company operates and reports financial results on a fiscal year
of 52 or 53 weeks, ending on the Saturday closest to December 31st.
Accordingly, fiscal 1999 ended on January 1, 2000, and was comprised of
53 weeks, fiscal 1998 ended on December 26, 1998, and was comprised of 52
weeks, and fiscal 1997 ended on December 27, 1997, and was comprised of 52
weeks. All reference to years in these notes to consolidated statements
represent fiscal years unless otherwise noted. The Company believes the
additional week in 1999 does not materially alter the results.
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.
The actual results with regards to restructuring charges could have a
material unfavorable impact on the Company if the actual expenditures to
implement the restructuring plan are greater than what the Company
estimated when establishing the restructuring accrual.
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.
- -17-
Fixed Assets
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 point of sale displays for certain
customers are borne by the Company in whole or in part. Such costs
are capitalized as other assets and amortized over a thirty-six month
period.
Deferred Financing Costs
The costs associated with obtaining the Company's Existing Credit
facility have been deferred and are being amortized over the term of
the agreement.
Capitalized Software Costs
As a result of the conversion of the Company's computer systems,
incremental personnel and related fringe benefit expense of those
individuals directly involved in this process have been capitalized in
accordance with the provisions of Statement of Position ("S.O.P.")
98-1. Such costs are capitalized as software costs along with other
software purchased from third parties and are amortized over a five
year period.
Evaluation of Long-Lived Assets
Long-lived assets are assessed for recoverability on an ongoing
basis. In evaluating the fair value and future benefits of long-lived
assets, their carrying value would be reduced by the excess, if any,
of the long-lived asset over management's estimate of the anticipated
undiscounted future net cash flows of the related long-lived asset.
There were no adjustments to the carrying amount of long-lived assets
in the years ended January 1, 2000 and December 26, 1998 resulting
from the Company's evaluation.
Revenue Recognition
Sales are recognized upon shipment of product, which is when
title passes to the customer. No sales are made on consignment. All
returns are required to be authorized by the Company and reserves are
provided for estimated returns.
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".
Basic and Diluted Earnings per Common Share
The Company adopted the provisions of Statement of Financial
Accounting Standard No. 128 "Earnings per share" (the "Statement").
The Statement establishes standards for computing and presenting
earnings per share and applies to entities with publicly held common
stock or potential common stock such as employee stock options. The
Statement replaces the presentation of primary earnings per share with
a presentation of basic earnings per share and also requires, among
other things, dual presentation of basic and diluted earnings per
share for all entities with complex capital structures. Basic
earnings per share excludes dilution and is computed by dividing net
earnings by the weighted-average number of shares outstanding for each
period presented. Diluted earnings per share is computed by dividing
net earnings by the weighted average number of shares outstanding plus
dilutive potential common shares which will result from the exercise
of stock options.
- -18-
<TABLE>
The following is a reconciliation of the weighted average shares
used in the computations of basic and dilutive earnings per common
shares:
<CAPTION>
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Weighted average common shares outstanding
used for basic earnings per share 5,553,374 5,552,313 5,548,782
Dilutive stock options** - 93,411 70,263
--------- --------- ---------
Weighted average common shares outstanding
used for dilutive earnings per share 5,553,374 5,645,724 5,619,045
========= ========= =========
**Diluted earnings per share common share equivalents for 1999 have been
excluded because they are anti-dilutive
</TABLE>
Fair Value of Financial Instruments
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 the mortgage note
due through the year 2009, which bears a fixed interest rate, is also
assumed to approximate its 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 due from
the unconsolidated entity were $136,843 and $261,844 at January 1,
2000 and December 26, 1998, respectively.
B. INVENTORIES
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Finished goods $45,696,690 $26,531,894
Work-in-process 4,897,894 4,447,059
Piece goods 3,292,182 3,985,135
Supplies and other 828,016 629,383
----------- -----------
$54,714,782 $35,593,471
=========== ===========
</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 January 1, 2000 and December 26, 1998 would
have been approximately $57,900,000 and $39,800,000 respectively.
