Hampton Machine Tool

Harvard Business School Case #280-103

Case Software #XLS056

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Exhibit 1 Shipments at Selling Price (thousands of dollars)

As Forecast As Forecast
December 1978 Actual September 1979
1979 January $1,302 $861
February 1,872 672
March 1,635 1,866
April 1,053 1,566
May 1,293 873
June 1,479 1,620
July 1,488 723
August 1,797 507

Eight months total $11,919 $8,688

September $1,299 $2,163

October 1,347 1,505
November 1,311 1,604
December 2,298 2,265
Exhibit 2 Balance Sheets, 1978–1979 (thousands of dollars)

1978 1979
November December March June July August

Cash $2,520 $491 $505 $1,152 $1,678 $1,559

Accounts receivable, net 1,245 1,863 1,971 1,893 1,269 684
Inventories 2,601 2,478 3,474 3,276 3,624 4,764
Current assets 6,366 4,842 5,950 6,321 6,571 7,007
Gross fixed assets 4,010 4,010 4,010 4,010 4,010 4,010
Accumulated depreciation 2,998 3,010 3,040 3,070 3,080 3,090
Net fixed assets 1,012 1,000 970 940 930 920
Prepaid expenses 62 40 39 24 24 42
Total assets $7,440 $5,872 $6,959 $7,285 $7,525 $7,969
Notes payable, bank -- $1,000 $1,000 $1,000 $1,000 $1,000
Accounts payable $348 371 681 399 621 948
Accruals 561 777 849 678 585 552
Taxes payablea 150 74 373 354 407 479
Customer advance payments 840 1,040 1,040 1,566 1,566 1,566
Current liabilities 1,899 3,262 3,943 3,997 4,179 4,545
Common stock ($10 par value) 1,178 428 428 428 428 428
Surplus 4,363 2,182 2,588 2,860 2,918 2,996
Net worth 5,541 2,610 3,016 3,288 3,346 3,424
Total liabilities and net worth $7,440 $5,872 6,959 7,285 7,525 7,969

a
Tax payments in 1979 included $75,000 due March 15 on underpayment of 1978 taxes and four equal payments of $181,000 due on
the fifteenth of April, June, September, and December for estimated 1979 tax liability with any underpayment of 1979 taxes due March
15, 1980.
Exhibit 3 Income Statements, 1978–1979 (thousands of dollars)

Fiscal Year 1979

Ending December
12/31/78 1978 January February March April May June July August

Net sales $7,854 $1,551 $861 $672 $1,866 $1,566 $873 $1,620 $723 $507
Cost of salesa 5,052 1,122 474 369 1,362 1,137 567 1,197 510 276

Gross profit 2,802 429 387 303 504 429 306 423 213 231
Selling and administrative
expenses 1,296 248 103 61 205 172 96 130 87 66

Interest expense -- -- 15 15 15 15 15 15 15 15

Net income before taxes 1,506 181 269 227 284 242 195 278 111 150
Income taxes 723 87 129 109 136 116 94 133 53 72

Net income $783 $94 $140 $118 $148 $126 $101 $145 $58 $78

Dividends $50 $25 -- -- -- -- -- $100 -- --

a
Includes depreciation charges of $150,000 in 1978, $12,000 in December 1978, and $10,000 per month in 1979
Eight Months
Ending
8/31/79

$8,668
5,892

2,796

920

120

1,756
842

$914

$100