Net sales for the fiscal
2007 third quarter were $13,786,000, compared to last year’s $11,940,000. Gross margin, as a percentage of sales,
increased 4.1 percentage points to 31.3% for the fiscal 2007 third quarter from
27.2% for the fiscal 2006 third quarter.
Selling, general and administrative expenses, excluding merger related fees,
were $4,301,000 for the fiscal 2007 third quarter as compared to $4,114,000 in the
same period of the prior year. The
Company incurred $610,000 of fees for the fiscal 2007 third quarter related to
its previously announced merger with
For the nine month period ended March 31, 2007, net
sales increased 15.1% to $50,000,000 from $43,444,000 in the same period last
year. Gross margin, for the fiscal 2007
nine month period, increased 4.2 percentage points to 32.4% from 28.2% in the comparable
period of fiscal 2006. Selling, general
and administrative expenses, excluding merger related fees, were $13,368,000 for
the fiscal 2007 nine month period, compared to $12,426,000 for the fiscal 2006
comparable period. Year-to-date, the
Company has incurred $1,952,000 of merger related fees. In addition, the Company recorded a $496,000
gain on the sale of its distribution center in
Mel Knigin, the Company’s President and Chief
Executive Officer, stated, “Our gross margin improved nicely during the quarter
and year-to-date, primarily as a result of a more profitable product mix and
lower customer allowances and markdowns.
We expect sales for the fourth quarter of fiscal 2007 to be higher than
the fourth quarter of fiscal 2006. At
March 31, 2007, our backlog of orders was approximately $17,700,000 as compared
to $27,400,000 at March 31, 2006. This
decrease in our backlog was due to a shift in the timing of orders booked from
the third to the fourth 2007 fiscal quarter. Orders booked in April 2007 were $13,600,000
compared to $3,000,000 in April 2006.”
The Company is working hard to close the proposed
merger, which is not expected to be completed until the fourth calendar quarter
of 2007. The later than anticipated
timing relates to a delay in the preparation of
MOVIE STAR, INC. designs,
manufactures (through independent contractors), imports, markets and
distributes women’s intimate apparel, including sleepwear, robes, leisurewear
and daywear, to mass merchandisers, specialty and department stores, discount
retailers, national and regional chains and direct mail catalog marketers
throughout the United States. Current
collections include the Cinema Etoile
premium line of intimate apparel and the Movie
Star line of apparel sold as private label programs.
Important
Additional Information Will be Filed with the SEC
In connection with the transactions
contemplated by the Merger Agreement, the Company will prepare a proxy
statement for the Company’s shareholders to be filed with the Securities and
Exchange Commission (“SEC”). Before making any voting decision, the
Company’s shareholders are urged to read the proxy statement carefully in its
entirety when it becomes available because it will contain important
information about the proposed transaction.
The Company’s shareholders and other interested parties will be able to
obtain, without charge, a copy of the proxy statement (when available) and
other relevant documents filed with the SEC from the SEC’s website at http://www.sec.gov. The Company’s shareholders and other
interested parties will also be able to obtain, without charge, a copy of the
proxy statement and other relevant documents (when available) by directing a
request by mail or telephone to Movie Star, Inc., 1115 Broadway, New York, NY
10010, telephone: (212) 798-4700.
Participants
in the Solicitation
The Company and its directors and officers
may be deemed to be participants in the solicitation of proxies from the
Company’s shareholders with respect to the transactions contemplated by the
Merger Agreement. Information about the
Company’s directors and executive officers and their ownership of the Company’s
common stock is set forth in the proxy statement for the Company’s 2005 Annual
Meeting, which was filed with the SEC on October 25, 2005. Shareholders and investors may obtain
additional information regarding the interests of the Company and its directors
and executive officers in the transactions contemplated by the Merger
Agreement, which may be different than those of the Company’s shareholders
generally, by reading the proxy statement and other relevant documents
regarding the transactions contemplated by the Merger Agreement, which will be
filed with the SEC.
Forward
Looking Statement
Certain of the matters set forth in this
press release are forward-looking and involve a number of risks and
uncertainties. Among the factors that
could cause actual results to differ materially are the following: business
conditions and growth in the industry; general economic conditions; addition or
loss of significant customers; the loss of key personnel; product development;
competition; risks of doing business abroad; foreign government regulations;
fluctuations in foreign rates; rising costs for raw materials and the
unavailability of sources of supply; the timing of orders booked; failure to
realize the merger’s anticipated synergies; approval of the transactions by
Movie Star’s shareholders and satisfaction of various other conditions to the
closing of the merger contemplated by the merger agreement; and the other risks
that are described from time to time in Movie Star’s SEC reports.
CONTACT: INVESTOR RELATIONS:
Movie Star, Inc.
-or- SM Berger & Company, Inc.
