ITEM 1. BUSINESS
(a) General Development of Business
Hampton Industries, Inc. and its subsidiaries and divisions (herein referred to as "Hampton" or "Company") are engaged in the business of manufacturing and selling wearing apparel.
Hampton, a North Carolina Corporation, is the successor of several predecessor corporations, the first of which was incorporated in 1925 in the State of New York under the name of Hampton Shirt Co.
(b) Financial Information About Industry Segments
Hampton has been engaged in one line of business in excess of five years; reference is made to the financial statements included herein under ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
(c ) Narrative Description of Business
Hampton's principal products consist of men's and boy's shirts and men's and women's sleepwear, which are produced domestically and in Central America. In addition, sport and dress shirts, sweaters, activewear, outerwear and swimtrunks, for both men and boys are imported from unaffiliated sources located primarily in the Far East.
Hampton's products are principally sold at retail under private labels. However, the company also manufactures and sells apparel under the "Nautica for Boy's" and "Rawlings" trademarks as licensees and under the Company owned tradenames, "Le Tigre" and "Campus" for men and boys and the "Kaynee" for boys, which are. Branded apparel is becoming a more important part of the success of the Company's business.
New license agreements have been entered into with "Ron Chereskin" for men's sleepwear and loungewear, "Bugle Boy" for men's and boy's loungewear, "Apex" for activewear, "Dickies" for casual/rugged sportswear and Warner Brothers for novelty apparel. The "Rawlings" license has been expanded to include boy's activewear. These new lines will contribute moderately to sales in 1997.
Hampton designs its line of apparel. The Company's products are manufactured from various combinations of man-made and natural fibers which are readily available from a number of sources both domestically and imported. Hampton has no long-term contracts with any supplier. The average domestic production cycle is approximately five weeks from the time the fabric is scheduled for cutting until the finished product is received at the Company's distribution centers. The production cycle for goods imported or manufactured in Central America is approximately ten weeks, while the lead time for goods imported from the Far East can be as long as six months. The design and production specifications for imported products are provided to the manufacturers by Hampton. I-1
Hampton's products are sold throughout the United States, to approximately 2,750 customers including most of the country's leading national and regional retail chains and department stores. Sales are made by a nationwide sales staff of 70 salesmen, including 39 field representatives at the end of 1996. Sales offices are located in New York, and at the Company's executive and administrative headquarters in Kinston, North Carolina. As of December 28, 1996 the Company had approximately 960 full-time associates domestically and approximately 405 associates in the Caribbean. Hampton is not a party to any collective bargaining agreements, has never experienced a strike or work stoppage, and believes that it maintains satisfactory relationships with its associates.
Products sold under "License" accounted for 23%, 14% and 3% of the consolidated sales for 1996 and the prior two years, respectively.
Each of the above named was elected for one year or until the election of a successor. The next election shall take place immediately following the Annual Meeting of Shareholders to be held on May 22, 1997. There is no arrangement or understanding between any of the above pursuant to which they were elected as Officers.
All of the Executive Officers above named, except Robert J. Stiehl, Jr., Frank Simms and Leo Tutak, are related family members. Steven Fuchs is the son of David Fuchs, Roger Eichel is David Fuchs' son-in-law and Paul Chused is the nephew of David Fuchs and the cousin of Steven Fuchs.
Mr. David Fuchs has held his current executive position for in excess of five years. Mr. Steven Fuchs was elected to his present position in January, 1996. From 1993 to January 1996, Mr. Steven Fuchs was the President of Hampton Shirt Co. ( a subsidiary). Prior to 1993, he held various positions with the Company. Paul Chused was elected Vice President in January, 1996. From May, 1994 to January, 1996, Mr. Chused was President. From August, 1993 to May, 1994, he was Senior Vice President and Assistant Secretary and prior thereto, he was Vice President - Operations of the Company. Mr. Roger Eichel was elected to his present position in May, 1993 and prior thereto, he was Secretary of the Company. Mr. Robert J. Stiehl, Jr. Was elected to his present position in January 1995. For in excess of five years prior thereto, he was Vice President - Finance. Mr. Frank Simms was elected Vice President of Finance in May 1995. Prior to joining Hampton he was the Chief Financial Officer of Riverside Manufacturing Co. for in excess of five years. Mr. Tutak was elected to his present position in January, 1995. For in excess of five years prior thereto, he was Vice President of one of the Company's subsidiaries.
