PINX:HAMP Hampshire Group Limited Quarterly Report 10-Q Filing - 3/31/2012

Effective Date 3/31/2012

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended March 31, 2012
 
OR
 
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from                      to                     
 
Commission File Number: 000-20201
 
HAMPSHIRE GROUP, LIMITED
 (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)

(864) 231-1200
 (Registrant’s telephone number, including area code)
 
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  x 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 ( §233.405 of this chapter) during the preceding 12 months (or shorter period that the registrant was required to submit and post such files). Yes  x No  ¨

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

Large accelerated filer ¨                                                                                                     Accelerated filer ¨                                   
Non-accelerated filer  ¨  (Do not check if smaller reporting company)                       Smaller reporting company x
 
Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ¨    No  x
 
Number of shares of common stock outstanding as of May 4, 2012: 7,434,767
 
 
 

 

HAMPSHIRE GROUP, LIMITED

QUARTERLY REPORT ON FORM 10-Q

For the Quarterly Period Ended March 31, 2012

“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.
12
Item 3.    Quantitative and Qualitative Disclosures About Market Risk.
16
Item 4.    Controls and Procedures.
16
PART II–OTHER INFORMATION
16
Item 1.    Legal Proceedings.
16
Item 1A. Risk Factors.
16
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds.
17
Item 6.    Exhibits
18
 
 
i

 
 
“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 (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,” “estimate,” “believe,” “continue,” “forecast,” “foresee” or other similar words. Such forward looking statements are based on our management’s current plans and expectations and 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. Important factors that could cause actual results to differ materially from those anticipated in our forward looking statements include, but are not limited to, those described in Part I, Item 2 of this Form 10-Q and under Risk Factors set forth in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2011.
 
We expressly disclaim any obligation to release publicly any updates or any changes in our expectations or any changes in events, conditions, or circumstances on which any forward looking statement is based.
 
As used herein, except as otherwise indicated by the context, the terms “Hampshire,” “Company,” “we” and “us” are used to refer to Hampshire Group, Limited and its wholly-owned subsidiaries.
 
 
ii

 
 
PART I–FINANCIAL INFORMATION
Item 1.    Financial Statements.
 
Hampshire Group, Limited and Subsidiaries
Unaudited Condensed Consolidated Balance Sheets
 
(In thousands, except par value and shares)
 
March 31,
2012
   
December 31,
2011
 
Current assets:
           
Cash and cash equivalents
  $ 26,307     $ 25,801  
Accounts receivable, net
    3,611       13,150  
Other receivables
    365       823  
Inventories, net
    18,727       18,591  
Other current assets
    5,246       1,701  
Assets of discontinued operations
    152       174  
Total current assets
    54,408       60,240  
Fixed assets, net
    8,985       9,203  
Goodwill
    2,460       2,460  
Intangible assets, net
    15,771       16,161  
Other assets
    996       2,996  
Total assets
  $ 82,620     $ 91,060  
                 
Current liabilities:
               
Current portion of long-term debt
  $ 31     $ 36  
Accounts payable
    8,092       11,534  
Accrued expenses and other liabilities
    14,195       12,574  
Liabilities of discontinued operations
    643       1,070  
Total current liabilities
    22,961       25,214  
Long-term debt less current portion
          5  
Other long-term liabilities
    19,325       23,434  
Total liabilities
    42,286       48,653  
                 
Commitments and contingencies
               
                 
Stockholders’ equity:
               
Preferred stock, $0.10 par value, 1,000,000 shares authorized at March 31, 2012 and December 31, 2011, respectively; none issued
           
Series A junior participating preferred stock, $0.10 par value, 10,000 shares authorized at March 31, 2012 and December 31, 2011, respectively; none issued
           
Common stock, $0.10 par value, 13,333,333 shares authorized; 8,243,784 shares issued at March 31, 2012 and December 31, 2011
    824       824  
Additional paid-in capital
    36,948       36,804  
Retained earnings
    8,459       12,977  
Treasury stock, 809,017 and 1,116,796 shares at cost at March 31, 2012 and December 31, 2011, respectively
    (5,897 )     (8,198 )
Total stockholders’ equity
    40,334       42,407  
Total liabilities and stockholders’ equity
  $ 82,620     $ 91,060  

See accompanying notes to the financial statements.
 
 
1

 

Hampshire Group, Limited and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations
 
   
Three Months Ended
 
(In thousands, except per share data)
 
March 31,
2012
   
April 2,
2011
 
Net sales
  $ 22,592     $ 3,511  
Cost of goods sold
    18,764       2,780  
Gross profit
    3,828       731  
Selling, general and administrative expenses
    9,071       4,277  
Loss from operations
    (5,243 )     (3,546 )
Other income (expense):
               
Interest income
          1  
Interest expense
    (71 )     (77 )
Other, net
    20       (4 )
Loss from continuing operations before income taxes
    (5,294 )     (3,626 )
Income tax provision
    46       69  
Loss from continuing operations
    (5,340 )     (3,695 )
Income (loss) from discontinued operations, net of taxes
    386        (1,302 )
Net loss
  $ (4,954 )   $ (4,997 )
Basic loss per share:
               
Loss from continuing operations
  $ (0.80 )   $ (0.67 )
Income (loss) from discontinued operations, net of taxes
    0.06       (0.23 )
Net loss
  $ (0.74 )   $ (0.90 )
Diluted loss per share:
               
Loss from continuing operations
  $ (0.80 )   $ (0.67 )
Income (loss) from discontinued operations, net of taxes
    0.06       (0.23 )
Net loss
  $ (0.74 )   $ (0.90 )
                 
Weighted average number of shares outstanding:
               
Basic weighted average number of common shares outstanding
    6,671       5,554  
Diluted weighted average number of common shares outstanding
    6,671       5,554  
 
See accompanying notes to the financial statements.
 