Thomas Rende, CFO Stanley Berger
(212) 798-4700 (216) 464-6400
[Tables follow]
MOVIE STAR,
INC.
CONSOLIDATED
CONDENSED BALANCE SHEETS
(In
Thousands, Except Share Information)
|
March 31, |
June 30, |
March 31, |
|
2007 (Unaudited) |
2006*
|
2006 (Unaudited) |
Assets
|
Current Assets |
|
|
|
|
Cash |
$ 82
|
$ 203 |
$ 134 |
|
Receivables, net |
6,647 |
6,074 |
9,529 |
|
Inventory |
8,115 |
8,981 |
6,431 |
|
Deferred income taxes |
1,725 |
1,914 |
1,782 |
|
Prepaid expenses and other current assets |
126 |
801 |
2,249 |
|
Total current assets |
16,695 |
17,973 |
20,125 |
|
|
|
|
|
|
Property, plant and equipment,
net |
994 |
838 |
727 |
|
Deferred income taxes |
3,198 |
3,296 |
2,606 |
|
Goodwill |
537 |
537 |
537 |
|
Assets held for sale |
- |
174 |
174 |
|
Other assets |
358 |
403 |
425 |
|
|
|
|
|
|
Total assets |
$21,782 |
$23,221 |
$24,594 |
Liabilities and Shareholders’ Equity
|
Current Liabilities |
|
|
|
|
Note payable |
$ 3,477 |
$ 4,955 |
$ 6,626 |
|
Current maturities of capital lease
obligations |
56 |
- |
- |
|
Accounts payable and other current
liabilities |
2,912 |
4,086 |
2,321 |
|
Total current liabilities |
6,445 |
9,041 |
8,947 |
|
|
|
|
|
|
|
|
|
|
|
Long-term liabilities |
400 |
398 |
384 |
|
|
|
|
|
|
Shareholders’ equity |
|
|
|
|
Common stock, $.01 par value – authorized
30,000,000 shares; |
|
|
|
|
issued 18,439,000 shares at March 31, 2007,
17,755,000 shares at June 30, 2006 and 17,736,000 shares at March 31, 2006 |
184 |
178 |
177 |
|
Additional paid-in capital |
5,518 |
4,834 |
4,808 |
|
Retained earnings |
12,870 |
12,361 |
13,876 |
|
Accumulated other comprehensive (loss)
income |
(17) |
27 |
20 |
|
Treasury stock, at cost—2,017,000 shares |
(3,618) |
(3,618) |
(3,618) |
|
Total shareholders’ equity |
14,937 |
13,782 |
15,263 |
|
|
|
|
|
|
Total liabilities and
shareholders’ equity |
$21,782 |
$23,221 |
$24,594 |
|
|
|
|
|
|
|
|
|
|
* Derived from
audited financial statements.
MOVIE STAR, INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
(In
Thousands, Except Per Share Amounts)
Three Months Ended Nine
Months Ended
March 31, March
31,
2007 2006
2007 2006
|
Net sales |
$13,786 |
$11,940 |
|
$50,000 |
$43,444 |
|
Cost of sales |
9,472 |
8,689 |
|
33,801 |
31,199 |
|
Gross profit |
4,314 |
3,251 |
|
16,199 |
12,245 |
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
4,301 |
4,114 |
|
13,368 |
12,426 |
|
Merger related fees |
610 |
- |
|
1,952 |
- |
|
Gain on sale of property, plant and equipment |
- |
- |
|
(496) |
- |
|
Insurance recovery |
- |
(1,424) |
|
- |
(1,424) |
|
|
|
|
|
|
|
|
(Loss) income from operations |
(597) |
561 |
|
1,375 |
1,243 |
|
|
|
|
|
|
|
|
Interest expense |
127 |
99 |
|
526 |
383 |
|
|
|
|
|
|
|
|
(Loss) income before provision for income taxes |
(724) |
462 |
|
849 |
860 |
|
(Benefit from) provision for income taxes |
(289) |
186 |
|
340 |
345 |
|
|
|
|
|
|
|
|
Net (loss) income |
$ (435) |
$ 276 |
|
$ 509 |
$ 515 |
|
|
|
|
|
|
|
|
BASIC NET (LOSS) INCOME PER
SHARE |
$(.03) |
$.02 |
|
$.03 |
$.03 |
|
|
|
|
|
|
|
|
DILUTED NET (LOSS) INCOME PER
SHARE |
$(.03) |
$.02 |
|
$.03 |
$.03 |
|
|
|
|
|
|
|
|
Basic weighted average number of shares outstanding |
16,372 |
15,717 |
|
15,978 |
15,687 |
|
Diluted weighted average number of shares outstanding |
16,372 |
15,824 |
|
16,467 |
15,774 |
|
|
|
|
|
|
|