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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

  

FORM 10-Q

  

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

  

For the quarterly period ended June 27, 2015

  

OR

  

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

  

For the transition period from U                    U to U                    U

 

Commission File Number: 000-20201

  

UHAMPSHIRE GROUP, LIMITEDU
(Exact name of registrant as specified in its charter)

  

Delaware	06-0967107
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
114 W. 41st Street, New York, New York	10036
(Address of principal executive offices)	(Zip Code)

 

(212) 840-5666

(Registrant’s telephone number, including area code)

 

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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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐No ☑  

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☐No ☑

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☐ (Do not check if a smaller reporting company)	Smaller reporting company ☑

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ☐    No ☑

 

Number of shares of common stock outstanding as of February 1, 2016: 8,795,530

 

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HAMPSHIRE GROUP, LIMITED

TABLE OF CONTENTS

QUARTERLY REPORT ON FORM 10-Q

For the Quarterly Period Ended June 27, 2015

      

“SAFE HARBOR” STATEMENT	ii
PART I – FINANCIAL INFORMATION	1
Item 1. Financial Statements.	1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	16
Item 3. Quantitative and Qualitative Disclosures About Market Risk.	24
Item 4. Controls and Procedures.	24
PART II – OTHER INFORMATION	26
Item 1. Legal Proceedings.	26
Item 1A. Risk Factors.	26
Item 6. Exhibits	27
SIGNATURES	29

 

 

“SAFE HARBOR” STATEMENT

UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

 

From time to time, we make oral and written statements that may constitute “forward-looking statements” (rather than historical facts), as defined in the Private Securities Litigation Reform Act of 1995 or by the Securities and Exchange Commission (the “SEC”) in its rules, regulations and releases, including Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We desire to take advantage of the “safe harbor” provisions in the Private Securities Litigation Reform Act of 1995 for forward-looking statements made from time to time, including, but not limited to, the forward-looking statements made in this Quarterly Report on Form 10-Q for the quarter ended June 27, 2015 (the “Form 10-Q”), as well as those made in other filings with the SEC.

 

Forward-looking statements can be identified by our use of forward-looking terminology such as “may,” “will,” “expect,” “anticipate,” “should,” “would,” “could,” “attempt,” “project,” “estimate,” “believe,” “continue,” “forecast,” “foresee” and other terms with similar meaning indicating possible future events or potential impact on our business or stockholders. The reader is cautioned not to place undue reliance on these forward-looking statements, which are not guarantees of future performance. The forward-looking statements are based on management’s current assumptions, beliefs, plans and expectations, all of which are subject to risks, uncertainties and changes in plans that could cause actual results to differ materially from those described in the forward-looking statements. The potential risks and uncertainties that could cause our actual future financial condition and results of operations to differ materially from those expressed or implied in our forward-looking statements include, but are not limited to, the risks described in Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K for the fiscal year ended December 31, 2014 (the “2014 Annual Report”) and other information set forth in this Form 10-Q.

 

We expressly disclaim any obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.

 

As used herein, except as otherwise indicated by the context, the terms “Hampshire,” “Company,” “we,” “our” and “us” are used to refer to Hampshire Group, Limited and our wholly-owned subsidiaries.

    

EXPLANATORY NOTE

 

As previously reported, we were unable to timely file our Quarterly Report on Form 10-Q for the third quarter of fiscal 2015. We expect to file our third quarter 2015 Form 10-Q Report in the near future. Except as specifically set forth herein, this Form 10-Q Report speaks only as of June 27, 2015 and the period then ended and does not reflect events or results of operations that may have occurred subsequent to June 27, 2015.

 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

Hampshire Group, Limited

Unaudited Condensed Consolidated Balance Sheets

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

   

Hampshire Group, Limited

Unaudited Condensed Consolidated Statements of Operations

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

 

Hampshire Group, Limited

Unaudited Condensed Consolidated Statement of Stockholders’ Deficit

  

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

 

Hampshire Group, Limited

Unaudited Condensed Consolidated Statements of Cash Flows

  

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

 

 Hampshire Group, Limited

Notes to Unaudited Condensed Consolidated Financial Statements

 

  

 

 

  

  

 

 

 

 

  

  

  

  

 

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

  

FORWARD-LOOKING STATEMENTS

 

The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included in Item 1. Financial Statements in this report. The following discussion contains statements that are forward-looking. These statements are based on expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of, among other reasons, factors discussed in the “Safe Harbor” statement on page ii of this report, in Part I, Item 1A. Risk Factors of our 2014 Annual Report and elsewhere in this report. Our 2014 Annual Report includes the following risk factors:

 

●

there is substantial doubt about our ability to continue as a going concern due to: the February 29, 2016 maturity date of our credit facility, potentially insufficient liquidity to fund our operations, our history of losses and our stockholders’ deficit. Our auditor’s opinion, for the year ended December 31, 2014, noted that these conditions raise substantial doubt about our ability to continue as a going concern;

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risks from the sale of Rio Garment S.A.;

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matters related to our Audit Committee investigation;

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identified material weaknesses in our internal controls;

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restricted ability to borrow under our credit facility;

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a prolonged period of depressed consumer spending;

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use of foreign suppliers for raw materials and manufacture of our products;

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volatility in the trading price of our common stock and the 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;

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financial instability experienced by our customers;

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chargebacks and margin support payments;

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loss of or inability to renew certain licenses;

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change in consumer preferences and fashion trends, which could negatively affect acceptance of our products by retailers and consumers;

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failure of our manufacturers to use acceptable ethical business practices;

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failure to deliver quality products in a timely manner;

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problems with our distribution system and our ability to deliver products;

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labor disruptions at ports, our suppliers, manufacturers or distribution facilities;

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failure, inadequacy, interruption or security lapse of our information technology;

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failure to compete successfully in a highly competitive and fragmented industry;

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challenges integrating any business we have acquired or may acquire;

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potential impairment of acquired intangible assets;

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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;

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significant adverse changes to international trade regulations;

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loss of certain key personnel which could negatively impact our ability to manage our business;

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risks related to the global economic, political and social conditions;

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fluctuations in the price of raw materials adversely affecting our results of operations;

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adverse fluctuations and volatility in our energy and fuel costs; and,

●

cyber-security risks related to breaches of security pertaining to sensitive company, customer, employee, and vendor info.