The LIFO valuation method had the effect of decreasing the loss by
$635,000 ($.11 per share) in 1999, increasing net earnings
by $514,500 ($.09 per share) in 1998, and decreasing net earnings by
$404,900 ($.07 per share) in 1997. Inventories increased in 1999 and
1998. Income realized as a result of inventory liquidation was not
significant in 1997.
- -19-
Inventory in transit of $10,614,000 in 1999 and $1,934,000 in
1998 are included in finished goods. The increase for 1999 is primarily
due to an increase in branded sales for the spring of 2000.
C. FIXED ASSETS
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
Land and land improvements $ 2,613,578 $ 2,613,578
Buildings and leasehold improvements 23,398,798 22,823,241
Machinery and equipment 12,329,815 17,944,343
Furniture and fixtures 1,388,575 1,388,575
Capitalized software costs 3,524,236 2,099,074
Capital leases 578,532 407,624
------------ ------------
43,833,534 47,276,435
Less accumulated depreciation and
amortization 24,932,005 27,409,584
------------ ------------
$18,901,529 $19,866,851
============ ============
</TABLE>
D. ASSETS HELD FOR RESALE
In conjunction with the restructuring plan, two factories are
being actively marketed for sale. While there is no certainty
regarding the consummation of real estate transactions, it is the
intention of management to make every effort to insure their sale in
2000.
E. RESTRUCTURING CHARGE
In November of 1999, the Board of Directors of the Company
approved a restructuring plan that resulted in the announcement to
close two domestic sewing factories located in Warrenton, NC and
Martinsville, VA, leaving one remaining factory in Washington, NC. These
closures were due to an increasing shift to sales of branded product,
which is primarily imported. The closure in Martinsville was completed
December 1999, and the Warrenton closure was completed in March 2000.
This plan also included the elimination of certain positions within the
selling and administrative functions of the Company. The restructuring
charge amounted to $936,000, which includes only the direct termination
benefits along with the related fringe benefits. This plan will
result in the reduction of approximately 298 full time associates or
30% of the domestic work force at the end of 1999. This plan will be
completed by the end of the first quarter of 2000. The two properties
affected by this closure are classified as "Assets held for resale" on
the Balance Sheet and are being actively marketed by Management. In
addition, this plan included the decision to no longer offer for sale
the ladies sleepwear product line. This product line contributed
approximately $20,314,000 in net sales for 1999 and $23,686,000 in
1998. This product line was primarily private label and was the only
ladies offerings by the Company.
- -20-
<TABLE>
Following is a summary of the restructuring charges and reserves
for 1999:
<CAPTION>
Restructuring Restructuring
Charges Cash Payments Reserve at
At Inception In 1999 Jan. 1, 2000
------------- ------------- -------------
<S> <C> <C> <C>
Severance and other
employee costs $ 935,627 $ 224,357 $ 711,270
============= ============= =============
</TABLE>
F. OTHER ASSETS
<TABLE>
The following are the major components of other assets:
<CAPTION>
1999 1998 1997
----------- ---------- -----------
<S> <C> <C> <C>
In-store fixtures (net of accumulated
amortization of $831,000, $731,000,
and $470,000) $ 1,736,583 $ 1,103,810 $ 1,338,937
Cash surrender value of life
insurance 1,509,038 601,393 176,182
Deferred financing costs 541,258 115,461 -
Other 243,299 282,344 872,294
----------- ----------- -----------
$ 4,030,178 $ 2,103,008 $ 2,387,413
=========== =========== ===========
</TABLE>
G. INCOME TAXES
<TABLE>
Components of income tax (benefit) provision reflected in the consolidated
statements of operations are as follows:
<CAPTION>
1999 1998 1997
----------- ----------- ----------
<S> <C> <C> <C>
Current:
Federal $(1,181,132) $ 888,000 $ 412,893
State and local 104,421 63,000 62,900
----------- ----------- ----------