David Fuchs, Steven Fuchs and Paul Chused are also Directors of the Company. I-3
ITEM 2.
ITEM 2. PROPERTIES
Hampton operates three domestic manufacturing plants, one manufacturing plant in the Caribbean and three domestic distribution centers. The Company's sales and merchandising personnel occupy a building located in New York city. Hampton's principal executive and administrative offices are located in North Carolina. All of these properties are owned by the Company. The New York office is subject to a mortgage loan. The purchase of the executive and administrative office located in North Carolina was financed through an Industrial Revenue Bond issued through a state governmental agency. All bonds and mortgages are guaranteed by the Company and are secured by the underlying assets.
The Company believes that its plants and facilities are in good repair and adequate in respect to its foreseeable needs. The machinery and equipment utilized in its facilities are considered by management to be modern and efficient.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
None significant
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II
ITEM 5.
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
The Company has not paid a cash dividend on its common stock since 1973. The present credit agreement includes restrictive covenants which, among other things, prevent the payment of cash dividends. I-4
( c) Approximate Number of Holders of Common Stock
The number of holders of record of Hampton's Common Stock as of December 28, 1996 was approximately 372, including, as a single holder of record, brokerage firms having more than one stockholder account.
The Company has not paid cash dividends on its common stock since 1973.
The Company uses the LIFO method of costing principally all of its inventories to more fairly present the results of operations by matching current costs with current revenues. The LIFO method had the effect of increasing net earnings by $504,800 ($.11 per share) in 1996, $153,800 ($.03 per share) in 1995 and $64,400 ($.01 per share) in 1994. The income realized as a result of inventory liquidation was $668,200 ($.15 per share) in 1996, was not significant in 1995 and $510,400 ($.11 per share) in 1994. I-5
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analyses of the consolidated results of operations and financil conditions should be read in conjunction with the accompanying financial statements and related notes to provide additional information concerning the Company's financial activities and conditions.
Results of Operations
Fiscal 1996 Versus Fiscal 1995
Net sales for 1996 declined by 13.0%. A decline of 17.4% in units shipped was partially offset by an increase of 5.5% in the average selling price. The increase in average selling price is primarily due to the greater influence of the "branded" product sales.
Gross profit margins increased by $3,806,000 for 1996. As a percent of sales this represented a increase of 4.9% from 16.9% in 1995 to 21.8% in 1996. Two programs that generated approximately $16,000,000 in sales during 1995 were discontinued by the Company. These programs were not profitable and their elimination contributed to the improvement in the margin.
Selling, general and administrative expenses declined by $957,000 in 1996. However, as a percent of sales, there was an increase to 18.2% in 1996 from 16.4% in 1995. "Barnded" products, for which royalty and advertising expenses are recorded, increased to 23.3% in 1996 from 14.2% of sales in 1995 and, as a result, royalty and advertising expenses were 2.1% of sales in 1996 and 1.4% in 1995 increasing by $823,000 in 1996. I-6
In 1995 the Company closed two manufacturing facilities which completed the Company's program of reducing excess domestic production capacity begun in 1991. The closing costs related thereto are included in the statement of operations as Provision for restructuring costs. The restructuring reduced the work force by approximately 400 associates or 25% of total employees. Plant closing costs totaled approximately $1,211,000 representing severance pay, payroll taxes and a noncash charge of $610,000 relating to the write-down of manufacturing equipment to estimated realizable value.
A portion of the Company's corporate office building in New York is leased to third parties. Rental income (net of related expenses) is classified separately.
Interest expense decreased by $908,000 from 1995. This decline is the result of a lower level of borrowing during the year which occurred from better management of receivables and inventory levels.
The effective tax rate increased to 31.6% in 1996 from a benefit rate of 24.9% in 1995. The effective rate in 1995 was impacted by the loss of certain future state tax benefits. The 1996 effective rate is less than the statutory rate due primarily to the utilization of certain carryover job tax credits and alternative minimum tax carryovers.