 

 

 

OVERVIEW

 

We are a provider of fashion apparel across a broad range of product categories, channels of distribution and price points. As a holding company, we operate through our wholly-owned subsidiaries, Hampshire Brands, Inc. (“Hampshire Brands”) and Hampshire International, LLC. As noted above, we completed the sale of Rio Garment S.A. (“Rio”) effective April 10, 2015.

 

Hampshire Brands designs and markets men’s sportswear to department stores, chain stores and mass market retailers under licensed brands. We offer a full tops assortment under the Dockers® brand and a full men’s assortment under our James Campbell® brand (which is discussed further below), both of which are licensed. Under our multi-year licensing agreement with Dockers® for its men’s “good” category tops in the United States, we oversee the design, production, sales and distribution of the line to certain chain and department stores including Kohl’s Department Stores, Inc., J.C. Penney Company, Inc. and Sears Holding Corporation. The woven and knit line includes button down shirts, polos, fleece tops and t-shirts and we believe that these categories complement and strengthen the marketability of our Dockers® sweater offering and, taken together, help to ensure we have a compelling international brand to offer to retailers.

  

We believe our primary strength is our ability to design, develop, source and deliver quality products within a given price range, while providing superior levels of customer service. Our diversification of product lines allows for multi-category licensing through Hampshire Brands. We have developed international sourcing abilities that permit us to deliver quality merchandise at competitive prices to our customers.

 

The apparel market is highly competitive. Competition is primarily based on product design, price, quality and service. We face competition from apparel designers, manufacturers, importers, licensors and our own customers’ private label programs, many of which are larger and have greater financial and marketing resources than we have available to us.

 

We remain focused on exploring opportunities to grow our sales and expand our retail relationships, leveraging our operating platform in the men’s business and actively pursuing other strategic opportunities. We continually review our portfolio of labels, business lines and divisions to evaluate whether they meet profitability and performance requirements and are in line with our business strategy and evaluate potential acquisitions, partnerships or license arrangements that leverage or complement our strengths.

 

In February 2014, we entered into an installment purchase and sale agreement with Maverick J, LLC, a Rick Solomon company, for the acquisition of the privately-held James Campbell® brands. James Campbell® is a West Coast designer brand positioned in the luxury sector of the men’s market and operates under the brands James Campbell, J. Campbell, Cultura International and Malibu Cowboy. James Campbell is sold in better stores in the United States with Nordstrom, Inc. the largest customer.

 

In April 2014, we entered into a license agreement with Levi Strauss & Co. for their Dockers brand in the women’s apparel category. The agreement provides us with the licensing rights to design, source, market and service the women’s category for both tops and bottoms beginning with the Spring 2015 season. The license is for the U.S. market beginning with Spring 2015 and extends to include Mexico and Canada for Fall 2015. In May 2014, we entered into an extension to our license agreement with Levi Strauss & Co. for their Dockers brand’s men’s tops business, which includes knit and woven tops, as well as sweaters for the U.S. market. Each of these agreements, as amended, runs through November 2017.

 

Termination of License Agreement with Sole Asset Holdings, Inc.

On April 27, 2015, we announced that we agreed to terminate, effective as of February 28, 2015, our license agreement with Sole Asset Holdings, Inc., which does business under the name Gramicci, a California-based hiking and climbing-inspired brand owned by our Chief Executive Officer, Paul Buxbaum. We entered into the license agreement on July 1, 2014.

 

The amount of Gramicci’s net sales and income from operations included in our unaudited condensed consolidated statements of operations for the quarter ended June 27, 2015 was approximately $0.2 million and $0.1 million, respectively. The amount of Gramicci’s net sales and income from operations included in our unaudited condensed consolidated statements of operations for the six months ended June 27, 2015 was approximately $1.2 million and $0.1 million, respectively. There were no net sales or income operations related to Gramicci for the three and six month periods ended June 28, 2014. There were no royalties earned by Gramicci for the periods ended June 27, 2015 and June 28, 2014.

 

For additional information, see Item 1. Financial Statements, Note 8 – Related Party Transactions – License Agreement and Termination Agreement with Sole Asset Holdings, Inc. doing business as “Gramicci.”

 

 

 

Sale of Rio

Pursuant to the terms of a Stock Purchase Agreement, dated as of April 10, 2015, as amended (the “Rio Agreement”), on September 15, 2015, we sold all the stock of Rio to a buying group headed by a former executive officer of Hampshire. Under the Rio Agreement, the buyer purchased all the stock of Rio for $6.0 million (of which $1.0 million is payable on the first anniversary of closing), caused Rio to transfer to us accounts receivable in existence as of April 10, 2015 and certain other assets of Rio totaling approximately $5.1 million, and caused Rio to assume approximately $3.2 million in certain liabilities. For accounting and financial reporting purposes, the sale of Rio will be deemed to have occurred effective as of the close of business on April 10, 2015 to the fullest extent permitted by applicable law.

 

Rio, acquired in 2011, is a Honduras-based apparel manufacturer, designing, sourcing and manufacturing knit tops for men, women and children, which are sold to retailers and distributors, primarily in the United States. 

 

We recorded a loss of approximately $1.3 million in the unaudited condensed consolidated statement of operations in the quarter ended June 27, 2015. For additional information, see Item 1. Financial Statements, Note 8 – Related Party Transactions – Rio Sale and Note 10 - Discontinued Operations.

