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Hampshire to restate Financial Statements

14 Dec '06

3 min read

Hampshire Group Limited announced that it will restate annual and quarterly financial statements for the years 2003 through 2005 as well as for the fiscal quarter ended April1, 2006 based on the preliminary findings of the previously announced investigation by the Audit Committee of its Board of Directors.

The Company is reviewing its financial statements for the fiscal year ended December 31, 2002, which may require adjustments as well. The Audit Committee has discussed these preliminary findings with Deloitte & Touche LLP, the Company's independent registered public accounting firm.

All of the Company's financial statements and related reports of the Company's independent registered public accounting firm, earnings press releases and similar communications, including reports on internal controls, issued by the Company relating to the aforementioned periods should no longer be relied upon.

The Audit Committee's investigation determined that Hampshire will have to make certain adjustments related to the previously announced $1.45 million of expense reports submitted by the former CEO, Ludwig Kuttner, a substantial portion of which were fraudulent or not substantiated in accordance with Hampshire's policies.

As part of the Audit Committee investigation, the Company also undertook a review of its accounting and disclosure policies and internal controls. Hampshire expects, as a result of this review, to make certain other adjustments to its historical financial statements primarily related to income tax expenses, tax contingency accruals, non-accountable plan reimbursements for certain executives, and certain executive benefit plans.

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