Fiscal 1995 Versus Fiscal 1994
Net sales for 1995 increased by approximately 7%. A decline of 4% in units shipped was offset by an increase of 12% in average selling price. The increase in average selling price is primarily due to the greater influence of the "branded" product sales. Profit margin declined by $871,000 for 1995. As a percent of sales this represented a decline of 1.7%. Two specific customer programs were no longer profitable and have been discontinued. These two programs generated approximately $16,000,000 of sales in 1995 and will not be replaced in 1996. In addition, certain sales divisions were discontinued that resulted in the liquidation and mark down of certain inventories. Selling, general and administrative expenses declined to 16.4% of sales for 1995 from 16.7% in 1994. In 1995 the Company closed two manufacturing facilities which completed the Company's program of reducing excess domestic production capacity begun in 1991. The closing costs related thereto are included in the statement of operations as a provision for restructuring costs. The restructuring reduced the work force by approximately 400 associates or 25% of total employees. Plant closing costs totaled approximately $1,211,000 representing severance pay, payroll taxes and a noncash charge of $610,000 relating to the write-down of the manufacturing equipment to estimated realizable value. Interest expense increased by $1,638,000 from 1994. Approximately two thirds of this increase was due to a higher level of borrowing with the remainder due to higher effective interest rates. The higher level of borrowing was the result of certain delays in order delivery dates from our customers which increased inventory levels during the course of the year, as well as, the higher level of inventory required to support the growing sales volume of the "Branded" products. The effective tax benefit rate decreased to 24.9% in 1995 from the effective tax rate expense of 30.6% in 1994 primarily as a result of the loss of future state tax benefits that were generated in the current year. I-7
Liquidity and Capital Resources
On May 3, 1996, Hampton entered into a credit facility with BNY Financial Corporation, as Agent ("New Facility"). The New Facility provides for a maximum line of credit of $100,000,000, which includes both direct loans and letters of credit. The initial proceeds of the New Facility were used to repay the outstanding indebtedness under the Company's previously existing bank line of credit.
Availability under the New Facility is based on a formula of eligible accounts receivable and eligible inventory and provides for a seasonal overadvance of up to $17,000,000 within the $100,000,000 maximum line of credit. Direct borrowings bear interest at the London Interbank Offered Rate plus the applicable margin (as defined in the New Facility) or the Prime Rate, at the option of the Company. Borrowings are collateralized by accounts receivable, inventory and general intangibles of the Company and its subsidiaries. The New Facility expires in May 1999.
The New Facility contains financial covenants, including but not limited to, tangible net worth and interest coverage, limits fixed asset purchases and does not allow for the payment of cash dividends. The Company is not rrequired to maintain compensating balances, however, it is required to pay a fee off 1/4 of 1% per annum on the unused portion of the total facility plus certain other administrative costs.
Outstanding borrowings under the New Facility amounted to $400,000 at December 28, 1996 as compared to $19,600,000 in 1995. Net working capital as of the end of 1996 was $40,158,000 as compared to $37,501,000 in 1995. The working capital ratio as of the end of 1996 was 4.5:1 as compared to 2.1:1 in 1995.
During 1996, cash provided by operations totaled approximately $22,000,000 compared to $9,600,000 being used in 1995. The reduction of inventory levels, improved earnings and better management of receivables contributed to this positive result.
Additions to plant, property and equipment which represented normal replacement and upgrading of equipment were approximately $600,000 in both 1996 and 1995. Capital expenditures for 1997 are expected to be higher than 1996 and will be financed from operations.
The increase in other assets is due to deferred financing costs associated with the New Facility, which is being amortized over the life of the credit agreement and unamortized in-store fixture cost which are being amortized over 36 months.
In 1993, the Company entered into two joint ventures in Central America for the purpose of producing apparel under the Caribbean Basin Incentive program or as imports. Effective December 1, 1996 purchased the 50% ownership interest of its joint venture partner in one of the ventures for $1,267,000. This entity has been consolidated since the date of acquisition. This transaction resulted in recording goodwill of $240,000 which is being amortized over 10 years. The Company continues to maintain a 50% interest in the other joint venture. I-8
The positive cash flow generated from operating activities enabled the Company to reduce its bank debt by approximately $20,221,000.
