News Flash

Hampshire announces completion of internal investigation

01 Jun '07

4 min read

As part of the Audit Committee investigation, the Company also undertook a review of its accounting and disclosure policies and internal controls. On December 13, 2006, the Company announced that it would restate its financial statements for the years 2003 through 2005 as well as the fiscal quarter ended April 1, 2006, and advised that all financial statements and related reports of the Company's independent registered public accounting firm for such periods should no longer be relied upon. The Company terminated the employment of Mr. Clark on December 31, 2006.

On May 25, 2007, the Audit Committee concluded its investigation, the results of which have been incorporated into the restatement. The Securities and Exchange Commission and the United States Attorney for the Southern District of New York are currently investigating certain issues identified during the Audit Committee investigation. The Company is cooperating with these investigations. As of March 31, 2007, the Company had incurred fees and expenses of approximately $8,000,000 in connection with the Audit Committee investigation and related matters. The Company could incur additional material costs relating to this investigation.

As of May 29, 2007, Hampshire had cash on hand of approximately $52,229,000 and $69,580,000 in letters of credit outstanding under its credit facility. No borrowings are outstanding under the credit facility. Based on its most recent borrowing base calculation as of May 5, 2007, Hampshire has a total availability of $69,143,000 excluding outstanding letters of credit.

Michael Culang, interim Chief Executive Officer, stated: “We are pleased that the Audit Committee investigation and related restatements have been completed. Our focus will now center on issuing results for 2006 and 2007, which remain unreported. We continue to manage this process while maintaining the vitality of our brands, and delivering product and service to our retail partners at the execution levels to which they have been accustomed. This has been achieved through a total effort by everyone at Hampshire.”

Hampshire Group Limited

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