(1,076,711) 951,000 475,793
Deferred:
Federal (1,286,955) 357,000 84,207
State and local (81,334) 92,000 5,000
----------- ----------- ----------
(1,368,289) 449,000 89,207
----------- ----------- ----------
$(2,445,000) $ 1,400,000 $ 565,000
=========== =========== ==========
</TABLE>
- -21-
<TABLE>
The following is a reconciliation of the statutory federal income
tax rate applied to pre-tax accounting (loss) earnings compared to the (benefit)
provision for income tax in the consolidated statements of operations:
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Income tax (benefit) expense at
the statutory rate $(2,448,000) $ 1,297,000 $ 560,400
(Decrease) increase resulting from:
State and local income taxes, net
of federal income tax (44,000) 102,000 29,800
Nontaxable foreign income (30,000) (35,000) (56,000)
Other, net 77,000 36,000 30,800
----------- ----------- -----------
$(2,445,000) $ 1,400,000 $ 565,000
=========== =========== ===========
</TABLE>
<TABLE>
The components of deferred taxes included in the balance sheet as
of January 1, 2000 and December 26, 1998 are as follows:
<CAPTION>
1999 1998
----------- ----------
<S> <C> <C>
Deferred income tax assets:
Federal operating loss carryforwards $ 837,214 $ -
Other federal carryover 311,257 -
State operating loss carryforwards 607,403 341,278
Reserve for doubtful accounts 168,905 90,203
Inventory and other 234,590 257,394
Deferred compensation 1,106,819 1,375,014
Restructuring charge 238,369 -
Trademarks and other 62,715 143,536
----------- -----------
3,567,272 2,207,425
Valuation allowance (518,554) (327,813)
----------- -----------
3,048,718 1,879,612
----------- -----------
Deferred income tax liabilities:
Depreciation 2,325,045 2,534,639
Conversion costs capitalized 396,238 385,827
----------- -----------
2,721,283 2,920,466
----------- -----------
Net deferred tax liabilities $ 327,435 $(1,040,854)
=========== ===========
</TABLE>
<TABLE>
Net operating loss carryforwards for federal income tax purposes of
$2,800,000 expire in 2020. Net operating loss carryforwards for state
income tax purposes expire as follows:
<CAPTION>
<S> <C>
Year Amount
------ -----------
2000 $ 2,471,810
2001 1,529,629
2002 27,419
2003 -
Thereafter 4,215,012
-----------
$ 8,243,870
===========
</TABLE>
- -22-
H. LONG TERM DEBT
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
Long-term credit facility (i) $ 35,008,237 $ 14,707,881
Mortgage lease obligations (ii) - 1,250,016
Mortgage note (iii) 11,000,000 2,860,000
Other 462,254 407,623
------------ ------------
46,470,491 19,225,520
Less amount due in one year 35,269,433 18,923,100
------------ ------------
$11,201,058 $ 302,420
============ ============
</TABLE>
<TABLE>
<CAPTION>
Annual maturities of long-term debt are as follows:
<S> <C>
2000 .......... $ 35,269,433
2001 .......... 285,344
2002 .......... 311,765
2003 .......... 268,419
2004 .......... 204,134
Thereafter .... 10,131,396
------------
$ 46,470,491
============
</TABLE>
(i) On May 5, 1999, the Company entered into a new credit facility
with The Chase Manhattan Bank, as Agent ("The Facility"). The
Facility provides for a maximum line of credit of $80,000,000, which
includes both direct loans and letters of credit. The initial
proceeds of The Facility were used to repay the outstanding
indebtedness under the Company's previously existing bank line of
credit.
Availability under The Facility is based on a formula of eligible
accounts receivable and eligible inventory, determined monthly, and
provides for a seasonal over-advance of up to $10,000,000 within the
$80,000,000 maximum line of credit. Direct borrowings bear interest
at the London Interbank Offered Rate plus the applicable margin (as
defined in The Facility) or the Prime Rate, at the option of the
Company. The applicable margin is determined by a ratio of adjusted
E.I.B.I.T.A. to interest expense. Borrowings are collateralized by
accounts receivable, inventory and general intangibles of the Company
and its subsidiaries. The Facility expires in May 2002.