At December 28, 1996, the Company had unused lines of credit of $21,110,000 for direct borrowings or this issuance of letters of credit. This availability is in addition to the outstanding direct borrowings of $400,000 and letters of credit of $21,908,000 outstanding at the end of 1996.
The credit that is available under the New Facility, together with the cash expected to be provided from operations, is adequate to meet the Company's financing needs for the foreseeable future. I-9
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders of Hampton Industries, Inc.
We have audited the accompanying consolidated balance sheets of Hampton Industries, Inc. and subsidiaries as of December 28, 1996 and December 30, 1995, and the related consolidated statements of operations, shareholders' equity and cash flows for the years ended December 28, 1996, December 30, 1995 and December 31, 1994. Our audits also included the financial statement schedule listed in the index at Item 14 (a)(2). These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material respects, the financial position of Hampton Industries, Inc. and subsidiaries as of December 28, 1996 and December 30, 1995 of their operations and their cash flows for the years ended December 28, 1996, December 30, 1995 and December 31, 1994 in conformity with generally accepted accounting principles. Also, in our opinion, the financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in all material respects the information set forth therein.
March 12, 1997 New York, New York I-10
See notes to consolidated financial statements. I-11
See notes to consolidated financial statements. I-12
See notes to consolidated financial statements. I-13
See notes to consolidated financial statements. I-14
HAMPTON INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 28, 1996, DECEMBER 30, 1995 AND DECEMBER 31, 1994
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business The Company is engaged in the business of manufacturing and selling wearing apparel. The principal products consist of men's and boy's shirts and men's and women's sleepwear, which are produced domestically and in Central America. In addition, Sport and dress shirts, sweaters, activewear, outerwear and swimtrunks, for both men and boys are imported from unaffiliated sources located primarily in the Far East.
Principles of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly-owned. All significant intercompany profits, transactions and balances have been eliminated. The Company has an investment in a 50% owned but not controlled entity which is accounted for by the equity method.
Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Inventories Inventories are carried at the lower of cost or market value. As described in Note B, the cost of substantially all inventory is determined by the last-in, first-out (LIFO) method.
Property, Plant and Equipment Expenditures for buildings, equipment and improvements are capitalized and depreciated or amortized on a straight-line basis over their estimated useful lives. Estimated useful lives of assets are based upon the following ranges: land improvements, 30 years, buildings and leasehold improvements, 30 to 35 years, machinery and equipment, 3 to 15 years and furniture and fixtures, 5 to 10 years.
In-Store Displays The costs for in-store displays for certain customers are borne by the Company in whole or in part. Such cost are capitalized and amortized over a thirty-six month period.
Deferred Financing Costs The costs associated with obtaining and closing the Company's New Credit facility have been deferred and are being amortized over the term of the agreement (Note E). I-15
Long-Lived Assets In March 1995, the Financial Accounting Standards Board issued Statement Number 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." This statement is effective for fiscal years beginning after December 15, 1995. The Company has adopted this statement and the impact has not been significant.
Revenue Recognition Sales revenue is recognized upon shipment of product, which is when title to the product passes to the customer.
Income Taxes Deferred income taxes are provided to reflect the tax effect of temporary differences between financial statement income and taxable income in accordance with the provisions of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes".
Earnings (Loss) per Common Share Earnings (loss) per common share is computed by dividing net earnings (loss) by the weighted average number of common shares outstanding during each period.
Stock Options and Warrants In October 1995, the Financial Accounting Standards Board issued SFAS No. 123, "Accounting for Stock-Based Compensation". The standard encourages, but does not require, companies to recognize compensation expense of grants for stock, stock options and other equity instruments to employees based on fair value accounting rules. The Company has elected to continue to follow the provisions of APB Opinion 25 and related Interpretations in accounting for employee stock options (Note F).
