PART I

10-Q 1 qfiling.htm HAI 1ST QRT 2001 10Q 3: PART I SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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, 2001

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 1-6105

Hampton Industries, Inc.
(Exact name of registrant as specified in its charter)

North Carolina			56-0482565
(State or other jurisdiction of incorporation or organization)			(IRS Employer Identification No.)

2000 Greenville Hwy., P.O. Box 614, Kinston, NC			28502-0614
(Address of principal executive offices)			(ZIP Code)

Registrant's telephone number, including area code:(252) 527-8011

Securities registered pursuant to Section 12(b) of the Act:
Title of each class			Name of each exchange on which registered
Common Stock of $1.00 par value share			American Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

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 _____

As May 14, 2001 there were 5,553,374 shares of common stock outstanding.

Part 1 - Financial Information

ITEM 1: FINANCIAL STATEMENTS

HAMPTON INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

	March 31, 2001	April 1, 2000	December 30, 2000
	(Unaudited)	(Unaudited)
ASSETS
Current assets:
Cash	$ 1,425,051	$ 714,048	$ 364,727
Accounts receivable -net	20,529,977	35,560,462	26,484,257
Inventories	21,367,554	54,489,476	25,203,751
Income tax receivable	-	1,181,132	-
Deferred income tax assets	-	3,758,718	-
Other current assets	204,829	690,021	446,089
Assets held for disposal - net	7,539,570	-	7,673,282
Total current assets	51,066,981	96,393,857	60,172,106

Fixed assets - net	11,702,588	19,323,631	12,176,554
Assets held for disposal - net	-	1,842,389	-
Investments in and advances to unconsolidated affiliates	269,842	791,311	260,235
Other assets	3,690,358	3,867,328	4,023,356
	$ 66,729,769	$ 122,218,516	$ 76,632,251
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable - banks and current maturities of long-term
debt	$ 34,182,195	$ 44,300,576	$ 40,655,668
Uncleared checks	1,424,831	2,204,835	1,369,113
Accounts payable	8,052,668	7,574,835	6,441,747
Accrued liabilities	2,908,070	3,168,035	3,378,870
Income taxes payable	(61,382)	-	-
Total current liabilities	46,506,382	57,248,281	51,845,398

Deferred income tax liabilities	-	2,721,283	-
Long-term debt	186,458	1,142,127	220,046
Retirement plan obligations	3,570,253	3,551,752	3,620,358
	50,263,093	74,663,443	55,685,802
Stockholders' equity	16,466,676	47,555,073	20,946,449
	$ 66,729,769	$ 122,218,516	$ 76,632,251
Note: The consolidated balance sheet at December 30, 2000 has been taken from the audited financial statements and condensed
See notes to consolidated financial statements

HAMPTON INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS

	Thirteen Weeks Ended
	March 31, 2001	April 1, 2000

Net sales	$ 28,643,730	$ 42,929,621
Cost of products sold	22,535,472	35,087,265
Gross margin	6,108,258	7,842,356

Selling, general and administrative	9,267,178	11,692,413
Equity in earnings of unconsolidated affiliates	-	(24,453)
Operating loss	(3,158,920)	(3,825,604)

Other (income) expense:
Rental income	(231,165)	(264,873)
Gain on disposal of fixed assets	(48,829)	(45,295)
Other income - net	(19,131)	24,256
Interest expense	1,619,979	1,200,005
	1,320,854	914,093
Loss before income tax benefit	(4,479,774)	(4,739,697)
Income tax benefit	-	(710,000)
Net loss	$ (4,479,774)	$ (4,029,697)

Basic loss per common share	$ (0.81)	$ (0.73)

Weighted average common shares outstanding	5,553,374	5,553,374

Diluted loss per share*	$ (0.81)	$ (0.73)

Weighted average common shares outstanding
and common share equivalents*	5,553,374	5,553,374

*Potential common shares have been excluded for 2001 and 2000 because they are anti-dilutive
See notes to consolidated financial statements