The Facility contains financial covenants relating to minimum
levels of net income, interest coverage, capital expenditures,
leverage, 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 up to .50 of 1% per annum on the unused
portion of the total facility plus certain other administrative costs.
Outstanding borrowings under the current facility amounted to
$35,000,000 at January 1, 2000 as compared to $14,708,000 at the same
time in 1998, under the previous facility. The increased borrowings
were primarily used to finance the increased level of accounts
receivable and inventories. At January 1, 2000, the Company had
unused lines of credit of $5,785,000 for direct borrowing or the
issuance of letter of credit. This availability is in addition to the
outstanding direct borrowing of $35,000,000 and letters of credit of
$16,645,000 outstanding at the end of 1999. Net working capital as of
the end 1999 was $43,997,000 as compared to $38,737,000 in 1998. The
working capital ratio at the end of 1999 was 1.9:1 as compared to
2.3:1 in 1998.
- -23-
At the end of December 1999, the Company was in violation of
convenants related to interest coverage and total operation loss.
Waivers were received in March 2000 and the agreement was amended to
reflect the expected operations for 2000.
(ii) The mortgage lease obligation was paid off in 1999.
(iii) During 1999, the Company entered, through a new wholly owned
subsidiary, 15 West 34th Street Corporation, into a new collateralized
mortgage loan agreement through a new wholly owned subsidiary,
15 West 34th Street Corporation, with the Chase Manhattan Bank acting as
agent on the New York office building. The proceeds were used to pay off the
Industrial Revenue Bond on the Kinston Facility as well as the
mortgage on the New York building. The remaining proceeds were used
in operating activities. The mortgage note was collateralized by
building and property having a carrying value at January 1, 2000 of
approximately $6,558,238 and is not guaranteed by the Company. The
mortgage note has a twenty-five year amortization period, is payable
monthly, is due in 2009, and has an effective interest rate of 8.45%.
At January 1, 2000, letters of credit amounting to approximately
$16,645,000 were outstanding which relate to purchase commitments
issued to foreign suppliers of approximately $26,215,000.
I. 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
The Board of Directors declared a 10% stock dividend in 1998 and
1999. The dividends were payable on July 2nd to stockholders of
record on June 2nd of both years. Basic and diluted (loss) earnings
per share have been restated for all periods presented to reflect the
stock dividends. Stock options have also been restated to reflect the
stock dividends.
The Company has a non-qualified stock option plan (the "Plan")
under which there are presently reserved 1,165,230 shares of common
stock. A committee designated by the Board of Directors administers
the Plan. 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 common stock of the Company. The exercise price of
options is equal to the fair market value on the date of each 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 1997, 1998 and 1999 is as follows:
- -24-
<TABLE>
<CAPTION>
Weighted
Number of Price Range Average Price
Shares per Share per Share
--------- ------------ -------------
<S> <C> <C> <C>
Outstanding at December 28, 1996 332,750 $3.72 $3.72
Granted 147,015 5.58 - 7.85 6.28
Exercised (968) 6.51 - 7.75 6.97
Canceled (7,260) 3.72 - 5.58 4.18
--------- ------------- ------------
Outstanding at December 27, 1997 471,537 3.72 - 7.85 4.51
Granted 399,905 5.99 - 6.09 6.00
Exercised (4,114) 3.72 3.72
Canceled (23,716) 3.72 - 7.85 4.95
--------- ------------- ------------
Outstanding at December 28, 1998 843,612 3.72 - 7.85 5.21
Granted 34,950 4.13 - 4.20 4.14
Exercised - - -
Canceled (153,142) 3.72 - 7.23 5.14
--------- ------------- ------------
Outstanding at January 1, 2000 725,420 $3.72 - $7.64 $5.17
========= ============= ============
Exercisable shares amounted to 274,428, as of January 1, 2000.
</TABLE>
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 are exercised. 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 $724,400 for the grants prior to
1998, $896,000 for the 1998 grants and $38,900 for the 1999 grants.