 
2

 

Hampshire Group, Limited and Subsidiaries
Unaudited Condensed Consolidated Statement of Stockholders’ Equity
 
 
Common Stock
   
Additional
Paid-In
 
Retained
 
Treasury Stock
   
Total
Stockholders’
 
(In thousands, except shares)
Shares
 
 Amount
 
Capital
 
 Earnings
  Shares  
Amount
 
Equity
 
Balance at December 31, 2011
8,243,784   $ 824   $ 36,804   $ 12,977   1,116,796   $ (8,198 ) $ 42,407  
   Net loss
            (4,954 )         (4,954 )
   Restricted stock forfeitures
            3,472   472,875     (3,472 )    
   Issuance of treasury stock for employee grant
            (245 ) (33,334 )   245      
   Issuance of treasury stock for contingent consideration
            (2,791 ) (753,838 )   5,541     2,750  
   Stock based compensation
        144               144  
   Purchase of treasury shares
              6,518     (13 )   (13 )
Balance at March 31, 2012
8,243,784   $ 824   $ 36,948   $ 8,459   809,017   $ (5,897 ) $ 40,334  

See accompanying notes to the financial statements.
 
 
3

 

Hampshire Group, Limited and Subsidiaries
Unaudited Condensed Consolidated Statements of Cash Flows
 
   
Three Months Ended
 
(In thousands)  
March 31, 2012
   
April 2, 2011
 
Cash flows from operating activities:
           
Net loss
  $ (4,954 )   $ (4,997 )
Less: Income (loss) from discontinued operations, net of taxes
    386        (1,302 )
Loss from continuing operations
    (5,340 )     (3,695 )
Adjustments to reconcile loss from continuing operations to net cash provided by (used in) operating activities:
               
Depreciation and amortization
    926       512  
Stock based compensation
    144       70  
Changes in operating assets and liabilities:
               
Receivables, net
    9,997       12,266  
Inventories, net
    (136 )     (540 )
Other assets
    (1,591 )     (1,714 )
Liabilities
    (3,180 )     (1,143 )
Net cash provided by (used in) continuing operating activities
    820       5,756  
Net cash provided by (used in) discontinued operations
    (19 )     (3,837 )
Net cash provided by (used in) operating activities
    801       1,919  
Cash flows from investing activities:
               
Capital expenditures
    (272 )     (86 )
Net cash provided by (used in) investing activities
    (272 )     (86 )
Cash flows from financing activities:
               
Decrease in cash restricted for the collateralization of letters of credit
          912  
Proceeds from line of credit
    1,175       1,266  
Repayment of line of credit
    (1,175 )     (1,230 )
Purchase of treasury stock
    (13 )     (9 )
Repayment of long-term debt
    (10 )     (10 )
Net cash provided by (used in) financing activities
    (23 )     929  
Net increase (decrease) in cash and cash equivalents
    506       2,762  
Cash and cash equivalents at beginning of period
    25,801       33,720  
Cash and cash equivalents at end of period
  $ 26,307     $ 36,482  
Supplemental disclosure of cash flow information:                
Non-cash issuance of stock for contingent consideration
  $ 2,750     $  
 
See accompanying notes to the financial statements.
 
 
4

 
 
 
Note 1 – Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Hampshire Group, Limited and its subsidiaries (the “Company” or “Hampshire”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and according to instructions from the United States Securities and Exchange Commission (“SEC”) for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements and should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10-K (“Form 10-K”) for the fiscal year ended December 31, 2011.

The information included herein is not necessarily indicative of the annual results that may be expected for the year ending December 31, 2012, but does reflect all adjustments (which are of a normal and recurring nature) considered, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results may differ from these estimates and assumptions. In addition, the Company’s revenues are subject to the seasonality of the apparel industry and may exhibit fluctuations in financial results for interim periods.

In May 2011, the Company sold certain assets of its women’s businesses, Hampshire Designers, Inc. (“Hampshire Designers”) and Item-Eyes, Inc. (“Item-Eyes”), in separate transactions. In accordance with GAAP, the financial position and results from operations for the women’s businesses have been presented as discontinued operations. See Note 9 – Dispositions and Discontinued Operations.

The Company has evaluated subsequent events from the date of the unaudited condensed consolidated balance sheet through the date the financial statements were issued. During this period, no material recognizable subsequent events were identified, except as disclosed in Note 6 - Credit Facility and Note 13 - Cost Savings Plan.

Reclassifications
Certain reclassifications have been made to prior period amounts between Retained earnings and Additional paid-in capital to conform to the current period financial statement presentation.

Accounting Standard Updates
In September 2011, the Financial Accounting Standards Board issued Accounting Standard Update (“ASU”) 2011-08, Intangibles-Goodwill and Other (Topic 350) Testing Goodwill for Impairment (“ASU 2011-08”). ASU 2011-08 gives entities testing goodwill for impairment the option of performing a qualitative assessment before calculating the fair value of a reporting unit in step 1 of the goodwill impairment test. For those entities that determine, on the basis of qualitative factors, that the fair value of a reporting unit is more likely than not less than the carrying amount, an entity is required to perform step 2 of the goodwill impairment test. ASU 2011-08 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. ASU 2011-08 is effective for the Company’s fiscal year ending December 31, 2012, and the adoption did not have an impact to the Company’s consolidated financial statements.

Note 2 – Acquisitions

On August 25, 2011, the Company, through its wholly owned subsidiary, RG Merger Sub S.A., completed its acquisition of Rio Garment S. de R.L. (“Rio”) for an aggregate purchase price of approximately $21.6 million to diversify its distribution channels with vertical specialty stores and improve its profitability and growth potential.