HAMPTON INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY


			Additional	Retained			Total
	Common Stock		Paid-in	earnings	Treasury Stock at Cost		Stockholder's
	Shares	Amount	Capital	(deficit)	Shares	Amount	Equity
Bal: January 1, 2000	6,286,418	$ 6,286,418	$ 39,148,350	$ 11,027,346	(733,045)	$ 4,877,344)	$ 51,584,770
Net loss	-	-	-	(30,638,320)	-	-	(30,638,320)
Bal: December 30, 2000	6,286,418	$ 6,286,418	$ 39,148,350	$(19,610,974)	(733,045)	$(4,877,344)	$ 20,946,450
Net loss	-	-	-	(4,479,774)	-	-	(4,479,774)
Bal: March 31, 2001	6,286,418	$ 6,286,418	$ 39,148,350	$(24,090,748)	(733,045)	$(4,877,344)	$ 16,466,676

HAMPTON INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
	Thirteen Weeks Ended
	March 1, 2001	April 1, 2000
OPERATING ACTIVITIES:
Net loss	$ (4,479,774)	$ (4,029,697)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Amortization	207,488	248,433
Depreciation	660,338	608,613
Deferred income taxes	-	(710,000)
Reserve for doubtful accounts and allowances	(786,205)	(2,671,000)
Retirement plan obligations	(50,105)	(423,630)
Gain on sale of fixed assets	(48,829)	(45,295)
Equity in earnings of unconsolidated affiliates	-	(24,453)
Changes in operating assets and operating liabilities:
Accounts receivable - net	6,740,485	(659,953)
Inventories	3,836,197	225,306
Other current assets	241,260	158,315
Uncleared checks	55,718	(705,311)
Accounts payable	1,610,922	1,577,859
Accrued liabilities	(470,800)	(1,240,272)
Income taxes payable	(61,382)	(67,480)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	7,455,313	(7,758,565)

INVESTING ACTIVITIES:
Additions to fixed assets	(27,998)	(607,502)
Additions to software	(40,583)	(18,359)
Additions to building	(4,600)	(410,653)
Proceeds from sale of fixed assets	69,350	51,095
Increase in investments in and advances to unconsolidated affiliates	(9,607)	(55,774)
Decrease (increase) in other assets	125,510	(85,583)
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES	112,072	(1,126,776)

FINANCING ACTIVITIES:
Net changes in debt	(6,507,061)	8,972,211
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES	(6,507,061)	8,972,211

INCREASE IN CASH	1,060,324	86,870
CASH AT BEGINNING OF PERIOD	364,727	627,179
CASH AT END OF PERIOD	$ 1,425,051	$ 714,049

Cash paid during the period: -Interest	$ 890,266	$ 891,043

-Income tax	$ 54,105	$ 84,105

HAMPTON INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information as of March 31, 2001 and April 1, 2000 is unaudited.)

Basis of Presentation

The consolidated balance sheets as of March 31, 2001 and April 1, 2000 and the consolidated statements of operations and cash flows for the thirteen week period then ended have been prepared by the Company, without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at March 31, 2001 and April 1, 2000 have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the audited financial statements and notes thereto included in the Company's December 30, 2000 Annual Filing Report - 10K. The results of operations for the period ended March 31, 2001 are not necessarily indicative of the operating results for the full year.

Summary of Significant Accounting Policies

Derivative Instruments and Hedging Activities - Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities", is effective for all fiscal years beginning after June 15, 2000. SFAS 133 as amended, establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities. Under SFAS 133, certain contracts that were not formerly considered derivatives may now meet the definition of a derivative. The Company adopted SFAS 133 effective December 31, 2000. The adoption of SFAS 133 had no effect on the financial position, results of operations, or cash flows of the Company.

In November 1999, the SEC issued Staff Accounting Bulletin (SAB) 101, "Revenue Recognition". This Bulletin sets forth the SEC Staff's position regarding the point at which it is appropriate for a Registrant to recognize revenue. The Staff believes that revenue is realizable and earned when all of the following criteria are met:

Persuasive evidence of an arrangement exists;
Delivery has occurred or service has been rendered;
The seller's price to the buyer is fixed or determinable; and
Collectibility is reasonably assured.

