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Note 1 - Basis of Presentation
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6 Months Ended |
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Jul. 02, 2011
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| Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] |
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,
2010.
The
information included herein is not necessarily indicative of
the annual results that may be expected for the year ending
December 31, 2011, 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
highly seasonal, causing significant fluctuations in
financial results for interim periods. The Company sells
apparel throughout the year but more than 90% of its annual
sales historically occur in the third and fourth quarters,
primarily due to the large concentration of sweaters in the
product mix and seasonality of the apparel industry in
general.
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 two separate transactions. In
accordance with GAAP, the financial position and results from
operations for the women’s businesses have been
presented as discontinued operations. Certain
reclassifications have been made to prior period amounts to
conform to the current period financial statement
presentation. See Note 8 – 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 – Commitments and
Contingencies.
Special
Costs
In
2006, the Audit Committee (the “Audit Committee”)
of the Board of Directors (the “Board”) commenced
an investigation related to members of the Company’s
former management (the “Audit Committee
Investigation”). The Company reported certain costs as
Special
Costs including, but not limited to, the costs
associated with the Audit Committee Investigation. All
litigation related to the Audit Committee Investigation was
resolved, and thus, the Company has not incurred significant
expenses associated with the Audit Committee Investigation
since August 2010 and does not expect to do so going
forward.
Accounting
Standard Updates
The
following accounting pronouncements have been issued and will
be effective for the Company in or after fiscal year
2011:
In
December 2010, the FASB issued ASU 2010-28, Goodwill and
Other (Topic 350): When to Perform Step 2 of the Goodwill
Impairment Test for Reporting Units with Zero or Negative
Carrying Amounts (“ASU 2010-28”). ASU
2010-28 modifies Step 1 of the goodwill impairment test for
reporting units with zero or negative carrying amounts. For
those reporting units, an entity is required to perform Step
2 of the goodwill impairment test if it is more likely than
not that a goodwill impairment exists. In determining whether
it is more likely than not that a goodwill impairment exists,
an entity must consider whether there are any adverse
qualitative factors indicating an impairment may exist. ASU
2010-28 is effective for fiscal years, and interim periods
within those years, beginning after December 15, 2010.
ASU 2010-28 is therefore effective for the Company’s
fiscal year ending December 31, 2011 and the adoption did not
have an impact on the Company’s consolidated financial
statements.
In
December 2010, the FASB issued ASU No. 2010-29,
Business
Combinations (Topic 805) — Disclosure of Supplementary
Pro Forma Information for Business Combinations
(“ASU 2010-29”). This standard update clarifies
that, when presenting comparative financial statements, SEC
registrants should disclose revenue and earnings of the
combined entity as though the current period business
combinations had occurred as of the beginning of the
comparable prior annual reporting period only. The update
also expands the supplemental pro forma disclosures to
include a description of the nature and amount of material,
nonrecurring pro forma adjustments directly attributable to
the business combination included in the reported pro forma
revenue and earnings. ASU 2010-29 is effective prospectively
for material (either on an individual or aggregate basis)
business combinations entered into in fiscal years beginning
on or after December 15, 2010 with early adoption
permitted. ASU 2010-29 is therefore effective for
acquisitions made after the beginning of the Company’s
fiscal year 2011. ASU 2010-29 may impact the Company’s
disclosures for any future business combinations, but the
effect will depend on acquisitions that may be made in the
future.
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