Upon closing, the Company paid to the former Rio equity holders, a total of $7.0 million in cash, $3.5 million of which was deposited into an escrow account pending certain post-closing purchase price adjustments. Additionally, the Company issued to the former Rio equity holders an aggregate of $2.6 million in Hampshire common stock, par value $0.10 (“Hampshire Common Stock”) and held back an additional $6.5 million of Hampshire Common Stock for potential post-closing purchase price adjustments and indemnification claims.
 
 
5

 

During the first quarter 2012, approximately $1.4 million of the escrowed amount was paid to the equity holders’ representative in respect of a net working capital purchase price adjustment, and approximately $1.8 million of the escrowed amount was paid to the former Rio equityholders relating to Rio’s 2011 “Adjusted EBITDA,” as determined in accordance with the merger agreement. In connection with the Adjusted EBITDA, in March 2012, the Company issued to a representative of the former Rio equityholders $2.75 million of Hampshire Common Stock. The Company continues to hold back an additional $3.75 million of Hampshire Common Stock until the conclusion of the indemnification holdback period 18 months from the closing date.

The following table summarizes the fair values of the assets acquired and liabilities, including purchase price adjustments, assumed at the acquisition date:

(In thousands)
 
August 25,
2011
 
Purchase price at acquisition date, adjusted
  $ 15,111  
Additional installment of purchase price
    6,500  
Total
  $ 21,611  
Assets
       
Cash
  $ 183  
Accounts receivable
    1,896  
Inventories
    11,921  
Other current assets
    872  
Fixed assets
    1,203  
Indemnification asset
    1,950  
Goodwill
    2,460  
Intangible assets
    16,681  
Other assets
    25  
Total assets acquired
  $ 37,191  
Liabilities
       
Accounts payable
  $ 9,098  
Accrued expenses and other liabilities
    6,482  
Total liabilities assumed
  $ 15,580  
         
Purchase price (net assets acquired)
  $ 21,611  

Intangible assets included approximately $16.4 million and $0.2 million attributable to customer relationships and a non-compete agreement, respectively, that are being amortized on a straight-line basis over a range of 5 to 11 years which reflects their estimated economic lives. In addition, the Company recorded an indemnification asset in the amount of approximately $2.0 million in relation to certain tax obligations that were assumed by the Company upon the acquisition, which remains accrued as of March 31, 2012 and is classified in Other long-term liabilities on the unaudited condensed consolidated balance sheets.
 
 
6

 

Note 3 –Goodwill and Intangible Assets

The following tables highlight the Company’s intangible assets and accumulated amortization as of March 31, 2012 and December 31, 2011:

   
March 31, 2012
   
December 31, 2011
 
 
(In thousands)
 
Gross
Carrying
Amount
   
 
Accumulated
Amortization
   
Gross
Carrying
Amount
   
 
Accumulated
Amortization
 
Unamortized Intangibles:
                       
Indemnification asset
  $ 1,950     $     $ 1,950     $  
Goodwill
    2,460             2,460        
Total
  $ 4,410     $     $ 4,410     $  
Amortized Intangibles:
                               
Customer relationships
  $ 16,441     $ (882 )   $ 16,441     $ (504 )
Non-compete agreement
    240       (28 )     240       (16 )
Total
  $ 16,681     $ (910 )   $ 16,681     $ (520 )

The indemnification asset is classified in Other current assets on the unaudited condensed consolidated balance sheets. See Note 2 – Acquisitions.
 
(In thousands) 
 
March 31,
2012
   
April 2,
2011
 
   Amortization expense
  $ 390     $  

Amortization expense for intangible assets for each year ending December 31 for 2012 through 2015 is expected to be approximately $1.6 million. For the year ending December 31, 2016, amortization expense is expected to be approximately $1.5 million.

Note 4 – Inventories

Inventories at March 31, 2012 and December 31, 2011 consisted of the following:

 (In thousands)
 
March 31,
2012
   
December, 31
2011
 
Finished goods
  $ 8,963     $ 9,253  
Work in process
    2,746       2,878  
Raw materials and supplies
    8,022       7,600  
Total cost
    19,731       19,731  
Less: reserves
    (1,004 )     (1,140 )
Inventories, net
  $ 18,727     $ 18,591  
 
 
7

 
 
Note 5 – Loss Per Share
 
Set forth in the table below is the reconciliation by quarter of the numerator (loss from continuing operations) and the denominator (shares) for the computation of basic and diluted loss from continuing operations per share:

(In thousands, except per share data)
 
Numerator
Income (Loss)
   
Denominator
Shares
   
Per Share
Amount
 
Three months ended March 31, 2012:
                 
Basic loss from continuing operations
  $ (5,340 )     6,671     $ (0.80 )
Effect of dilutive securities:
                       
Preferred rights
                 
Restricted stock
                 
Stock options
                 
Diluted loss from continuing operations
  $ (5,340 )     6,671     $ (0.80 )
                         
Three months ended April 2, 2011:
                       
Basic loss from continuing operations
  $ (3,695 )     5,554     $ (0.67 )
Effect of dilutive securities:
                       
Preferred rights
                 
Restricted stock
                 
Diluted loss from continuing operations
  $ (3,695 )     5,554     $ (0.67 )
 
For the quarters ended March 31, 2012 and April 2, 2011, potentially dilutive shares of 608,000 and 681,750, respectively, were excluded from the calculation of dilutive shares because their effect would have been anti-dilutive.

Note 6 – Credit Facility

The Company has a $50.0 million asset based revolving credit facility, (referred to as the “Credit Facility”) with Wells Fargo Capital Finance, LLC (“WFCF”). The Credit Facility matures on October 28, 2014, and is secured by substantially all assets of the Company and each of its domestic subsidiaries. The Credit Facility is designed to provide working capital and letters of credit that will be used primarily for the purchase and importation of inventory and for general corporate purposes.