Fair Value of Financial Instruments During October 1994, the Financial Accounting Standards Board issued SFAS 107, "Disclosure about Fair Value of Financial Instruments". This statement requires the disclosure of estimated fair values for all financial instruments for which it is practicable to estimate fair value. For financial instruments including cash, accounts receivable and payable, accruals, notes payable - banks and current maturities of long- term debt, it was assumed that the carrying amount approximated fair value because of their short maturity. The carrying amount of the non-current portion of mortgage notes due through the year 2000, all of which bear interest at floating rates, are also assumed to approximate their fair values. Investments In and Advances to Unconsolidated Affiliates The investment in the remaining joint venture is carried on the equity basis, which approximates the Company's equity in the unconsolidated entity's underlying net book value. Advances receivable from the unconsolidated entity were $478,764 at December 28, 1996. I-16
Principally all inventories are valued at the lower of last-in, first- out (LIFO) cost or market. Information related to the first-in, first-out (FIFO) method may be useful in comparing operating results to those of companies not on the LIFO method. On a supplemental basis, if inventories had been valued at the lower of FIFO cost or market, inventories at December 28, 1996 and December 30, 1995 would have been approximately $35,100,000 and $51,400,000, respectively. The LIFO valuation method had the effect of increasing net earnings by $504,800 ($.11 per share) in 1996, $153,800 ($.03 per share) in 1995 and $64,400 ($.01 per share) in 1994. The income realized as a result of inventory liquidation approximated $668,200 ($.15 per share) in 1996, was not significant in 1995 and $510,400($.11 per share) in 1994. Included in finished goods are inventory in transit of $4,453,000 in 1996 and $7,139,300 in 1995.
I-17
The following is a reconciliation of the statutory federal income tax rate applied to pre-tax accounting earnings (loss), with the income tax provision (benefit) in the consolidated statements of operations:
I-18
(i) On May 3, 1996, the Company entered into a new credit facility with BNY Financial Corporation, as Agent ("New Facility"). The New facility provides for a maximum line of credit of $100,000,000, which includes both direct loans and letters of credit. The initial proceeds of the New Facility were used to repay the outstanding indebtedness under the Company's previously existing bank line of credit. Availability under the New Facility is based on a formula of eligible accounts receivable and eligible inventory and provides for a seasonal overadvance of up to $17,500,000 within the $100,000,000 maximum line of credit. Direct borrowings bear interest at the London Interbank Offered Rate, plus the applicable margin (as defined in the New Facility) or the Prime Rate, at the option of the Company. Borrowings are collateralized by accounts receivable, inventory and general intangibles of the Company and its subsidiaries and the New Facility expires in May 1999. The New Facility contains financial covenants, including but not limited to, tangible net worth and interest coverage, restricts fixed asset purchases and does not allow for the payment of cash dividends. The Company is not required to maintain compensating balances, however, it is required to pay a fee of 1/4% of 1% per annum on the unused portion of the total facility and certain other administrative costs.
(ii) The 8 1/4% mortgage notes were payable primarily to principal stockholders of the Company and members of their families. I-20
(iii) The mortgage notes and capitalized lease obligations are collateralized by building and property having a carrying value at December 28, 1996 of $8,178,867. The effective interest rate on the aggregate amount of capitalized leases at December 28, 1996 was 5.34%. The effective interest rate on the mortgage note due in 2000 at December 28, 1996 was 7.98%.
At December 28, 1996, letters of credit amounting to approximately $21,908,300 were outstanding which relate to purchase commitments issued to foreign suppliers of approximately $30,970,500.
F. STOCKHOLDERS' EQUITY
Preferred Stock The Company has authorized 14,140.5 shares of $7 cumulative First Preferred Stock, par value of $100, none of which is issued. In addition, the Company has authorized 1,000,000 shares of Second Preferred Stock, par value of $1, none of which has been issued. The Board of Directors is authorized to fix designations, relative rights, preferences and limitations on the stock at the time of issuance.