These amounts 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 risk-free interest rates from 5.5% to 6.7%, expected
volatility of 30.9% to 39.3% and a 5-year expected life. 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-three Fifty-two Fifty-two
Weeks Ended Weeks Ended Weeks Ended
January 1, December 28, December 27,
2000 1998 1997
------------ ----------- -----------
<S> <C> <C> <C>
Net (loss) income
- as reported $(4,756,209) $ 2,415,745 $ 1,083,086
============ =========== ===========
- pro forma $(4,935,885) $ 2,253,039 $ 1,014,086
============ =========== ===========
Net (loss) income per common share
- as reported $(.86) $.44 $.20
====== ==== ====
- pro forma $(.89) $.41 $.18
====== ==== ====
Diluted net income per common share*
- as reported $(.86) $.43 $.19
====== ==== ====
- pro forma $(.89) $.40 $.18
====== ==== ====
*Diluted earnings per share common share equivalents for 1999 have been
excluded because they are anti-dilutive.
</TABLE>
- -25-
J. PROFIT SHARING PLANS
The Company has a Qualified Profit Sharing and Retirement Savings
Plan (the "401-K Plan") that covers all associates of the Company.
During 1999, 1998 and 1997, 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 2000 at 40%. The Company has the option of
changing the matching contribution each year, the right to amend,
modify or terminate the Plan.
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. The participants in this
Supplemental Plan are no longer able to make salaried deferral
contributions to this plan. The Company has not made supplemental
profit sharing credits to this plan since 1995.
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. However, in 1998, the Company purchased life
insurance policies on the lives of the participants of which it is the
beneficiary. It is the intention of the Company that distributions
under the Supplemental Plan will continue to be made from general
assets of the Company until such time that the cash surrender value of
these policies will provide the funding necessary for the payment of
future benefits to the participants.
Effective January 1, 1998, the Company adopted a Nonqualified
Deferred Compensation Plan for Key Executives (the "Deferred Executive
Plan") to permit certain key executives to defer a portion
of compensation in order to provide retirement and death benefits on
behalf of such employees. The Company may provide a matching
contribution to the Deferred Executive Plan. The Company may provide
supplemental profit sharing credits which are determined at the
discretion of the Board of Directors. Amounts of matching
contributions and profit sharing credits are vested in the same manner
as vesting occurs under the Company's Qualified Profit Sharing and
Retirement Savings Plan. For 1998 the Company established a matching
rate of 20% of the executives' deferrals. For 2000 and 1999, the
Company has established a matching rate of 40% of the executives'
deferrals. The Deferred Executive 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 Deferred Executive Plan is held by the Company and
commingled with its general assets. However, executives' deferrals
and the Company's match are deposited each month in Company owned
insurance contracts. Within these contracts the employees have the
option of selecting a variety of investments. The return on these
underlying investments will determine the amount of earnings credit.
The Company has the option of changing the matching contribution each
year and the right to amend, modify or terminate the Deferred
Executive Plan.
- -26-
Effective January 1, 1999, the Company adopted a Nonqualified
Deferred Compensation Plan for Key Employees (the "Deferred Key Plan")
to permit certain key employees to defer receipt of current
compensation up to a maximum of $10,000 per year for 1999, and $10,500
for 2000, in order to provide retirement and death benefits on behalf
of such employees. The Company may provide a matching contribution to
the Deferred Key Plan. The Company may provide supplemental profit
sharing credits which are determined at the discretion of the Board of
Directors. Amounts of matching contributions and profit sharing
credits are vested in the same manner as vesting occurs under the
Company's Qualified Profit Sharing and Retirement Savings Plan. For
1999 and 2000 the Company has established a matching rate of 40% of
the employees deferrals. The Deferred 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 Deferred Key Plan is held by the Company and commingled with
its general assets. However, employee deferrals and the Company's
match are deposited each month in Company owned insurance contracts.