On August 15, 2011, WFCF consented to the acquisition of Rio and also waived certain defaults that would otherwise have arisen under the Credit Facility as a result of the acquisition of Rio. 

On April 30, 2012, the Company entered into a Second Amendment to Credit Agreement (the “Second Amendment”) with WFCF to better align certain Credit Facility covenants to the Company’s go-forward business model. The Second Amendment provides for, among other things, amendments to the fixed charge coverage ratio and liquidity covenants, and the inclusion of certain accounts receivable in the calculation of the borrowing base under the Credit Facility. The Second Amendment also provides for an increase in the amount of intercompany advances that are permitted under the Credit Facility.

At March 31, 2012, there were no outstanding borrowings and approximately $5.9 million outstanding under letters of credit. Borrowing availability was approximately $0.7 million at March 31, 2012 and the Company had approximately $26.3 million of cash that is not included in the availability calculation.

Note 7 - Commitments and Contingencies

In July 2007, the Company entered into a lease (the “New York Lease”) for corporate office space located at 114 West 41st Street, New York, NY 10036 (the “New York Office”). As part of the New York Lease, the landlord agreed to commence and substantially complete major capital improvements to the common areas of the New York Office by June 2008. After June 2008, if such capital improvements have not been substantially completed, the New York Lease provides, among other things, for a reduction in rent by one half for each day beyond June 30, 2008 that the capital improvements remain incomplete and are not being diligently prosecuted toward completion.
 
 
8

 
 
On February 16, 2011, the Company filed a complaint in the Supreme Court, New York County, with respect to the New York Lease. The Company asserted claims against the Landlord of the New York Office and the receiver of such property appointed in connection with a foreclosure action commenced against Landlord by its lender. The complaint sought (i) a judgment declaring (a) that the Company is not in default under the New York Lease and (b) that the rent previously paid by the Company represents the full amount of rent; and (ii) for rescission of the New York Lease as of June 30, 2008 by reason of default by the Landlord with respect to a material provision under the New York Lease requiring prompt completion of major capital improvements of the New York Office’s common areas. The Supreme Court action was dismissed on December 16, 2011 without prejudice to renew the action if complete relief is not afforded in the Civil Court action.
 
On February 23, 2011, the court appointed Receiver of the subject property commenced a non-payment proceeding in the Civil Court of the City of New York against the Company. The Receiver seeks payment of allegedly past due and unpaid rent and additional rent under the New York Lease. The Company vigorously denies that any rent or additional rent is due and owing under the New York Lease and has moved for an order removing this action to the Supreme Court, New York County, and consolidating it with the previously commenced action described above. The motion for removal and consolidation was denied by the Supreme Court and the matter has been proceeding in Civil Court. The Company has filed its answer, affirmative defenses and counterclaims and has moved for discovery in that action dated June 16, 2011. The motion and subsequent cross-motion were argued before the court on July 18, 2011. On October 5, 2011, that court granted the Company’s motion for discovery which remains in process through the date the financial statements were issued.
 
The Company is from time to time involved in other litigation incidental to the conduct of its business, none of which is expected to be material to its business, financial condition or operations.
 
Note 8 – Taxes

The Company’s provision for income taxes for the quarters ended March 31, 2012 and April 2, 2011 is comprised mostly of state minimum income taxes and interest and penalties on income tax reserves.

As of March 31, 2012, the Company’s unaudited condensed consolidated balance sheet reflects a liability for unrecognized tax benefits of $4.5 million, including $2.1 million of accrued interest and penalties. The Company anticipates that total unrecognized tax benefits will decrease only negligibly due to the settlement of certain state and local income tax liabilities or the expiration of statutes of limitation within the next twelve months. The Company currently has U.S. net operating loss carryforwards and has utilized net operating loss carrybacks. Upon examination, one or more of these net operating loss carryforwards or carrybacks may be limited or disallowed.

The Company maintains a full valuation allowance on all of the net deferred tax assets due to the significant negative evidence in regards to future realization of these net deferred tax assets as of March 31, 2012 and April 2, 2011. Excluding the valuation allowances on net deferred tax assets, the Company would have recognized a tax benefit from continuing operations of $1.8 million or an effective tax rate of 34.7% due to the losses incurred in the quarter ended March 31, 2012. Excluding the valuation allowances on net deferred tax assets, the Company would have recognized a tax benefit from continuing operations of $1.4 million or an effective tax rate of 38.1% due to the losses incurred in the quarter ended April 2, 2011.

Note 9 – Dispositions and Discontinued Operations

The Company continually reviews its portfolio of labels, business lines and divisions to evaluate whether they meet profitability and performance requirements and are in line with the Company’s business strategy. As a part of this review, the Company has disposed and discontinued operations of certain divisions as outlined below.

On May 5, 2011, in separate transactions, the Company sold certain assets of Hampshire Designers and Item-Eyes. In accordance with GAAP, these unaudited condensed consolidated financial statements reflect the results of operations and financial position of the aforementioned divisions separately as discontinued operations. The assets and liabilities of the discontinued operations are presented in the unaudited condensed consolidated balance sheets under the captions Assets of discontinued operations and Liabilities of discontinued operations
 
 
9

 
 
The underlying assets and liabilities of the discontinued operations at March 31, 2012 and December 31, 2011 were as follows:   
 
(In thousands)
March 31,
2012
 
December 31,
2011
 
Other receivables
$ 144   $ 170  
Other current assets
  8     4  
Assets of discontinued operations
$ 152   $ 174  
             
Accounts payable
$   $ 237  
Accrued expenses and other liabilities
  643     833  
Liabilities of discontinued operations
$ 643   $ 1,070  
 
At March 31, 2012 and December 31, 2011, approximately $0.2 million remains accrued in Accrued expenses and other liabilities in the table above relating to divisions disposed and discontinued prior to 2011.
 