 

Lease Settlement

On June 18, 2015, we entered into an Amendment of Lease dated as of June 1, 2015 (the “Lease Amendment”) for our New York City offices to, among other things, provides for the (i) surrender to the Landlord of four floors no longer needed by us in exchange for a surrender fee; (ii) certain changes to the rent schedule; (iii) payment by us for rent arrearages in various installments; and, (iv) discontinuance and settlement of litigation and appeals between the parties related to the New York office lease.

 

Under the amended agreement, we returned four of the five floors we had previously leased but did not occupy, maintaining a lease for the single floor currently occupied by us. The revised agreement provides for a payment structure that will reduce our cash payments, as compared to the previous agreement, by approximately $16.4 million over the next eight years through the termination of the lease.

 

We recorded a charge of approximately $5.3 million related to the present value of the surrender fee as well as certain changes made to the rent schedule, which is reflected in Lease litigation settlement in the in the consolidated statement of operations in the quarter ended June 27, 2015. We reversed accrued liabilities of approximately $10.6 million, which are reflected in (Gain) loss on lease obligations in the consolidated statement of operations for the quarter ended June 27, 2015. The reversals were comprised of the following: (i) $9.6 million in loss on lease obligations and $0.4 million of deferred rent and related liabilities associated with the New York Office Lease Amendment; (ii) $0.5 million in broker’s fees; and, (iii) $0.1 million of loss on lease obligations and deferred rent associated with the Company’s South Carolina offices. As of June 27, 2015, approximately $1.2 million is included in Accrued expenses and other liabilities, $2.4 million is included in Long-term Debt and $3.0 million is included in Other long-term liabilities related to the Lease Amendment in the unaudited condensed consolidated balance. For additional information about the New York lease see Item 1. Financial Statements, Note 4 – Loss on Lease Obligations and Note 8 – Commitments and Contingencies – New York Office Lease.

 

Seasonality

In the past, our business was highly seasonal as a result of our product mix including a high concentration of sweaters. Although not as significant as in prior years, our business continues to be subject to seasonality, with approximately 66% of our sales during 2014 occurring in the third and fourth quarters. As a result of such seasonality, inventory begins to rise in the second quarter and typically peaks during the third quarter before descending to its cyclical low in the fourth quarter. Trade receivable balances rise commensurately with sales. Cash balances follow this cycle as inventory is purchased, product is sold and trade receivables are collected. Funding inventory and pending trade receivable collections deplete cash balances and typically require borrowings under our revolving credit facility in the third and fourth quarters. Our income or loss from continuing operations has generally been correlated with revenue, as a large percentage of our profits have historically been generated in the third and fourth quarters. In 2015 and beyond, we expect this seasonality to decline further as a result of the Dockers® and James Campbell® licenses, which we believe will increase our sales during the spring season. 

 

RESULTS OF CONTINUING OPERATIONS 

 

As discussed in Sale of Rio and Item 1. Financial Statements, Note 8 – Related Parties Transactions – Rio Sale, we sold Rio effective as of April 10, 2015 and in Note 7 – Commitments and Contingencies, on June 7, 2013, we sold certain assets of the scott james clothing brand and line. In accordance with United States generally accepted accounting principles (“GAAP”), the unaudited condensed consolidated financial statements reflect the financial position, results of operations and cash flows of the Rio and scott james businesses as discontinued operations.

 

 

 

Quarterly Comparison – Three Months Ended June 27, 2015 and June 28, 2014

 

		Three Months Ended
(In thousands)		June 27, 2015				June 28, 2014
Net sales		$	12,218			$	3,728
Gross profit			2,947				749
Selling, general and administrative expenses			4,325				4,606
Lease litigation settlement			5,284				—
(Gain) loss on lease obligations			(10,590	)			82
Income (loss) from continuing operations before income taxes			3,976				(4,143	)
Income tax provision			33				119
Income (loss) from continuing operations			3,943				(4,262	)

 

Net Sales

Net sales increased 227.7% to approximately $12.2 million in the three months ended June 27, 2015 compared to approximately $3.7 million in the same period last year. The reconciliation of net sales is outlined in the table below:

 

(Dollars in thousands)		Dollars				Percentage of 2014
Net sales for the quarter ended June 28, 2014		$	3,728				100.0	%
Effect of volume			7,793				209.0	%
Effect of average selling prices			697				18.7	%
Net sales for the quarter ended June 27, 2015		$	12,218				327.7	%

 

The approximate $8.5 million increase in net sales in the three months ended June 27, 2015 compared to the same period last year was due to an increase in Hampshire Brands volumes, which more than tripled from the prior period, and higher selling prices as a result of a change in sales mix. James Campbell, acquired in 2014, accounted for $3.3 million and $31,000 of revenues in the quarters ended June 27, 2015 and June 28, 2014, respectively.

 

For the quarter ended June 27, 2015, $0.2 million of revenues were generated through Gramicci, which had no revenues in the period ended June 28, 2014. We terminated our license agreement with Gramicci effective February 28, 2015. For additional information, see Item 1. Financial Statements, Note 8 – Related Party Transactions – License Agreement and Termination Agreement wit Sole Asset Holdings Inc. doing business as “Gramicci” and Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, Termination of License Agreement with Sole Asset Holdings, Inc.

 

Gross Profit
Gross profit in the three months ended June 27, 2015 was approximately $2.9 million compared to approximately $0.7 million in the same period last year, which, as a percentage of net sales, represented an increase to 24.2% from 20.1% in the same quarter in 2014. Approximately $0.8 million increase in gross profit in the three months ended June 27, 2015 compared to the same period last year was due to higher average selling prices and sourcing synergies at Hampshire Brands and $1.3 million of gross profit generated through James Campbell. Revenues related to Gramicci accounted for approximately $0.1 million of gross profit in the quarter ended June 27, 2015.