The Company uses the above criteria to determine whether revenue can be recognized, and therefore believes that the issuance of this Bulletin has no effect on these financial statements.

Going Concern Considerations

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company incurred net losses of $30,600,000 and $4,800,000 for the year ended December 30, 2000 and January 1, 2000, respectively. In addition, and as further described below and elsewhere in this document the Company has at various times over these periods been in default of it's loan agreements, and as of March 31, 2001 is in default and has been operating under short term extensions of their agreement. Also, as discussed in Part II - Subsequent Events, the Board of Directors of the Company has also approved a plan to sell all or a portion of the Company's assets. These factors among others may indicate that the Company will be unable to continue as a going concern for a reasonable period of time.

The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. As described in this document, the Company is not in compliance with several provisions of its senior credit facility and, because the lender has refused to waive these provisions for the quarter ended March 31, 2001, the balance of the loan ($23,205,000) has been classified as a current liability. Under current conditions, the Company is not able to obtain sufficient financing from its lenders, or from any other source, in order to continue operations on more than a short-term basis. As outlined in this document, the Board believes that the current financial arrangement and projected cash flows from operations will not be sufficient to meet the Company's operating needs, retire debt and fund required capital needs. The Company's continuation as a going concern is dependent on its ability to generate sufficient cash flow to meet its obligations on a timely basis, to comply with the terms and covenants of its financing agreements, to obtain additional financing or refinancing as may be required, and ultimately to attain successful operations.

Inventories

Inventories are valued at the lower of cost or market. Principally all inventory costs were determined by the last-in, first-out (LIFO) method. Use of the LIFO method increased the loss by $592,000 ($.11 per share) in 2001 and had no effect on the loss in the prior year quarter.

In 2001, the liquidation of certain LIFO layers decreased cost of goods sold by $579,200 ($.10 per share). The inventories in these LIFO layers were acquired at lower cost in prior years.

Credit Facility

On October 31, 2000, the Company entered into a new credit facility with Fleet Capital Corporation ("Fleet"), as Agent, ("the Facility"). The Facility provided for a maximum line of credit of $65,000,000, which included both direct borrowings and letters of credit. The initial proceeds of the Facility were used to repay the outstanding borrowings under the Company's previously existing bank credit facility.

Direct borrowings bear interest at the London Interbank Offered Rate plus the applicable margin or the Base rate (as defined in the Facility) plus the applicable margin, at the option of the Company. The applicable margin is determined by a ratio of adjusted E.B.I.T.D.A. to interest expense. Borrowings are collateralized by accounts receivable, inventory and general intangibles of the Company and its subsidiaries. The Facility originally had an expiration of October 2005.

In 2000, Fleet notified the Company that it was in default of the borrowing base limitation covenant contained in the loan agreements. Beginning in January 2001, the Company entered into a number of forbearance agreements with Fleet. The most recent forbearance agreement was amended on April 13, 2001. The total revolver commitment has been reduced to $20,000,000. The agreement allows the Company to borrow funds based on the following formula:

The lesser of $20,000,000 or the sum of 60% of the value of eligible inventory as determined by Fleet, and 85% of the value of eligible accounts receivable as determined by Fleet.

Under no circumstances can the total of direct borrowings plus outstanding letters of credit exceed the total revolver commitment. Additionally, the loan does not permit letters of credit to be issued with expiration dates beyond June 30, 2001. The current forbearance agreement expires May 25, 2001.

While the Company has successfully negotiated several extensions to the forbearance agreement in the past, there can be no assurances that Hampton will be able to continue to negotiate acceptable forbearance agreements. Furthermore, the Company has traditionally financed much of its overseas purchases by issuing letters of credit.

Outstanding borrowings amounted to $23,205,000 at March 31, 2001 as compared to $44,047,000 at the same time in 2000. Net working capital at March 31, 2001 was $4,561,000 as compared to $39,146,000 in 2000. The working capital ratio as of March 31, 2001 was 1:1 as compared to 1.7:1 at the same time in 2000.