Common Stock In 1992, the stockholders approved a non-qualified stock option plan (the "Plan") under which it has reserved 363,000 shares of common stock and expires in 2002. The Plan is administered by a committee designated by the board of directors. Options granted to eligible employees are exercisable in increments of 20% annually. Stock to be offered under the Plan consists of shares, whether authorized but unissued or reacquired by the Company, of the common stock of the Company. On May 30, 1996, options were granted for 279,500 shares at $4.50 per share, the fair market value on the date of grant. The exercise price may be paid in cash, common stock of the Company, or a combination thereof. A summary of the changes in common stock options during 1996 is as follows:
None of the stock options were exercisable at December 28, 1996. I-21
The Company applies the provisions of APB Opinion 25 and related Interpretations in accounting for its stock options. Accordingly, no compensation cost has been recognized for the foregoing options. The excess, if any, of the fair market value of shares on the measurement date over the exercise price is charged to operations each year as the options become exercisable. Had compensation cost for these options been determined using the Black-Scholes option-pricing model described in FASB Statement 123, the Company would have recorded aggregate compensation expense of approximately $490,100 which would be expensed at the rate of 20% per annum over the option's vesting period. The assumptions used in the option-pricing model include a risk-free interest rate of 6.7%, expected life of 3 years and ten months and expected volatility of 39.25%. The pro forma impact of following the provisions of FASB Statement 123 on the Company's operations and income per share would be as follows:
Net income per share has been calculated using the weighted average shares outstanding during the periods.
G. PROFIT SHARING PLANS
On December 31, 1995, the Company merged two qualified profit sharing plans into a single plan (the Plan) that is in compliance with the regulations of the Internal Revenue Service Code for qualification as a 401-K plan. The Plan covers all associates of the Company. During 1996, the Company made a matching contribution of 40% of the deferral amount that the associates elect to make (as limited by the Internal Revenue Service Code) and has set the matching contribution rate for 1997 at 40%. The Company has the option of changing the matching contribution each year, the right to amend, modify or terminate the Plan. Company contributions to the plan were $160,475 for 1996. Under the predecessor plans, the Company contributions aggregated $248,000 and $446,000 for 1995 and 1994, respectively. The Company also maintains a Supplemental Retirement Plan for Key Employees (the Supplemental Plan) to permit certain key associates to defer receipt of current compensation in order to provide retirement and death benefits on behalf of such associates. Company profit sharing credits are determined at the discretion of the Board of Directors. Amounts of profit sharing credits are vested in the same manner as vesting occurs under the Company's Qualified Profit Sharing and Retirement Savings Plan. An annual return equal to the Moody's AAA Corporate bond rate is added to each participant deferred compensation account balance and employer profit sharing credit account balance. The Company may provide supplemental profit sharing credits to one or more active participants in the Supplemental Plan, the amount of which shall be determined by the Board of Directors in its sole and absolute discretion. I-22
As of January 1, 1996, the participants in this Supplemental Plan were no longer able to make salaried deferrals. The Company credited interest and profit sharing credits to the participants as follows:
The Supplemental Plan is not intended to be a qualified plan under the provisions of the Internal Revenue Code. It is intended to be unfunded and, therefore, all compensation deferred under the Supplemental Plan is held by the Company and commingled with its general assets.
H. SELECTED QUARTERLY DATA (UNAUDITED)
The following table sets forth selected quarterly financial information for the fiscal years 1996 and 1995 (in thousands of dollars, except per share amounts):
I. CONCENTRATION OF CREDIT RISK
Trade receivables potentially subject the Company to credit risk. The Company extends credit to its customers based upon an evaluation of the customer's financial condition and credit history and generally does not require collateral. The Company has historically incurred minimal credit losses. The Company's broad range of customers includes many large multi- outlet retail chains, two of which account for a significant percentage of sales volume, as follows:
I-23
J. RESTRUCTURING COSTS
In 1995 the Company closed two manufacturing facilities which completed the Company's program of reducing excess domestic production capacity begun in 1991. The closing costs related thereto are in the statement of operations as Provision for restructuring costs. The restructuring reduced the work force by approximately 400 associates or 25% of total employees. Plant closing costs totaled approximately $1,211,000 representing severance pay, payroll taxes and a noncash charge of $610,000 relating to the write-down of manufacturing equipment to estimated realizable value.