 

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses in the three months ended June 27, 2015 were approximately $4.3 million compared to approximately $4.6 million in the same period last year, which, as a percentage of net sales, represented a decrease to 35.4% from 123.6% for the same quarter in 2014. The approximate $0.3 million decrease in SG&A expenses in the second quarter of 2015 compared to the same period last year was primarily due to lower compensation expenses in the three months ended June 27, 2015.

 

Lease Litigation Settlement
Effective June 1, 2015 we amended our New York City office lease to, among other things, provide for the (i) surrender to the landlord of four floors no longer needed by us in exchange for a surrender fee; (ii) certain changes to the rent schedule; (iii) payment by us for rent arrearages in various installments; and, (iv) discontinuance and settlement of litigation and appeals between the parties related to the New York office lease. We recorded a charge of approximately $5.3 million related to the present value of the surrender fee as well as certain changes made to the rent schedule in the quarter ended June 27, 2015. For additional information about the New York lease, see Item 1. Financial Statements, Note 4 – Loss on Lease Obligations and Note 8 – Commitments and Contingencies – New York Office Lease and Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Lease Settlement.

 

 

 

Gain (loss) on Lease Obligations
We reversed accrued liabilities of approximately $10.6 million in the consolidated statement of operations for the quarter ended June 27, 2015. The reversals were comprised of the following: (i) $9.6 million in loss on lease obligations and $0.4 million of deferred rent and related liabilities associated with the New York Office Lease Amendment; (ii) $0.5 million in broker’s fees; and, (iii) $0.1 million of loss on lease obligations and deferred rent associated with the Company’s South Carolina offices. For additional information about the New York lease, see Item 1. Financial Statements, Note 4 – Loss on Lease Obligations and Note 8 – Commitments and Contingencies – New York Office Lease and Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Lease Settlement.

 

Income Taxes
Our provision for income taxes for the quarters ended June 27, 2015 and June 28, 2014 was comprised primarily of state minimum income taxes, foreign income taxes, and interest on unrecognized tax benefits.

 

We evaluate our deferred tax assets each reporting period to determine if valuation allowances are required. Currently, GAAP requires a full valuation allowance on all of our net deferred tax assets due to the weight of significant negative evidence with regard to future realization of these net deferred tax assets. Excluding the valuation allowances on net deferred tax assets, in the three months ended June 27, 2015, we would have recognized tax expense from continuing operations of approximately $1.8 million, or an effective tax rate of 45.6%, due to income during the period. Excluding the valuation allowances on net deferred tax assets, in the three months ended June 28, 2014, we would have recognized a tax benefit from continuing operations of approximately $1.3 million, or an effective tax rate of 31.5%, due to losses incurred during the period. The effective tax rates vary from the statutory rates due primarily to changes in unrecognized tax benefits, changes in valuation allowances, foreign income taxes and nondeductible expenses. For additional information, see Item 1. Financial Statements, Note 7 – Income Taxes.

 

Year-to Date Comparison – Six Months Ended June 27, 2015 and June 28, 2014

 

		Six Months Ended
(In thousands)		June 27, 2015				June 28, 2014
Net sales		$	24,820			$	9,719
Gross profit			6,436				2,055
Selling, general and administrative expenses			9,499				9,175
Lease litigation settlement			5,284				—
(Gain) loss on lease obligations			(10,590	)			82
Income (loss) from continuing operations before income taxes			1,926				(7,663	)
Income tax provision			93				140
Income (loss) from continuing operations			1,833				(7,803	)

 

Net Sales

Net sales increased 155.4% to approximately $24.8 million in the six months ended June 27, 2015 compared to approximately $9.7 million in the same period last year. The reconciliation of net sales is outlined in the table below:

 

(Dollars in thousands)		Dollars				Percentage of 2014
Net sales for the six months ended June 28, 2014		$	9,719				100.0	%
Effect of volume			13,294				136.8	%
Effect of average selling prices			1,807				18.6	%
Net sales for the six months ended June 27, 2015		$	24,820				255.4	%

 

The approximate $15.1 million increase in net sales in the six months ended June 27, 2015 compared to the same period last year was due to an increase in Hampshire Brands volumes, which more than doubled from the prior period, and higher selling prices as a result of a change in sales mix. James Campbell, acquired in 2014, accounted for $4.8 million and $31,000 of revenues in the six months ended June 27, 2015 and June 28, 2014, respectively.

 

For the six months ended June 27, 2015, $1.2 million of revenues were generated through Gramicci, which had no revenues in the period ended June 28, 2014. We terminated our license agreement with Gramicci effective February 28, 2015. For additional information, see Item 1. Financial Statements, Note 8 – Related Party Transactions – License Agreement and Termination Agreement wit Sole Asset Holdings Inc. doing business as “Gramicci.”

 

 

 

Gross Profit
Gross profit in the six months ended June 27, 2015 was approximately $6.4 million compared to approximately $2.1 million in the same period last year, which, as a percentage of net sales, represented an increase to 26.0% from 21.2% in the same period in 2014. Approximately $2.1 million increase in gross profit in the six months ended June 27, 2015 compared to the same period last year was due to higher average selling prices and sourcing synergies at Hampshire Brands and $1.8 million of gross profit generated through James Campbell. Revenues related to Gramicci accounted for approximately $0.5 million of gross profit in the six months ended June 27, 2015.

 

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses in the six months ended June 27, 2015 were approximately $9.5 million compared to approximately $9.2 million in the same period last year, which, as a percentage of net sales, represented a decrease to 38.3% from 94.4% for the same six month period in 2014. The increase in SG&A expenses in the six months ended June 27, 2015 compared to the same period last year was primarily due to Gramicci, which accounted for approximately $0.5 million of SG&A expenses partially offset by a decrease in compensation expenses. There were no SG&A expenses related to Gramicci in the prior period.