The Facility contains financial covenants relating to minimum levels of net income, interest coverage and capital expenditures and does not allow for the payment of cash dividends. The Company is not required to maintain compensating balances, however, it is required to pay a fee of .25% to .375%, dependent on the ratio of E.B.I.T.D.A. to interest expense, per annum on the unused portion of the total facility plus certain other administrative costs. The Company is currently in default of the financial covenants of the Facility.

Under current conditions, the Company is not able to obtain sufficient funding from its lenders, or from any other source, in order to continue operations on more than a short-term basis. Accordingly, following the termination of the forbearance period, or the expiration thereof without extension, there is substantial doubt as to whether the Company will be able to continue as a going concern.

The Company has been unable to cure the events of default which have occurred under the Facility, and is currently unable to obtain sufficient financing from its lenders, or from any other source, to continue operations on more than a short term basis primarily due to the following factors:

During fiscal 2000, the Company's gross profit decreased by approximately $22,700,000 as compared to the previous year. As a percentage of sales this represented a decrease of 11.1% from 24.4% in 1999 to 13.3% in 2000. The Company's total loss for fiscal 2000 was approximately $30,600,000.

The Company remains subject to increasing competitive pressures which have had, and are likely to continue to have, a material adverse impact on its profit margins, including consolidations among retailers, a trend towards self-sourcing by large retailers, an increased level of chargebacks by, and other demands from, retailers.

The Company has not been able to identify a business model which it believes will be profitable in light of the competitive pressures the Company currently faces, as well as the liquidity constraints the Company is currently experiencing.

Stockholders' Equity

The Board of Directors declared a 10% stock dividend in 1998 and 1999. The dividends were payable on July 2^nd to stockholders of record on June 2^nd of both years. Basic and diluted (loss) earnings per share have been restated for all periods presented to reflect the stock dividends. Stock options have also been restated to reflect the stock dividends.

Subsequent Events

Contract to sell New York office building

On April 3, 2001, the Company entered into a contract to sell its New York office building to 15 W. 34^th St. LLC, a New York limited liability company for $15,500,000. Terms of the contract require the Purchaser to assume the Company's mortgage, which has eight years remaining. This building has served as the sales and marketing headquarters for the Company, as well as office space for all of the selling divisions and executive offices of several members of senior management. Proceeds from the sale will be used to reduce debt under the Company's credit facility. The closing on this property is expected to occur on May 15, 2001.

Sale of Assets Plan

At a special meeting of the Board of Directors ("Board") held on April 11, 2001, the Board decided that the Company should consider strategic alternatives, including a sale of all or some portion of its assets on the most favorable terms it can obtain. Accordingly, the Board adopted the Sale of Assets Plan, and decided that the Sale of Assets Plan be submitted to the shareholders for approval. Under the Sale of Assets Plan, the Board shall be authorized to approve the sale of all or any portion of the Company's assets upon terms and conditions, which the Board deems fair to the Company and in the best interests of the Company and its shareholders.

Proceeds from any sale of assets under this plan would be used first to pay off indebtedness to the Company's senior lenders and then to pay off the general debts of the Company in such order, as the Board may deem advisable. In the event that all of the Company's assets are sold pursuant to the Sale of Assets Plan, the Board would seek the necessary approval of shareholders under North Carolina law for the Company to liquidate and dissolve. In such event, following the payment of all of the Company's debts, and subject to such reserves as the Board my deem necessary for other liabilities or expenses, contingent or otherwise, any remaining proceeds would then be distributed to shareholders. However, there can be no assurance that the Company will be able to sell its assets on terms satisfactory to it or that any such proceeds will be sufficient to cover the Company's debts or contingencies.

The Company currently has received non-binding letters of intent for the purchase of its Hampton Private Brands and Kaynee divisions, as well as an offer to purchase the sewing operations and equipment at its El Salvador factory. However, there can be no assurance that the Company will be able to sell its assets on terms satisfactory to it or that any such proceeds will be sufficient to cover the Company's debts or contingencies.