The operating results for the discontinued operations for the three month periods ended March 31, 2012 and April 2, 2011 were as follows:
 
(In thousands)
 
March 31,
2012
   
April 2,
2011
 
Net sales
  $     $ 13,322  
                 
Gross profit
  $     $ 2,806  
                 
Income (loss) on discontinued operations before income taxes
  $ 386      $ (1,302 )
Income tax benefit
           
Income (loss) from discontinued operations, net of taxes
  $ 386     $ (1,302 )

Note 10 – Loss on Lease Obligations

In November 2011, the Company completely vacated two of the five floors leased at the New York Office. GAAP requires that the fair value of the liability for costs that will continue to be incurred under an operating lease for its remaining term without economic benefit to the entity shall be recognized at the cease-use date based on the remaining lease rentals, adjusted for the effects of any prepaid or deferred items recognized under the lease, and reduced by estimated sublease rentals that could be reasonably obtained for the property, even if the entity does not intend to enter into a sublease. The Company recorded a loss on lease charge of $6.3 million during the fourth quarter 2011, net of the release of deferred rent attributable to the vacant space.

At March 31, 2012, $1.5 million and $6.8 million of deferred loss on lease obligations is included in Accrued expenses and other liabilities and Other long-term liabilities, respectively, of the unaudited condensed consolidated balance sheet. The Company has loss on lease obligations separate from the New York Office lease of $0.7 million and $0.8 million at March 31, 2012 and December 31, 2011, respectively. A reconciliation of the beginning and ending liability balances for the total loss on lease obligations is shown in the table below:

   
Three Months Ended
   
March 31, 2012
 
April 2, 2011
   
New York
         
New York
       
(In thousands) 
 
Office
 
Other
 
Total
 
Office
 
Other
 
Total
 
Beginning of period
  $ 7,871   $ 826   $ 8,697   $   $ 566   $ 566  
Costs charged to expense
    97     12     109         3     3  
Costs paid or settled
    (383 )   (116 )   (499 )       (30 )   (30 )
End of period
  $ 7,585   $ 722   $ 8,307   $   $ 539   $ 539  
 
Note 11 – Fair Value Measurements
 
GAAP defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. GAAP also established a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. As of March 31, 2012, the Company did not have any assets measured at fair value on a recurring basis that would require disclosure based on the fair value hierarchy of valuation techniques.
 
 
10

 

In addition, certain of our non-financial assets and liabilities are to be initially measured at fair value on a non-recurring basis. This includes items such as non-financial assets and liabilities initially measured at fair value in a business combination (but not measured at fair value in subsequent periods) and non-financial, long-lived assets measured at fair value for an impairment assessment. In general, non-financial assets and liabilities including goodwill and property and equipment are measured at fair value when there is an indication of impairment and are recorded at fair value only when impairment is recognized. The Company has not recorded any impairments related to such assets and has had no other significant non-financial assets or non-financial liabilities requiring adjustments or write-downs to fair value as of March 31, 2012.

Note 12 - Stock Plan
 
The Hampshire Group, Limited 2009 Stock Incentive Plan (the “Stock Plan”) is designed to assist the Company in attracting, retaining, motivating and rewarding key employees, officers, directors and consultants, and promoting the creation of long-term value for stockholders of the Company by closely aligning the interests of these individuals with those of the Company’s stockholders, though the Company’s stockholder will experience dilution if and when such shares are ultimately issued. The Stock Plan permits the Company to award eligible persons nonqualified stock options, restricted stock and other stock-based awards.

On March 30, 2012, 459,000 shares of non-vested restricted stock previously granted to certain employees who are participants in the Stock Plan were surrendered for cancellation by such employees pursuant to transactions that, with respect to each such employee, provided that such employee would be granted options to purchase Hampshire Common Stock in consideration for the cancellation of such shares of restricted stock held by it. In connection with such transactions, a total of 331,250 options were granted.
 
In addition, on March 30, 2012, certain other employees who are participants in the Stock Plan were granted, in the aggregate, 276,750 options to purchase Hampshire Common Stock such that, together with the options granted in the transactions described above, a total of 608,000 options to purchase Hampshire Common Stock were granted on March 30, 2012. Twenty-five percent (25%) of such options will vest and become exercisable on December 31st of each of 2012, 2013, 2014 and 2015, and the options will expire on March 30, 2022. The exercise price of the options is $2.05, which represents the price of Hampshire Common Stock, as quoted on the OTC Markets, at the end of the trading day on March 30, 2012. No compensation expense related to these options was recorded during the three months ended March 31, 2012.

The following summarizes the activity for the Stock Plan’s non-vested restricted stock for the quarter ended March 31, 2012:

   
2012
 
   
Shares
   
Weighted
Average Fair
Value at
Grant Date
 
Non-vested at beginning of period
    502,375     $ 3.52  
Granted – restricted stock
           
Forfeited
    (472,875 )     3.51  
Vested
    (29,500 )     3.67  
Non-vested at end of period
        $  
 
Note 13 – Cost Savings Plan

On May 14, 2012, the Company announced a cost savings plan primarily related to workforce reduction. Subsequent to the first quarter, the Company accrued for severance costs of approximately $0.3 million that are expected to be paid during 2012.
 
 
11

 
 
Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations.
 
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 factors discussed elsewhere in this report. This discussion should be read in conjunction with the discussion of forward-looking statements, the financial statements, and the related notes and the other statistical information included in this report.