 

Lease Litigation Settlement
Effective June 1, 2015 we amended our New York City office lease to, among other things, provide for the (i) surrender to the landlord of four floors no longer needed by us in exchange for a surrender fee; (ii) certain changes to the rent schedule; (iii) payment by us for rent arrearages in various installments; and, (iv) discontinuance and settlement of litigation and appeals between the parties related to the New York office lease. We recorded a charge of approximately $5.3 million related to the present value of the surrender fee as well as certain changes made to the rent schedule in the quarter ended June 27, 2015. For additional information about the New York lease, see Item 1. Financial Statements, Note 4 – Loss on Lease Obligations and Note 8 – Commitments and Contingencies – New York Office Lease and Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Lease Settlement.

 

Gain (Loss) on Lease Obligations
We reversed accrued liabilities of approximately $10.6 million in the consolidated statement of operations for the quarter ended June 27, 2015. The reversals were comprised of the following: (i) $9.6 million in loss on lease obligations and $0.4 million of deferred rent and related liabilities associated with the New York Office Lease Amendment; (ii) $0.5 million in broker’s fees; and, (iii) $0.1 million of loss on lease obligations and deferred rent associated with the Company’s South Carolina offices. For additional information about the New York lease Item 1. Financial Statements, Note 4 – Loss on Lease Obligations and Note 8 – Commitments and Contingencies – New York Office Lease and Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Lease Settlement.

 

Income Taxes
Our provision for income taxes for the six months ended June 27, 2015 and the six months ended June 28, 2014 was comprised primarily of state minimum income taxes, foreign income taxes, and interest on unrecognized tax benefits.

 

We evaluate our deferred tax assets each reporting period to determine if valuation allowances are required. Currently, GAAP requires a full valuation allowance on all of our net deferred tax assets due to the weight of significant negative evidence with regards to future realization of these net deferred tax assets. Excluding the valuation allowances on net deferred tax assets, in the six months ended June 27, 2015, we would have recognized tax expense from continuing operations of approximately $1.0 million, or an effective tax rate of 51.4%, due to income incurred during the period. Excluding the valuation allowances on net deferred tax assets, in the six months ended June 28, 2014, we would have recognized a tax benefit from continuing operations of approximately $2.4 million, or an effective tax rate of 31.9%, due to losses incurred during the period. The effective tax rates vary from the statutory rates due primarily to changes in unrecognized tax benefits, changes in valuation allowances, foreign income taxes and nondeductible expenses. For additional information, see Item 1. Financial Statements, Note 7 – Income Taxes.

  

LIQUIDITY AND CAPITAL RESOURCES

 

Overview

Our primary liquidity and capital requirements are to fund working capital for current operations, including funding the seasonal buildup in inventories and accounts receivable. Our primary sources of funds to meet our liquidity and capital requirements include cash on hand, funds generated from operations and borrowings under our revolving credit facility. Due to the seasonality of our business, increased borrowings under our revolving credit facility will generally occur during the third and fourth quarters of the year.

 

We are in default under our credit facility and recently entered into a forbearance agreement and amendment to our credit facility, which among other items, changed the maturity date of the credit facility to February 29, 2016. Our lender has indicated that it intends to exit its lending line of business and will not renew our credit facility beyond that maturity date. We are seeking a replacement credit facility and are also considering raising additional financing through the sale of equity or debt. Although we have not yet received any commitments from potential lenders or investors, management believes that it will be able to secure new financing to replace our existing credit facility. For additional information see, Item 1. Financial Statements, Note 1 – Basis of Presentation and Liquidity and Financing and Note 5 – Credit Agreement, and Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, Lease Settlement.

 

 

 

No assurance can be given that any refinancing or sale of equity or debt will be possible or that we will be able to negotiate acceptable terms. In addition, our access to capital is affected by prevailing conditions in the financial and equity capital markets, as well as our own financial condition. If we do not generate sufficient cash from operations, or if we incur additional unanticipated liabilities, we may be required to seek additional financing or sell equity or debt on terms which may not be as favorable as we could have otherwise obtained.

 

This, among other reasons, raises substantial doubt about our ability to continue as a going concern. As a result, our independent registered accounting firm issued an opinion in our 2014 Annual Report on our consolidated financial statements that states that the consolidated financial statements were prepared assuming we will continue as a going concern. This opinion further states that there is substantial doubt about our ability to continue as a going concern.

 

Credit Agreement

On September 26, 2013, we and certain of our subsidiaries, Hampshire Brands, Rio, Hampshire International, LLC and Scott James, LLC (collectively, the “Subsidiaries” and with the Company, the “Borrowers”), entered into a Credit Agreement (the “Credit Agreement”) and related agreements with Salus Capital Partners, LLC and Salus CLO 2012-1, Ltd. (collectively, the “Lender”) providing for: (i) a $27.0 million revolving credit facility (which includes up to $15.0 million for letters of credit), subject to borrowing base limitations and (ii) a $3.0 million term loan.

 

As reported in Note 8 – Related Party Transactions – Rio Sale, Rio was sold effective April 10, 2015.

 

Information regarding the credit facility and related matters is presented in our 2014 Annual Report in Item 1A. Risk Factors, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, Liquidity and Capital Resources, and Item 8. Financial Statements and Supplementary Data, Note 1 – Organization, Liquidity and Financing, and Audit Committee Investigation and Note 10 – Credit Facility and is incorporated herein by reference.

 

On May 22, 2015, the Borrowers entered into a Waiver and Fourth Amendment to Credit Agreement with the Lender to, among other things: (i) waive certain specified defaults, including the delivery of borrowing base certificates and/or other reports prior to February 27, 2015 that included irregularities and/or errors defaults; (ii) add a reserve for Honduran inventory to the calculation of the borrowing base; (iii) lower the availability block from $3.5 million to $1.5 million; (iv) replace the minimum EBITDA and minimum availability covenants with a minimum net sales covenant; and (v) require the Borrowers to seek and complete a capital raise with net proceeds of at least $1.5 million by July 31, 2015.