Within these contracts the employees have the option of selecting a
variety of investments. The return on these underlying investments
will determine the amount of earnings credit. The Company has the
option of changing the matching contribution each year and the right
to amend, modify or terminate the Deferred Key Plan.
<TABLE>
The Company matches to the plans are as follows:
<CAPTION>
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
401K Plan $ 367,400 $ 386,800 $ 362,000
Supplemental Plan - - -
Deferred Executive Key Plan 77,900 36,200 -
Deferred Key Plan 96,100 - -
--------- --------- ---------
Total $ 541,400 $ 423,000 $ 362,000
========= ========= =========
<CAPTION>
Interest and earnings to the plans are as follows:
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Supplemental Plan $ 245,900 $ 241,300 $ 273,000
Deferred Executive Key Plan 114,600 44,500 -
Deferred Key Plan 73,000 - -
--------- --------- ---------
Total $ 433,500 $ 285,800 $ 273,000
========= ========= =========
</TABLE>
- -27-
K. SELECTED QUARTERLY DATA (UNAUDITED)
<TABLE>
The following table sets forth selected quarterly financial
information for the fiscal years 1999 and 1998 (in thousands of
dollars, except per share amounts):
<CAPTION>
NET LOSS
-----------------------------
BASIC DILUTED
NET GROSS NET PER PER
QUARTER ENDED SALES MARGIN LOSS SHARE SHARE*
- -------------- -------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
3-27-99 $ 36,914 $ 10,200 $ (507) $(.09) $(.09)
6-26-99 30,937 8,692 (1,732) (.31) (.31)
9-25-99 50,170 12,665 (792) (.14) (.14)
1-01-00 74,540 15,380 (1,725) (.31) (.31)
-------- -------- --------
Y E A R $192,561 $ 46,937 $(4,756)
======== ======== ========
<CAPTION>
NET (LOSS) EARNINGS
------------------------------
NET BASIC DILUTED
NET GROSS (LOSS) PER PER
QUARTER ENDED SALES MARGIN INCOME SHARE SHARE*
- -------------- -------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
3-28-98 $ 34,311 $ 8,925 $ (266) (.05) (.05)
6-27-98 34,177 8,518 (202) (.04) (.04)
9-26-98 60,454 14,820 2,081 .37 .37
12-26-98 61,388 12,413 803 .14 .14
-------- -------- --------
Y E A R $190,330 $ 44,676 $ 2,416
======== ======== ========
*Diluted earnings per share common share equivalents for losses have been
excluded because they are anti-dilutive.
</TABLE>
L. 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.
<TABLE>
The Company's broad range of customers includes many large multi-
outlet retail chains, three of which account for a significant
percentage of sales volume, as follows:
<CAPTION>
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
J.C. Penney Co. 13% 14% 16%
K-Mart 12% 6% 4%
Wal-Mart Stores, Inc. 8% 12% 15%
</TABLE>
M. LITIGATION
The Company and its subsidiaries are party to various legal actions
arising in the ordinary course of business. In management's opinion,
the ultimate disposition of these matters will not have a material
adverse effect on its financial condition or results of operations.
- -28-
N. ACCRUED LIABLITIES
<TABLE>
Accrued liabilities consist of the following:
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Accrued expenses $2,870,675 $2,473,522
Accrued payroll 588,994 834,013
Accrued restructuring charges 711,270 -
Other 237,368 262,837
---------- ----------
$4,408,307 $3,570,372
========== ==========
</TABLE>
ITEM 9. DISAGREEMENTS OF ACCOUNTING AND FINANCIAL DISCLOSURE
None
- -29-
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 2000 Annual Meeting of Shareholders, which information is
incorporated herein by reference. Also see information contained
under the caption "Executive Officers of Registrant" on page 2 hereof.
ITEM 11. EXECUTIVE COMPENSATION
See "Compensation of Officers and Directors" on page 4 of the
Registrant's 2000 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 2000 Proxy
Statement, which information is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See "Certain Transactions with Management" on page 9 of the
Registrant's 2000 Proxy Statement, which information is incorporated
herein by reference.