 
DISCUSSION OF FORWARD-LOOKING STATEMENTS
 
This report contains statements which may constitute ‘forward looking statements” (rather than historical facts) as defined in the Private Securities Litigation Reform Act of 1995 or by the SEC in its rules, regulations and releases, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward looking statements are based on our management's current plans and expectations and 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 words “may,”  “will,” “expect,” “anticipate,” “estimate,” “believe,” “continue,” “forecast,” “foresee” or other similar words are meant to identify such forward looking statements. Potential risks and uncertainties that could cause our actual results to differ from those anticipated in any forward looking statements include, but are not limited to, those described in our Annual Report for the fiscal year ended December 31, 2011 under Item 1A - Risk Factors and in Part II, Item 1A – Risk Factors in this Form 10-Q, and include the following risk factors:
 
 
A prolonged period of depressed consumer spending;
 
Use of foreign suppliers for raw materials and manufacture of our products including a manufacturing facility based in Honduras;
 
Lack of an established public trading market for our common stock;
 
Decreases in business from or the loss of any one of our key customers;
 
Financial instability experienced by our customers;
 
Chargebacks and margin support payments;
 
Loss of or inability to renew certain licenses;
 
Change in consumer preferences and fashion trends, which could negatively affect acceptance of our products by retailers and consumers;
 
Failure of our manufacturers to use acceptable ethical business practices;
 
Failure to deliver quality products in a timely manner;
 
Problems with our distribution system and our ability to deliver products;
 
Labor disruptions at ports, our suppliers, manufacturers or distribution facilities;
 
Failure, inadequacy, interruption or security lapse of our information technology;
 
Failure to compete successfully in a highly competitive and fragmented industry;
 
Challenges integrating any business we have acquired or may acquire;
 
Potential impairment of acquired intangible assets;
 
Unanticipated expenses beyond the amount reserved on our balance sheet or unanticipated cash payments related to the ultimate resolution of income and other possible tax liabilities;
 
Significant adverse changes to international trade regulations;
 
Loss of certain key personnel which could negatively impact our ability to manage our business;
 
Our stockholders’ rights plan potentially adversely affecting existing stockholders;
 
Risks related to the global economic, political and social conditions;
 
Fluctuation in the price of raw materials adversely affecting our results of operations; and
 
Energy and fuel costs are subject to adverse fluctuations and volatility.
 
We expressly disclaim any obligation to release publicly any updates or any changes in our expectations or any changes in events, conditions or circumstances on which any forward looking statement is based.
 
 
12

 
 
OVERVIEW
 
Hampshire Group, Limited is 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., Rio Garment S.A. and scott james, LLC. We were established in 1976 and are incorporated in the state of Delaware.
 
Hampshire Brands designs and markets men’s sportswear to department stores, chain stores and mass market retailers under licensed brands, our own proprietary brands and the private labels of our customers. Among others, we offer a full sportswear assortment under the JOE Joseph Abboud® brand and sweaters under the Geoffrey Beene® brand (both under an agreement through December 31, 2012), a full tops assortment under the Dockers® brand and a t-shirt and board short assortment under the Panama Jack® brand, all of which are licensed, as well as private label t-shirt and sweater offerings to retailers under their private labels.
 
Rio, acquired on August 25, 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. Rio’s manufacturing platform primarily supports the vertical specialty store channel. Our manufacturing operations begin with the purchase of fabric and other raw materials from third party suppliers. The fabrics are ultimately sewn into finished garments at our textile facility or at the facilities of third party contractors located in Honduras. Rio also purchases yarn and outsources fabric production to third parties, where upon completion, the fabric returns to the Rio facility for production. Our garments may also be embellished and prepared for retail (with any combination of services, including ticketing, hang tags and hangers).
 
The scott james® brand is a designer apparel collection for men, which includes a full sportswear offering. It is sold primarily through upscale department and specialty stores, scott james® retail shops and online at www.scottjamesonline.com.
 
Our relationships with major retailers range from national and regional department stores such as Macy’s, Inc. and Belk, Inc., to national chain stores such as JC Penney and Kohl’s Department Stores, Inc., to vertical specialty stores such as Aeropostale, Inc., to off-price retailers such as TJ Maxx, and Ross Stores, Inc. These relationships enable our products to reach a large consumer base both in number and in geographical area.

Our expanded product line and capabilities through the acquisition of Rio and development of scott james® permit us to supply many more departments of our existing customers and helps us attract new customers. The emphasis with every garment we offer is a compelling product that features high quality and good value. The recent diversification and expansion of our product offerings allows us to participate in a range of retail price points from "main floor" traditional styles to fashion forward designer styles.

Our product mix has historically included a high concentration of sweaters, which causes seasonality in our business as approximately 92% of our 2011 net sales occurred in the third and fourth quarters. In 2012, this degree of seasonality is expected to decline due to the acquisition of Rio which has typically had a more even distribution of sales throughout the year. Beyond 2012, we expect seasonality to decline even further due to our expanded Dockers® offering in multiple product categories.

RESULTS OF CONTINUING OPERATIONS

Quarterly Comparison – Three Months Ended March 31, 2012 and April 2, 2011

Net Sales
Net sales increased to $22.6 million for the three months ended March 31, 2012 compared with $3.5 million for the same period last year. The reconciliation of net sales is outlined in the table below:

   
Quarterly Rate/Volume
 
(Dollars in thousands)
 
Dollars
 
Percentage
of 2011
 
Net sales quarter ended April 2, 2011
 
$
3,511
 
   100%
 
Volume
   
58,234
 
1,658%
 
Average net selling prices
 
(39,153
)
(1,115%
Net sales quarter ended March 31, 2012
 
$
22,592
 
   643%
 

 
13

 
 
The $19.1 million increase in net sales over the same period last year was primarily due to the inclusion of Rio’s net sales of $18.8 million for the three months ended March 31, 2012. Rio sells a higher volume of units at a lower price point than Hampshire Brands. Hampshire Brands net sales remained comparable to the prior year period. Due to the seasonality of Hampshire Brands, a significant portion of our net sales are expected to occur in the third and fourth quarters of 2012. We do not expect Rio to experience high levels of seasonality.