 

We are in default under the Credit Agreement. On November 30, 2015, the Borrowers and Lender entered into a Forbearance Agreement and Fifth Amendment to Credit Agreement under which, among other items, (i) the maturity date of the loans was changed to February 29, 2016 and (ii) the Lender agreed to forbear from exercising its rights with respect to certain specified defaults. The Lender has indicated that it intends to exit its lending line of business and will not renew the Credit Agreement beyond that maturity date. We are seeking a replacement credit facility and are also considering raising additional financing through the sale of equity or debt.

 

Available borrowings under the revolving credit facility are limited to a borrowing base, generally consisting of specified percentages of inventory and trade receivables, less the total of availability reserves established under the Credit Agreement. On February 24, 2014, the Lender extended additional borrowing availability under the Credit Agreement to include inventory assets held at Rio’s Honduran facilities, which were previously excluded from the borrowing base. 

 

Loans under the Credit Agreement are secured by a security interest in substantially all of the assets of the Borrowers, including a pledge of the stock of the Subsidiaries. All of the Borrowers are jointly and severally liable for all borrowings under the Credit Agreement. The Credit Agreement will expire, and all outstanding loans will become due and payable, on February 29, 2016. 

 

 

 

Loans under the Credit Agreement bear interest at the prime rate of interest published from time to time by www.bankrate.com plus 4.50%, provided, however, that the applicable annual interest rate on all loans will not be lower than 8.0%. In the event of a default under the Credit Agreement, the loans will bear interest at the applicable rate plus an additional 3%. Interest is payable monthly in arrears. As of June 27, 2015, the interest rate on both the term loan and the outstanding borrowings on the revolving credit facility was 8.0%. Additional fees are payable under the Credit Agreement, including a letter of credit issuance fee, an unused line fee, a collateral monitoring fee and an early termination fee.

 

No principal payments are required under the term loan. All remaining principal and accrued interest is payable on the termination of the Credit Agreement. The Borrowers are also required to use the net cash proceeds of certain asset sales, insurance proceeds, sales of equity securities or incurrence of debt to prepay the loan.

 

The Credit Agreement includes various representations, warranties, affirmative and negative covenants, events of default, remedies and other provisions customary for a transaction of this nature. The Credit Agreement initially also contained covenants regarding average availability and minimum EBITDA levels.

 

As of June 27, 2015, we had outstanding borrowings of $3.0 million on the term loan and approximately $7.6 million on the revolving credit facility and no letters of credit outstanding under the Credit Agreement. Availability under the Credit Agreement at June 30, 2015 was approximately $0.3 million.

 

As of June 27, 2015 and December 31, 2014, the fair value of the term loan was approximately $3.0 million and was determined by discounting the cash flows using the current interest rate (8.0%) on the loan (Level 3).

 

Summary of Cash Flows

A summary of cash flows for the six months ended June 27, 2015 and June 28, 2014 was as follows:

 

		Six Months Ended
(In thousands)		June 27, 2015				June 28, 2014
Net cash provided by operating activities		$	6,540			$	2,259
Net cash provided by (used in) investing activities			890				(566	)
Net cash used in financing activities			(8,454	)			(2,429	)
Net decrease in cash and cash equivalents		$	(1,024	)		$	(736	)

 

Cash provided by operating activities

 

We generated approximately $4.3 million more in cash from operating activities in the first six months of 2015 compared to the same period last year. Changes in operating assets and liabilities combined with an increase in cash provided by discontinued operations in the six months ended June 27, 2015 primarily accounted for the increase in cash provided by operations as compared to the same period in 2014.

 

Cash used in investing activities

 

We generated approximately $1.5 million more cash in investing activities in the first six months of 2015 compared to the same period last year. This increase was primarily from proceeds from the sale of Rio in 2015. 

 

Cash used in financing activities

 

We used approximately $6.0 million more cash in financing activities in the first quarter of 2015 compared to the same period last year. This increase was primarily due to payments under our revolving credit facility in the first six months of 2015 compared to the same period last year.

 

 

 

INFLATION

 

We are subject to increased prices for the products we source due to both inflation and exchange rate fluctuations. We have historically managed to lessen the impact of inflation by achieving sourcing efficiencies, controlling costs in other parts of our operations and, when necessary, passing along a portion of our cost increases to our customers through higher selling prices. We confront increasing inflationary pressures in our cost of goods, including those caused by rising costs in transportation, labor and materials, particularly cotton. If these costs rise at rates higher than those we have historically experienced, there can be no guarantee that we will be successful in passing a sufficient portion of such increases onto our customers to preserve our gross profit.

 

OFF-BALANCE SHEET ARRANGEMENTS

 

We utilize letters of credit and are a party to operating leases. It is currently not our general business practice to have material relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

 

There have been no material changes to our critical accounting policies and estimates as set forth in our 2014 Annual Report.

 

No new accounting pronouncements, issued or effective during 2015, have had or are expected to have a significant impact on our consolidated financial statements.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

Not Applicable.

 

Item 4. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and accumulated and communicated to the Company’s management, including the Chief Executive Officer and Interim Chief Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosures.

 

The Company’s management, with the participation of the Chief Executive Officer and the Interim Chief Financial Officer, conducted an evaluation, as of the end of the period covered by this report, of the effectiveness of the Company’s disclosure controls and procedures, as such term is defined in Exchange Act Rule 13a-15(e). Based on this evaluation, the Chief Executive Officer and the Interim Chief Financial Officer have concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures, as defined in Rule 13a-15(e), were effective at the reasonable assurance level.