- -30-
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 ......................................... 12
Consolidated balance sheets - January 1, 2000 and December 26, 1998 ... 13
Consolidated statements of operations - years ended January 1, 2000
December 26, 1998 and December 27, 1997 .............................. 14
Consolidated statements of stockholders' equity - years ended
January 1 2000, December 26, 1998, and December 27, 1997 ............. 15
Consolidated statements of cash flows - years ended January 1, 2000,
December 26, 1998 and December 27, 1997 .............................. 16
Notes to consolidated financial statements ......................... 17-30
(a)2. Financial Statement Schedule
Schedule II - Valuation and qualifying accounts ...................... 32
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 .......................... 33
(b) Reports on Form 8-K
None
- -31-
<TABLE>
HAMPTON INDUSTRIES, INC.
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>
RESERVE FOR DOUBTFUL ACCOUNTS
AND CUSTOMER ALLOWANCES:
Year ended:
January 1, 2000 $2,389,000 $2,302,582 $ 21,331 (A)
========== ========== ==========
December 26,1998 $2,304,000 $ (77,000) $ 162,000 (A)
========== ========== ==========
December 27,1997 $ 819,000 $1,470,531 $ 57,305 (A)
========== ========== ==========
<CAPTION>
Balance at
end
Description Deductions of period
- ----------------------------- ---------- ----------
<S> <C> <C>
RESERVE FOR DOUBTFUL ACCOUNTS
AND CUSTOMER ALLOWANCES:
Year ended:
Year ended January 1, 2000 $ 211,913 (B) $4,501,000
========== ==========
Year ended December 26, 1998 $ - (B) $2,389,000
========== ==========
Year ended December 27, 1997 $ 42,836 (B) $2,304,000
========== ==========
NOTES:
(A) Recoveries of accounts previously written off.
(B) Uncollectible accounts written off.
</TABLE>
- -32-
Exhibit 21
<TABLE>
HAMPTON INDUSTRIES, INC.
SUBSIDIARIES
------------
<CAPTION>
Name State of Incorporation
-------------------------- ----------------------
<S> <C>
Hamptex, Inc. North Carolina
IGM CORP., S.A. DE C.V. El Salvador
15th West 34th Street Corp North Carolina
Hampton owns 100% of the outstanding stock of each subsidiary and
they are included in the consolidated financial statements.
</TABLE>
- -33-
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/ROGER M. EICHEL
_____________________________________
Roger M. Eichel, Senior Vice President
and Secretary
S/FRANK E. SIMMS
_____________________________________
Frank E. Simms, Chief Financial Officer,
Treasurer, and Vice President of Finance
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/SOL SCHECHTER S/PAUL CHUSED
_______________________________ _______________________________
Sol Schechter, March 29, 2000 Paul Chused, March 29, 2000
(Director)
S/BARBARA HENAGAN
_______________________________
Barbara Henagan, March 29, 2000
(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.
- -34-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-01-2000
<PERIOD-END> JAN-01-2000
<CASH> 627,179
<SECURITIES> 0
<RECEIVABLES> 32,229,509
<ALLOWANCES> 0
<INVENTORY> 54,714,782
<CURRENT-ASSETS> 92,649,655
<PP&E> 18,901,529
<DEPRECIATION> 0
<TOTAL-ASSETS> 118,134,835
<CURRENT-LIABILITIES> 43,652,342
<BONDS> 0
0
0
<COMMON> 5,553,374
<OTHER-SE> 50,175,696
<TOTAL-LIABILITY-AND-EQUITY> 118,134,835
<SALES> 192,560,527
<TOTAL-REVENUES> 192,560,527
<CGS> 145,623,169
<TOTAL-COSTS> 145,623,169
<OTHER-EXPENSES> 50,558,220
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,245,548
<INCOME-PRETAX> (7,201,209)
<INCOME-TAX> (2,445,000)
<INCOME-CONTINUING> (4,756,209)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,756,209)
<EPS-BASIC> (.86)
<EPS-DILUTED> (.86)
</TABLE>