Gross Profit
Gross profit for the three months ended March 31, 2012 was $3.8 million compared with $0.7 million for the same period last year, which reflected an increase in net sales attributable to Rio, offset by lower average selling prices for Hampshire Brands and scott james® due to off priced prior season goods sold in the current period. In addition, cost of goods sold increased to $18.8 million for the three months ended March 31, 2012 from $2.8 million for the three months ended April 2, 2011 commensurate with the acquisition of Rio. We confront inflationary pressures in our cost of goods, including those caused by rising costs in transportation, labor and materials. To the extent we cannot pass these increases onto our customers, our future results will be adversely affected.

Selling, General and Administrative Expenses
Selling, general and administrative expenses for the three months ended March 31, 2012 were $9.1 million compared with $4.3 million for the same period last year. This increase is primarily the result of the addition of Rio’s selling, general and administrative expenses for the first quarter of $3.1 million and $1.7 million of residual overhead costs incurred during the current quarter that remained after the sale of the women’s division in 2011.
 
Subsequent to the first quarter of 2012, and based on the knowledge gained through operating under our new business model over the last two quarters, we announced a cost savings plan primarily related to workforce reduction. We expect this plan will provide annualized savings of approximately $1.0 million in compensation costs. In addition to the workforce reduction, we have identified other cost savings that are designed to streamline our operations and to better align our operations with our go-forward business strategy.
 
Income Taxes
Our provision for income taxes for the quarters ended March 31, 2012 and April 2, 2011 is comprised mostly of state minimum income taxes and interest and penalties on income tax reserves.

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 our net deferred tax assets due to the significant negative evidence in regards to future realization of these net deferred tax assets. Excluding the valuation allowances on net deferred tax assets, we would have recognized a tax benefit from continuing operations of $1.8 million or an effective tax rate of 34.7% due to the losses incurred in the quarter ended March 31, 2012. Excluding the valuation allowances on net deferred tax assets, we would have recognized a tax benefit from continuing operations of $1.4 million or an effective tax rate of 38.1% due to the losses incurred in the quarter ended April 2, 2011. See Item I. Financial Statements Note 8 – Taxes.

STOCK PLAN

On March 30, 2012, 459,000 shares of non-vested restricted stock previously granted to certain employees who are participants in the Hampshire Group, Limited 2009 Stock Incentive Plan were surrendered for cancellation by such employees, pursuant to transactions that, with respect to each employee, provided that such employee would be granted options to purchase shares of our common stock in consideration for the cancellation of such shares of restricted stock. In connection with such transactions, a total of 331,250 options were granted. An additional 276,750 options to purchase our common stock were granted to certain other employees under the Hampshire Group, Limited 2009 Stock Incentive Plan. An aggregate total of 608,000 options to purchase Hampshire Common Stock were granted on March 30, 2012. See Item I. Financial Statements Note 12 – Stock Plan.

LIQUIDITY AND CAPITAL RESOURCES

Our primary liquidity and capital requirements are to fund working capital for current operations, consisting of funding the seasonal buildup in inventories and accounts receivable and funding markdown allowances. 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.

We have a $50.0 million asset based revolving credit facility, (referred to as the “Credit Facility”) with Wells Fargo Capital Finance, LLC (“WFCF”). The Credit Facility matures on October 28, 2014, and is secured by substantially all of our assets and those of our domestic subsidiaries. The Credit Facility is designed to provide working capital and letters of credit that will be used primarily for the purchase and importation of inventory and for general corporate purposes.
 
 
14

 

On August 15, 2011, WFCF consented to the acquisition of Rio and also waived certain defaults that would otherwise have arisen under the Credit Facility as a result of the acquisition of Rio. 

On April 30, 2012, we entered into a second amendment to our credit agreement with WFCF to properly align our Credit Facility with our business model going forward. This amendment provides for, among other things, amendments to the fixed charge coverage ratio and liquidity covenants, and the inclusion of certain accounts receivable in the calculation of the borrowing base under the Credit Facility. The Second Amendment also provides for an increase in the amount of intercompany advances that are permitted under the Credit Facility.

At March 31, 2012, there were no outstanding borrowings from the Credit Facility with approximately $0.7 million of availability and approximately $26.3 million of cash and cash equivalents that was not included in the availability calculation. The highest level of borrowings outstanding during the first quarter of 2012 was approximately $0.2 million. Borrowings under the Credit Facility were generally repaid on the same day. At March 31, 2012, letters of credit outstanding was approximately $5.9 million.

We believe that cash on hand, borrowings available to us under the Credit Facility and cash flow from operations will provide adequate resources to meet our capital requirements and operational needs for the next twelve months.

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 continue to 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 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 the Annual Report for the year ended December 31, 2011. See Item I. Financial Statements Note 1 – Basis for Presentation to the financial statements regarding Recent Accounting Pronouncements.
 
 
15

 

Item 3.    Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to market risk in the area of changing interest rates. During the first quarter of fiscal year 2012, there were no significant changes in our exposure to market risks. See Item 7A in our Annual Report for the year ended December 31, 2011, which was filed with the SEC on March 19, 2012, for a discussion regarding our exposure to market risks. The impact of a hypothetical 100 basis point increase in interest rates on our variable rate debt (borrowings under the Credit Facility) would have had no material effect in the three months ended March 31, 2012 due to the fact that there were insignificant short-term borrowings on our Credit Facility during the period.

Item 4. Controls and Procedures.
 