 

Audit Committee Investigation

 

As previously discussed in our 2014 Annual Report, based upon an anonymous report filed by an employee in our South Carolina office through our “whistleblower” hotline in February 2015, the Audit Committee of the Board of Directors of the Company engaged our outside corporate counsel, who in turn engaged a forensic accounting firm, to investigate allegations by the whistleblower that our then Chief Financial Officer was overstating accounts receivable on the borrowing base certificates submitted to our lender, Salus Capital Partners, LLC and Salus CLO 2012-1, LTD. (collectively, “Lender”). Based on the investigation, we believe that the Chief Financial Officer was directing certain employees to delay the posting of customer payments to the accounts receivable aging report, which had the effect of overstating our accounts receivable and the available borrowing base under the Lender credit facility. Based on the investigation, we believe that the delay in posting began at the end of December 2013 and continued through February 2015, with the most significant delays occurring from November 2014 through February 2015. Due to the delays in posting, the Company submitted incorrect borrowing base certificates to the Lender and thereby borrowed more than was available under the credit facility, in amounts ranging from $51,000 to $2.1 million. Further, the delays in posting and incorrect borrowing base certificates led other members of management of the Company and the Lender to erroneously believe that the Company was in compliance with the availability covenant in the credit facility.

 

 

 

The investigation did not find any evidence that the delays in posting of accounts receivable affected the reported balances of cash, accounts receivable or debt in the financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2013 or in our Quarterly Reports on Form 10-Q for the quarters ended March 29, 2014, June 28, 2014 or September 27, 2014 (collectively referred to as the “Prior Reports”). Based on the investigation and additional work subsequently performed by members of the Company’s finance department, we concluded that amounts disclosed as available for borrowing under the revolving credit facility as of the end of the respective periods covered by the Prior Reports was understated by $0.1 million in the Annual Report on Form 10-K for the year ended December 31, 2013, overstated by $0.1 million in the Quarterly Report on Form 10-Q for the quarter ended March 29, 2014 and overstated by insignificant amounts with respect to the Quarterly Reports on Form 10-Q for the quarters ended June 28, 2014 and September 27, 2014. As a result, we did not accurately reflect our liquidity position in certain of the Prior Reports. The Company concluded, however, that no restatements of the Prior Reports were required.

 

The Chief Financial Officer was terminated. The investigation did not find that other members of senior management had any knowledge of the delay in posting of accounts receivable or the overstatement of availability on the borrowing base certificates.

 

Changes in Internal Control Over Financial Reporting

 

As previously reported, based on an assessment conducted by management of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2014, management identified the following material weakness in the Company’s internal controls and has implemented the remediation measures described below:

 

Management override of internal controls. Based on the Audit Committee investigation, we believe that our former Chief Financial Officer was directing certain employees to delay the posting of customer payments to the accounts receivable aging report, which had the effect of overstating our accounts receivable and the available borrowing base under the Lender credit facility.

 

To remediate this, we implemented the following measures in the quarter ended June 27, 2015:

  

●

the Audit Committee, the Board of Directors and management have renewed their commitment to establishing a culture of compliance, integrity and transparency and communicated their commitment and expectations to all employees of the Company; and

 

●

the Audit Committee has implemented improvements to the Company’s whistleblower hotline to restore employee confidence in the efficacy of the hotline.

 

Previously, in the quarter ended March 28, 2015, we implemented the following measures to remediate the override of internal controls:

 

●

we terminated the Chief Financial Officer and engaged the firm of GRL Capital Advisors to provide the services of an Interim Chief Financial Officer;

 

●

we have implemented controls over the posting of all cash received, including the creation of a report summarizing unposted cash that is reviewed by a member of the finance department other than the person responsible for posting cash;

 

●

we have segregated duties surrounding assembling, reviewing and reporting our borrowing base:

 

o

we now require that a member of our finance department prepare the borrowing base certificate and related calculations,

o

the borrowing base certificate is then reviewed and approved by the Interim Chief Financial Officer, and

o

our Chief Executive Officer reviews the borrowing base certificate and must approve any borrowings before they are drawn from our credit facility.

 

 

 

PART II – OTHER INFORMATION

  

Item 1. Legal Proceedings.

  

For a description of litigation and certain related matters, see Part I, Item 1. Financial Statements, Note 7 – Commitments and Contingencies, which is incorporated herein by reference.

 

Item 1A. Risk Factors.

  

In addition to the other information set forth in this Form 10-Q, you should carefully consider the risk factors in Part I, Item 1A. Risk Factors of our 2014 Annual Report. These risk factors could materially affect our business, financial condition or future results of operations in evaluating our business and any investment in our common stock. In particular, the risks described in our 2014 Annual Report could cause actual events to differ materially from those contemplated in the forward-looking statements in this Form 10-Q. The risks described in our 2014 Annual Report are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially affect our business, financial condition or future results.

 

 

  

Item 6. Exhibits.

  

Exhibit No.

Description

 

2.1

Stock Purchase Agreement dated as of April 10, 2015 among Hampshire Group, Limited, Hampshire International, LLC, Rio Garment, S.A., David Gren and Minor Valle. Omitted schedules and exhibits will be supplied to the SEC upon request (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the SEC on April 13, 2015).

 

2.2

Amendment No. 1 to Stock Purchase Agreement dated as of May 14, 2015 among Hampshire Group, Limited, Hampshire International, LLC, Rio Garment, S.A., David Gren and Minor Valle. Omitted schedules and exhibits will be supplied to the SEC upon request (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 18, 2015).

 

10.1	Mutual Release Agreement dated as of May 14, 2015 among Hampshire Group, Limited, Hampshire International, LLC and David Gren (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 18, 2015).

 

10.2	Consulting Agreement dated as of May 14, 2015 between Hampshire Group, Limited and Pure Fresh Coast LLC (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on May 18, 2015).

 

10.3

Waiver and Fourth Amendment to Credit Agreement, dated as of May 22, 2015, among Hampshire Group, Limited, Hampshire Brands, Inc., Rio Garment, S.A., Hampshire International, LLC and Scott James, LLC, as borrowers, and Salus CLO 2012-1, Ltd. and Salus Capital Partners, LLC, as lenders (incorporated by reference to Exhibit 10.14.5 to the Company’s Annual Report on Form 10-K filed with the SEC on December 11, 2015).