Sale of the Kaynee, Sleepwear and Private Brands Divisions

Hampton has received indications of interest in the form of non-binding Letters of Intent for the purchase of the Kaynee, Sleepwear and Private Brands divisions containing the following terms:

Financial terms are being evaluated by the potential buyer.
Buyer to purchase finished goods inventory, work in process and raw materials relating to open orders in the respective divisions.
Buyer to purchase all open orders, trademarks and intangibles related to the respective divisions.
Buyer to purchase certain non current inventory.

Compensation

The Compensation Committee of the Board of Directors has authorized guaranteed severance packages to two Officers and Directors of the Company. In return for their continued service until such time as the Company no longer requires their efforts, the Company will guarantee minimum severance packages. These packages include salary guarantees of 9 and 12 months of current salary, as well as additional compensation ranging from $15,000 to $245,000, depending upon the outcome of certain transactions.

The Company is considering offering retention incentives to additional employees who are not members of the Company's Board. The details of these plans have not been finalized or presented to the Board.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations

The following table summarizes the operating data for the periods indicated:

	Thirteen Weeks Ended
	March 31, 2001		April 1, 2000
Net sales	100.0	%	100.0	%
Cost of products sold	78.7		81.7
Gross margin	21.3		18.3
Selling, general and administrative	32.4		27.2
Equity in earnings of unconsolidated affiliates	0.0		(0.1)
Operating loss	(11.0)		(8.9)
Other (income) expense:
Rental income - net	(0.8)		(0.6)
Gain on disposal of fixed assets - net	(0.2)		(0.1)
Other (income) expense - net	(0.1)		0.1
Interest expense	5.7		2.8

Net loss before income tax benefit	(15.6)		(11.0)
Net loss	(15.6)	%	(9.4)	%

Thirteen Weeks Ended March 31, 2001 As Compared to the Thirteen Weeks Ended April 1, 2000

Net sales decreased by $14,286,000 or 33.3% for the quarter. Sales of branded product decreased by $4,812,000. As a percentage of sales, this represented a change from 65.9% of total sales in 2000 to 81.9% of total sales in 2001. The decrease in branded sales was due to the closeout of the Joe Boxer and Spalding line. Non-branded product accounted for a sales decrease of $9,474,000 for the first quarter of 2001.

Gross profit decreased by $1,734,000 during the quarter ended March 31, 2001. As a percent of sales, gross margin percent increased to 21.3% from 18.3% in the prior period. The decline in the gross profit was primarily due to lower sales. The increase in gross profit percentage was principally due to liquidation of LIFO layers, which resulted in a 2% increase in the current year.

Selling, general and administrative expenses decreased by $2,425,000 or 20.7% during the quarter ended March 31, 2001, as compared to the comparable 1999 period. These costs were 32.4% of net sales in the first quarter of 2001 as compared to 27.2% in the first quarter of 2000. The decrease was primarily due to a decrease in salaries and related benefits, samples, and royalty expenses of $1,441,000, $369,000, and $276,000 respectively.

Interest expense increased by $420,000 in the first quarter of 2001 as compared to the same quarter in 2000. Deferred credit facility closing costs of $451,000 were expensed in the current period.

The Company engaged the services of a management consulting firm to assist in the negotiations with lenders, the development and implementation of a strategic business plan to reduce expenses and increase shareholder value, and to assume direct responsibility for the day-to-day financial management of the Company.

Under the terms of the agreement the consulting firm is entitled to professional fees billed at specified hourly rates, as well as success fees for various completed transactions. In addition, the consulting firm is entitled to receive 350,000 options to purchase Company stock at the closing price of the stock on February 26, 2001. The per share stock price on February 26, 2001 was $.85.

On February 2, 2001, the Company engaged the services of a management consulting firm to assist in completing significant structural transactions between the Company and other potential transaction participants, including, but not limited to, merger, acquisition, asset sale, consolidation, stock sale or similar transactions.

In conjunction with the retention of this firm, the Company agreed to pay a $36,000 retainer fee. This fee being payable in four monthly installments of $9,000 each, the initial payment was paid upon the execution of this agreement. In addition, the firm is entitled to a success fee for all completed transactions for the sale of selling divisions that are approved by the Company, with the exception of the Nautica division. The term of this engagement shall end six months after the acceptance of the engagement by the Company.

