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Hampshire Reports Fourth Quarter And Fiscal Year 2012 Results

On December 31, 2012, cash and cash equivalents totaled $12.5 million, compared with $25.8 million on December 31, 2011. The Company’s working capital related to continuing operations was $24.9 million at December 31, 2012 compared with $35.9 million at December 31, 2011. As of December 31, 2012, the Company had no outstanding borrowings from its credit facility with $3.1 million of availability and $12.5 million of cash and cash equivalents that is not included in the availability calculation.

About Hampshire Group

Hampshire Group, Limited ( www.hamp.com), along with its wholly-owned subsidiaries, Hampshire Brands, Inc., Rio Garment S.A. and scott james, LLC, is a provider of fashion apparel across a broad range of product categories, channels of distribution and price points. The Company specializes in designing and marketing men’s sportswear to department stores, chain stores and mass market retailers under licensed brands, our own proprietary brands and the private labels of our customers. The Company operates a Honduras-based apparel manufacturer, designing, sourcing and manufacturing knit tops for men, women and children. The Company also offers a full sportswear collection for men through the scott james® brand that is sold primarily at upscale department and specialty stores and online at www.scottjamesonline.com.

Cautionary Disclosure Regarding Forward-Looking Statements

This press release contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that reflect the Company's current views with respect to future events. Such statements are subject to certain risks and uncertainties which could cause actual results to differ materially from those projected. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to publish revised forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrences of unanticipated events. Readers are urged to review and consider carefully the various disclosures made by the Company in its Form 10-K and other Securities and Exchange Commission filings, which advise interested parties of certain factors that affect the Company's business. Risks and uncertainties that could cause actual results to differ materially from those anticipated in our forward looking statements include, but are not limited to, the following: A prolonged period of depressed consumer spending; use of foreign suppliers for raw materials and manufacture of our products including a manufacturing facility based in Honduras; lack of an established public trading market for our common stock; decreases in business from or the loss of any one of our key customers; financial instability experienced by our customers; chargebacks and margin support payments; loss of or inability to renew certain licenses; change in consumer preferences and fashion trends, which could negatively affect acceptance of our products by retailers and consumers; failure of our manufacturers to use acceptable ethical business practices; failure to deliver quality products in a timely manner; problems with our distribution system and our ability to deliver products; labor disruptions at ports, our suppliers, manufacturers or distribution facilities; failure, inadequacy, interruption or security lapse of our information technology; failure to compete successfully in a highly competitive and fragmented industry; challenges integrating any business we have acquired or may acquire; potential impairment of acquired intangible assets; unanticipated expenses beyond the amount reserved on our balance sheet or unanticipated cash payments related to the ultimate resolution of income and other possible tax liabilities; significant adverse changes to international trade regulations; loss of certain key personnel which could negatively impact our ability to manage our business; our stockholders’ rights plan potentially adversely affecting existing stockholders; risks related to the global economic, political and social conditions; fluctuation in the price of raw materials adversely affecting our results of operations; and energy and fuel costs are subject to adverse fluctuations and volatility.

   

Hampshire Group, Limited and Subsidiaries

Selected Financial Data

 
 
(In thousands, except per share data) 2012 2011
 
Net sales $ 117,560 $ 86,148
Cost of goods sold   94,106     71,588  
 
Gross profit 23,454 14,560
Selling, general and administrative expenses 33,965 27,977
Restructuring costs 644 179
Loss on lease obligation 6,306
Goodwill impairment loss       1,204  
 
Loss from operations (11,155 ) (21,106 )
Other income (expense):
Interest income 2 5
Interest expense (532 ) (400 )
Other, net   204     228  
 
Loss from continuing operations before income taxes (11,481 ) (21,273 )
 
Income tax provision (benefit)   1,041     (972 )
 
Loss from continuing operations (12,522 ) (20,301 )
Income from discontinued operations   783     10,341  
 
Net loss $ (11,739 ) $ (9,960 )
 
Basic loss per share:
Loss from continuing operations $ (1.72 ) $ (3.41 )
Income from discontinued operations   0.11     1.74  
 
Net loss $ (1.61 ) $ (1.67 )
 
Diluted loss per share:
Loss from continuing operations $ (1.72 ) $ (3.41 )
Income from discontinued operations   0.11     1.74 )
 
Net loss $ (1.61 ) $ (1.67 )
 
 
Basic and diluted weighted average number of common shares outstanding   7,271     5,941  
 
 
NON GAAP RECONCILIATION:
Net loss $ (11,739 ) $ (9,960 )
Income tax (benefit) provision 1,041 (972 )
Interest expense (income), net 530 395
Depreciation and amortization   3,750     2,606  
 
EBITDA   (6,418 )   (7,931 )
 
Restructuring costs 644 179
Stock based compensation   750     378  
 
Adjusted EBITDA $ (5,024 ) $ (7,374 )
 
The Company believes that supplementing its financial statements prepared according to generally accepted accounting principles in the United States (“GAAP) with certain non-GAAP financial measures, as defined by the Securities and Exchange Commission (“SEC”), provides a more comprehensive understanding of the Company’s results of operations. Such measures include EBITDA and Adjusted EBITDA and should not be considered an alternative to comparable GAAP financial measures, but should rather be read in conjunction with the GAAP financial measures. Certain items we previously included in Adjusted EBITDA such as goodwill impairment loss, acquisition costs, other income and expense, income or loss from discontinued operations and loss on lease obligation are not currently included in the calculation of Adjusted EBITDA because we do not believe that they are relevant to the ongoing operations of our Company. Readers are urged to review and consider carefully the various disclosures made by the Company in its Form 10-K for the year ended December 31, 2012 and other SEC filings, which advise interested parties of certain factors that affect the Company’s business.
 

SELECTED BALANCE SHEET DATA:

(excluding discontinued operations)

Dec. 31, 2012

Dec. 31, 2011

Cash and cash equivalents $ 12,500

$

25,801

Accounts receivable, net

 

$ 8,134

$

13,150

Inventories, net $ 22,194

$

18,591

Borrowings under credit facility $

$

Working capital   $ 24,926    

$

35,922

 




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