K. CUSTOMS DUTY REFUNDS
In 1994, the Company received funds of contervailing customs duties assessed by the U. S. Customs in 1990 and 1991 on certain imported products which were determined not to be subject to anti-dumping provisions.
L. ACCRUED LIABILITIES
ITEM 9.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None I-24
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
See "Election of Directors" on page 2 of the Proxy Statement for Registrant's 1997 Annual Meeting of Shareholders, which information is incorporated herein by reference. Also see information contained under the caption "Executive Officers of Registrant" on page 3 hereof.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
See "Compensation of Officers and Directors" on page 4 of the Registrant's 1997 Proxy Statement, which information is incorporated herein by reference.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
See "Voting Securities" on page 1 of the Registrant's 1997 Proxy Statement, which information is incorporated herein by reference.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See "Certain Transactions with Management" on page 11 of the Registrant's 1997 Proxy Statement, which information is incorporated herein by reference. I-25 PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A)1. Financial Statements
The following consolidated financial statements of Hampton Industries, Inc. and its subsidiaries are included in Part II, Item 8:
Independent Auditors' Report ______________________ 10
Consolidated balance sheets - December 28, 1996 and December 30, 1995 __________________________________________________ 11
Consolidated statements of operations - years ended December 28, 1996, December 30, 1995 and December 31, 1994 _____ 12
Consolidated statements of stockholders' equity - years ended December 28, 1996, December 30, 1995 and December 31, 1994 _____ 13
Consolidated statements of cash flows - years ended December 28, 1996, December 30, 1995 and December 31, 1994 _____ 14
Notes to consolidated financial statements _______ 15-24
(a)2. Financial Statement Schedule
Schedule II - Valuation and qualifying accounts _ 27
All other schedules have been omitted because they are inapplicable or not required, or the information is included elsewhere in the financial statements or notes thereto.
(a)3. Exhibits
Exhibit No. 21 - Subsidiaries of the Company _____ 28
(b) Reports on Form 8-K
None I-26
HAMPTON INDUSTRIES, INC.
NOTES:
(A) Recoveries of accounts previously written off.
(B) Uncollectible accounts written off. I-27
Exhibit 21 HAMPTON INDUSTRIES, INC.
Subsidiaries
Name State of Incorporation Production Link, Ltd. New York Samsons Inc. North Carolina Samsons Manufacturing Corp. North Carolina Kinston Shirt Company North Carolina Samsons Apparel Corp. North Carolina (wholly-owned subsidiary of Samsons Manufacturing Corp.) Kinston Paper Box Co., Inc. North Carolina Kinston Die Cutting Corp. North Carolina Hampco Apparel, Inc. Maryland Hampton Shirt Co., Inc. New York Hampton Shirt Co., Inc. North Carolina Snow Hill Apparel Co., Inc. North Carolina Hamptex, Inc. North Carolina IGM Corp., S.A. de C.V. El Salvador
Hampton owns 100% of the outstanding stock of each subsidiary, except as indicated, and all are included in the consolidated financial statements. Subsequent to the end of the year, all of the subsidiaries, except Hamptex, Inc. and IGM Corp., S.A. de C.V. were merged into Hampton Industries, Inc. I-28
SIGNATURES
Pursuant to requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Hampton Industries, Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
HAMPTON INDUSTRIES, INC.
S/DAVID FUCHS _____________________________________ David Fuchs, Chairman and Director
S/STEVEN FUCHS _____________________________________ Steven Fuchs, President and Director
S/ROBERT J. STIEHL, JR. _____________________________________ Robert J. Stiehl, Jr., Executive Vice President - Operations, Chief Financial Officer and Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report had been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated:
S/HERBERT L. ASH S/SOL SCHECHTER _______________________________ _______________________________ Herbert L. Ash, March 19, 1997 Sol Schechter, March 19, 1997 (Director) (Director)
S/GERALD FRIEDER S/PAUL CHUSED _______________________________ _______________________________ Gerald Frieder, March 19, 1997 Paul Chused, March 19, 1997 (Director) (Director)
The Company's annual report to stockholders and proxy material is to be furnished to its security holders subsequent to the filing of the annual report on this form. Copies of such material will be furnished to the Commission when it is sent to security holders. I-29