On March 20, 2001, the Board approved a transaction with Nautica Enterprises, Inc. ("Nautica") pursuant to which the Company and Nautica would mutually agree to terminate the license granted to the Company by Nautica. At the time this agreement was signed, the Company was in default under its license from Nautica as a result of failure to pay certain required royalties. Under the terms of the agreement with Nautica, which was completed on April 2, 2001, the Company sold all of its remaining Nautica related inventory for $5.1 million, and sold all fixtures, samples and other support material related to its Nautica product line for $1.5 million. A portion of the sales proceeds, $500,000, were subject to holdback provisions for inventory and chargeback issues, and may never be realized by the Company. In addition, Nautica agreed to waive $1.4 million of past due royalties and all future minimum royalties due under the contract over a seven-month period. The proceeds of the sale were used to reduce debt under the Company's credit facility.

Under this agreement the Company will provide transitional services to Nautica for a period of time to be determined by Nautica, but not to exceed October 31, 2001. These services include, but are not limited to the storage and distribution of the purchased Nautica line of products on behalf of Nautica. The Company will receive a service fee for all transitional services provided for under this agreement.

Liquidity and Capital Resources

the lesser of $20,000,000 or the sum of 60% of the value of eligible inventory as determined by Fleet, and 85% of the value of eligible accounts receivable as determined by Fleet.

During fiscal 2000, the Company's gross profit decreased by approximately $22,700,000 as compared to the previous year. As a percentage of sales this represented a decrease of 11.1% from 24.4% in 1999 to 13.3% in 2000. The Company's total loss for fiscal 2000 was approximately $30,600,000.

The Company remains subject to increasing competitive pressures which have had, and are likely to continue to have, a material adverse impact on its profit margins, including consolidations among retailers, a trend towards self-sourcing by large retailers, an increased level of chargebacks by, and other demands from, retailers.

The Company has not been able to identify a business model which it believes will be profitable in light of the competitive pressures the Company currently faces, as well as the liquidity constraints the Company is currently experiencing.

At a special meeting of the Board of Directors held on April 11, 2001, in light of the foregoing factors, the Board of Directors determined that it should consider all strategic alternatives available to the Company at the present time, including a possible sale of all or some portion of the Company's assets.

In the event the Company is presented with an offer for the sale of all or some portion of its assets, the Board of Directors believes that it is essential to maximizing shareholder value that the Board of Directors be able to authorize the completion of any such sale or sales quickly, without the requirement of obtaining further shareholder approval. Accordingly, under the Sale of Assets Plan for which the Company is seeking shareholder approval, the Board of Directors will be able to approve a sale or sale of assets by the Company without the requirement of obtaining further shareholder approval.

On April 27, 2001, the Company filed a preliminary proxy statement with the Securities and Exchange Commission with respect to a special meeting of shareholders to consider a proposal to approve the Sale of Assets Plan. A complete description of the Sale of Assets Plan is set forth in the preliminary proxy materials as filed with the Securities and Exchange Commission.

As of April 3, 2001 the Company has entered into an agreement to sell the New York sales office for $15,500,000 subject to the assumption of the mortgage by the buyer. The anticipated closing is expected to occur on May 15, 2001. After fees, taxes and expenses the Company anticipates receiving net liquidity of $3,500,000.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk represents the risk of loss that may impact the financial position, results of operations or cash flows of the Company due to adverse changes in financial rates. The Company is exposed to market risk in the area of interest rates. This exposure is directly related to borrowing activities under the Credit Facility. The Company does not maintain any interest rate hedging arrangements due to the reasonable risk that near-term interest rates will not rise significantly.

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 thereunder duly authorized.

HAMPTON INDUSTRIES, INC.

Registrant

S/STEVEN FUCHS
_____________________________________
Steven Fuchs, President

S/FRANK J. COBIA
_____________________________________
Frank J. Cobia, Controller

Date: May 15, 2001