 

10.4

Amendment of Lease dated as of June 1, 2015 between Hampshire Group, Limited and Klaus Kretschmann, not individually but as Court-Approved Receiver for 114 West 41st Street, New York, New York a/k/a 119 West 40th Street, New York (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on June 19, 2015).

 

10.5

Surrender Note dated as of April 1, 2015 between Hampshire Group, Limited and Klaus Kretschmann, not individually but as Court-Approved Receiver for 114 West 41st Street, New York, New York a/k/a 119 West 40th Street, New York (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on June 19, 2015).

 

31.1*

Certification of Principal Executive Officer pursuant to Item 601(b) (31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

31.2*

Certification of Principal Financial Officer pursuant to Item 601(b) (31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

32.1*

Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

32.2*

Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

101

The following materials from this Quarterly Report on Form 10-Q for the three and six month periods ended June 27, 2015 formatted in XBRL (eXtensible Business Reporting Language): (i) the Unaudited Condensed Consolidated Balance Sheets as of June 27, 2015 and December 31, 2014; (ii) the Unaudited Condensed Consolidated Statements of Operations for the three and six month periods ended June 27, 2015 and June 28, 2014; (iii) the Unaudited Condensed Consolidated Statement of Stockholders’ Equity for the six months ended June 27, 2015; (iv) the Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 27, 2015 and June 28, 2014; and (v) the Notes to the Unaudited Condensed Consolidated Financial Statements.*

 

101.INS*    XBRL Instance Document

 

 

 

101.SCH*   XBRL Taxonomy Extension Schema Document

 

101.CAL*   XBRL Taxonomy Extension Calculation Linkbase Document

 

101.DEF*   XBRL Taxonomy Extension Definition Linkbase Document

 

101.LAB*   XBRL Taxonomy Extension Label Linkbase Document

 

101.PRE*   XBRL Taxonomy Extension Presentation Linkbase Document

 

*	Filed with this Form 10-Q.

 

  

SIGNATURES

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

	Hampshire Group, Limited
Date: February 17, 2016	By:	/s/ Paul M. Buxbaum
		Paul M. Buxbaum
		President and Chief Executive Officer
		(Principal Executive Officer)
		/s/ William Drozdowski
		William Drozdowski
		Interim Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

 

 

 

EXHIBIT INDEX

 

 

Exhibit No.

Description

 

2.1

Stock Purchase Agreement dated as of April 10, 2015 among Hampshire Group, Limited, Hampshire International, LLC, Rio Garment, S.A., David Gren and Minor Valle. Omitted schedules and exhibits will be supplied to the SEC upon request (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the SEC on April 13, 2015).

 

2.2

Amendment No. 1 to Stock Purchase Agreement dated as of May 14, 2015 among Hampshire Group, Limited, Hampshire International, LLC, Rio Garment, S.A., David Gren and Minor Valle. Omitted schedules and exhibits will be supplied to the SEC upon request (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 18, 2015).

 

10.1	Mutual Release Agreement dated as of May 14, 2015 among Hampshire Group, Limited, Hampshire International, LLC and David Gren (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 18, 2015).

 

10.2	Consulting Agreement dated as of May 14, 2015 between Hampshire Group, Limited and Pure Fresh Coast LLC (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on May 18, 2015).

 

10.3

Waiver and Fourth Amendment to Credit Agreement, dated as of May 22, 2015, among Hampshire Group, Limited, Hampshire Brands, Inc., Rio Garment, S.A., Hampshire International, LLC and Scott James, LLC, as borrowers, and Salus CLO 2012-1, Ltd. and Salus Capital Partners, LLC, as lenders (incorporated by reference to Exhibit 10.14.5 to the Company’s Annual Report on Form 10-K filed with the SEC on December 11, 2015).

 

10.4

Amendment of Lease dated as of June 1, 2015 between Hampshire Group, Limited and Klaus Kretschmann, not individually but as Court-Approved Receiver for 114 West 41st Street, New York, New York a/k/a 119 West 40th Street, New York (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on June 19, 2015).

 

10.5

Surrender Note dated as of April 1, 2015 between Hampshire Group, Limited and Klaus Kretschmann, not individually but as Court-Approved Receiver for 114 West 41st Street, New York, New York a/k/a 119 West 40th Street, New York (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on June 19, 2015).

 

31.1*

Certification of Principal Executive Officer pursuant to Item 601(b) (31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

31.2*

Certification of Principal Financial Officer pursuant to Item 601(b) (31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

32.1*

Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

32.2*

Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

101

The following materials from this Quarterly Report on Form 10-Q for the six months ended June 27, 2015 formatted in XBRL (eXtensible Business Reporting Language): (i) the Unaudited Consolidated Balance Sheets as of June 27, 2015 and December 31, 2014; (ii) the Unaudited Consolidated Statements of Operations for the three and six month periods ended June 27, 2015 and June 28, 2014; (iii) the Unaudited Consolidated Statement of Stockholders’ Equity for the six months ended June 27, 2015; (iv) the Unaudited Consolidated Statements of Cash Flows for the six months ended June 27, 2015 and June 28, 2014; and (v) the Notes to the Unaudited Consolidated Financial Statements.*

 

101.INS*    XBRL Instance Document

 

 

 

101.SCH*   XBRL Taxonomy Extension Schema Document

 

101.CAL*   XBRL Taxonomy Extension Calculation Linkbase Document

 

101.DEF*   XBRL Taxonomy Extension Definition Linkbase Document

 

101.LAB*   XBRL Taxonomy Extension Label Linkbase Document

 

101.PRE*   XBRL Taxonomy Extension Presentation Linkbase Document

 

*	Filed with this Form 10-Q.

 

 

31