Hampshire Group, Limited and Subsidiaries Consolidated Statement of Operations The Company defines EBITDA as net income (loss) before interest expense, interest income, income taxes, depreciation and amortization. Adjusted EBITDA removes the impact of non-operational items of a one-time supplier dispute release, discontinued operations, special costs, restructuring charges, tender offer related costs and other, net. Management believes these measures provide useful information for investors concerning the Company's operating results and financial performance. As non-GAAP financial measures, EBITDA and Adjusted EBITDA should not be considered an alternative to comparable GAAP financial measures but should rather be read in conjunction with the GAAP financial measures. Depreciation & amortization for the period ending December 31, 2008 includes a charge of $8.2 million for goodwill impairment. Other, net for the period ending December 31, 2008 includes a net recovery of approximately $1.5 million related to the Settlement Agreement with the Company's former CEO. In the fourth quarter of 2009, the Company determined that a $5.1 million liability related to a supplier dispute was no longer required for, among other things, the lapse of regulatory and contractual statutes of limitations regarding potential claims by interested parties, and reversed the reserve against cost of sales. YEAR ENDED YEAR ENDED YEAR ENDED QTR ENDED in 000's December 31, 2009 December 31, 2008 April 3, 2010 (unaudited) Net sales $ 165,178 $ 240,901 $ 20,450 Cost of goods sold 125,777 188,700 16,212 Gross profit 39,401 52,201 4,238 23.9% 21.7% 20.7% SG&A 39,715 57,632 8,559 Special costs 4,547 2,995 541 Restructuring charges 4,820 580 - Tender offer related costs 2,053 386 - Goodwill impairment loss - 8,162 - Loss from operations $ (11,734) $ (17,554) $ (4,862) Net loss $ (6,046) $ (29,897) $ (5,020) Interest expense (income), net 147 (946) 90 Income tax provision (benefit) (6,251) 9,906 39 Depreciation & amortization (2) 2,549 10,064 618 EBITDA (1) (9,601) (10,873) (4,273) Cost of sales - supplier dispute release (4) (5,081) - - Special costs 4,547 2,995 541 Restructuring charges 4,820 580 - Tender offer related costs 2,053 386 - Other, net (3) 376 (1,622) 24 Discontinued operations, net of tax 40 5,005 5 Adjusted EBITDA (1) $ (2,846) $ (3,529) $ (3,703) |