Disclosure Controls and Procedures
 
The Company maintains disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified and pursuant to the regulations of the Securities and Exchange Commission. Disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act, include controls and procedures designed to ensure the information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. It should be noted that the Company’s system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met.
 
Under the supervision and with the participation of the Company's Chief Executive Officer and Chief Financial Officer, the Company carried out an evaluation of the effectiveness of its disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act that were in place, as of March 31, 2012. Based on that evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2012.

Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the three months ended March 31, 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II–OTHER INFORMATION
 
Item 1. Legal Proceedings.

For a description of litigation and certain related matters, see Note 7 of Part I, Item 1, entitled Commitments and Contingencies.

In addition, the Company is from time to time involved in other litigation incidental to the conduct of its business, none of which is expected to be material to its business, financial condition or operations.

Item 1A. Risk Factors.
 
A description of the risk factors associated with our business is contained in Part I, Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the year ended December 31, 2011. These cautionary statements are to be used as a reference in connection with any forward-looking statements. The factors, risks and uncertainties identified in these cautionary statements are in addition to those contained in any other cautionary statements, written or oral, which may be made or otherwise addressed in connection with a forward-looking statement or contained in any of our subsequent filings with the Securities and Exchange Commission.
 
 
16

 

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds.

ISSUER PURCHASES OF EQUITY SECURITIES
COMMON STOCK, $0.10 PAR VALUE
 
Period
 
Total
Number of
Shares
Purchased
   
Average
Price
Paid per
Share
   
Total Number of Shares Purchased
as Part of Publicly
Announced Plans
or Programs
   
Maximum
Number of Shares
that May Yet be Purchased Under
the Plans or
Programs
 
January 1, 2012  –  January 28, 2012
        $              
January 29, 2012  – February 25, 2012
                       
February 26, 2012 – March 31, 2012
    459,000 (1)        — (1)            
      6,518 (2)     2.05              
Total
    465,518     $ 2.05              

 
(1)
Represents the aggregate number of shares of restricted stock previously granted to certain employees of the Company under the Hampshire Group, Limited 2009 Stock Incentive Plan (the “Stock Plan”) that were surrendered for cancellation by such employees pursuant to transactions that, with respect to each employee, provided that such employee would be granted options to purchase shares of common stock in consideration for cancellation of such shares of restricted stock held by it.
 
 
(2)
Represents shares returned by employees of the Company to cover personal tax obligations on shares of common stock that vested on March 31, 2012. The vested shares were awarded to certain employees under the Stock Plan, which allows employees to satisfy their applicable withholding tax obligations by using shares of common stock that would otherwise be deliverable upon the vesting of the restricted stock.
 
 
17

 
 
Item 6.    Exhibits.
 
 (a)
The following exhibits are filed as part of this Report:
 
10.1
Indemnification Agreement, dated August 25, 2011, by and between Hampshire Group, Limited and David L. Gren.
 
10.2
Employment Agreement, dated June 13, 2011, between Hampshire Group, Limited and David L. Gren
 
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 our Quarterly Report on Form 10-Q for the three months ended March 31, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets as of March 31, 2012 and December 31, 2011; (ii) the Condensed Consolidated Statements of Operations for the three months ended March 31, 2012 and April 2, 2011; (iii) the Condensed Consolidated Statement of Stockholders’ Equity for the three months ended March 31, 2012; (iv) the Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2012 and April 2, 2011; and (v) the Notes to the Condensed Consolidated Financial Statements, tagged as blocks of text**
 
 
101.INS**   XBRL Instance
 
 
101.SCH**   XBRL Taxonomy Extension Schema
 
 
101.CAL**   XBRL Taxonomy Extension Calculation
 
 
101.DEF**   XBRL Taxonomy Extension Definition
 
 
101.LAB**   XBRL Taxonomy Extension Labels
 
 
101.PRE**   XBRL Taxonomy Extension Presentation
 
 
**       XBRL information hereto are deemed furnished and not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

 
 
18

 
 
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: May 15, 2012
 
By:
/s/ Heath L. Golden
       
Heath L. Golden
       
President and Chief Executive Officer
       
(Principal Executive Officer)
         
     
By:
/s/ Maura M. Langley
       
Maura M. Langley
       
Chief Financial Officer
(Principal Financial and Accounting Officer)
 
 
19

 
 
INDEX TO EXHIBITS
 
EXHIBIT
NUMBER
DESCRIPTION
 
 
10.1
Indemnification Agreement, dated August 25, 2011, by and between Hampshire Group, Limited and David L. Gren.
 
 
10.2
Employment Agreement, dated June 13, 2011, between Hampshire Group, Limited and David L. Gren
 
 
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 our Quarterly Report on Form 10-Q for the three months ended March 31, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets as of March 31, 2012 and December 31, 2011; (ii) the Condensed Consolidated Statements of Operations for the three months ended March 31, 2012 and April 2, 2011; (iii) the Condensed Consolidated Statement of Stockholders’ Equity for the three months ended March 31, 2012; (iv) the Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2012 and April 2, 2011; and (v) the Notes to the Condensed Consolidated Financial Statements, tagged as blocks of text**
 
   
101.INS**   XBRL Instance
 
   
101.SCH**   XBRL Taxonomy Extension Schema
 
   
101.CAL**   XBRL Taxonomy Extension Calculation
 
   
101.DEF**   XBRL Taxonomy Extension Definition
 
   
101.LAB**   XBRL Taxonomy Extension Labels
 
   
101.PRE**   XBRL Taxonomy Extension Presentation
 
   
**       XBRL information hereto are deemed furnished and not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
 

PINX:HAMP Hampshire Group Limited Quarterly Report 10-Q Filling

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PINX:HAMP Hampshire Group Limited Quarterly Report 10-Q Filing - 3/31/2012
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