Pursuant to Rule 425 under the Securities Act of 1933
and deemed to be filed pursuant to Rule 14a-12 of
the Securities Exchange Act of 1934
Subject Company: Movie Star, Inc.
Commission File No.: 333-143619
1115 Broadway, New
York , NY 10010
FOR IMMEDIATE RELEASE:
Movie Star, Inc.
Reports Fiscal 2007
Fourth-Quarter and Full-Year
Financial Results
Net sales for the fiscal
2007 fourth quarter increased 64.6% to $13,493,000 from $8,195,000 in the same
quarter last year. Gross margin, as a
percentage of sales, increased 8.0 percentage points to 30.8% for the fiscal
2007 fourth quarter from 22.8% for the fiscal 2006 fourth quarter. Selling, general and administrative expenses,
excluding merger-related fees, were $4,066,000 for the fiscal 2007 fourth
quarter, compared to $3,884,000 for the fiscal 2006 fourth quarter. The Company incurred $439,000 in
merger-related fees for the fiscal 2007 fourth quarter related to its
previously announced merger with
Net sales for the fiscal 2007 full year increased 23.0%
to $63,493,000 from $51,639,000 in fiscal 2006.
Gross margin for fiscal 2007 increased 4.7 percentage points to 32.0%
from 27.3% in fiscal 2006. Selling,
general and administrative expenses, excluding merger-related fees, were $17,434,000
for fiscal 2007, compared to $16,310,000 for fiscal 2006. The Company incurred $2,391,000 of merger-related
fees during fiscal 2007. In addition,
the Company recorded a $496,000 gain on the sale of its distribution center in
Excluding the gain from the sale of the distribution
center of $496,000 and the merger-related fees of $2,391,000 for fiscal 2007,
as well as the gain from the insurance recovery of $1,450,000 and the merger-related
fees of $246,000 for fiscal 2006, net income for fiscal 2007 would have significantly
improved as compared to the net loss for fiscal 2006.
Our backlog of open orders at June 30, 2007 was $35,229,000,
compared to $41,686,000 at June 30, 2006.
The decline in backlog was primarily due to an additional $2,000,000
order from Wal-Mart that we were able to ship in the fiscal 2007 fourth quarter
instead of the first quarter of fiscal 2008 and a reduction in orders from
other customers. As we are in the
process of building our book of business for fiscal 2008, it is premature to
comment on our outlook at this time. We remain
optimistic that the closing of the merger with
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 with FOH
Holdings, Inc., Movie Star will file a definitive proxy statement and a final
prospectus for a proposed rights offering with the SEC. BEFORE MAKING ANY INVESTMENT DECISION TO
PARTICIPATE IN THE RIGHTS OFFERING, MOVIE STAR SHAREHOLDERS ARE URGED TO READ
THE FINAL PROSPECTUS CAREFULLY IN ITS ENTIRETY WHEN IT BECOMES AVAILABLE
BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED RIGHTS
OFFERING. BEFORE MAKING ANY VOTING
DECISION, MOVIE STAR SHAREHOLDERS ARE URGED TO READ THE DEFINITIVE PROXY
STATEMENT CAREFULLY IN ITS ENTIRETY WHEN IT BECOMES AVAILABLE BECAUSE IT WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTIONS. Movie Star shareholders and other interested
parties will be able to obtain, without charge, a copy of the definitive proxy
statement and final prospectus (when available) and other relevant documents
filed with the SEC, from the SEC’s website at http://www.sec.gov. Movie Star shareholders and other interested
parties will also be able to obtain, without charge, a copy of the definitive
proxy statement, final prospectus 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
Movie
Star and its directors and officers may be deemed to be participants in the
solicitation of proxies from Movie Star shareholders with respect to the
transactions contemplated by the merger agreement. Information about Movie Star’s directors and
executive officers and their ownership of Movie Star common stock is set forth
in a preliminary proxy statement currently on file with the SEC and will be set
forth in the definitive proxy statement.
Shareholders and investors may obtain additional information regarding
the interests of Movie Star and its directors and executive officers in the
transactions contemplated by the merger agreement, which may be different than
those of Movie Star shareholders generally, by reading the proxy statement and
other relevant documents regarding the transactions contemplated by the merger
agreement that have been or 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: competition;
business conditions and industry growth; rapidly changing consumer preferences
and trends; general economic conditions; large variations in sales volume with
significant customers; addition or loss of significant customers; continued
compliance with government regulations; loss of key personnel; labor practices;
management of growth, increases in costs of operations or inability to meet
efficiency or cost reduction objectives; the timing of orders and deliveries of
products; foreign government regulations and risks of doing business abroad;
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
STATEMENTS OF OPERATIONS
(In
Thousands, Except Per Share Amounts)
|
Three
Months Ended |
|
Fiscal
Year Ended |
||
|
June 30, |
June 30, |
|
June 30, |
June 30, |
|
2007 |
2006 |
|
2007 |
2006 |
|
(Unaudited) |
|
|
|
|
|
Net sales |
$13,493 |
$8,195 |
|
$63,493 |
$51,639 |
|
Cost of sales |
9,343 |
6,329 |
|
43,144 |
37,528 |
|
Gross profit |
4,150 |
1,866 |
|
20,349 |
14,111 |
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
4,066 |
3,884 |
|
17,434 |
16,310 |
|
Merger related fees |
439 |
246 |
|
2,391 |
246 |
|
Gain on sale of property, plant and equipment |
- |
- |
|
(496) |
- |
|
Insurance recovery |
- |
(26) |
|
- |
(1,450) |
|
|
|
|
|
|
|
|
(Loss) income from operations |
(355) |
(2,238) |
|
1,020 |
(995) |
|
|
|
|
|
|
|
|
Interest expense, net |
78 |
90 |
|
604 |
473 |
|
|
|
|
|
|
|
|
(Loss) income before provision for income taxes |
(433) |
(2,328) |
|
416 |
(1,468) |
|
(Benefit from) provision for income taxes |
(70) |
(813) |
|
270 |
(468) |
|
|
|
|
|
|
|
|
Net (loss) income |
$ (363) |
$ (1,515) |
|
$ 146 |
$(1,000) |
|
|
|
|
|
|
|
|
BASIC NET (LOSS) INCOME PER
SHARE |
$(.02) |
$ (.10) |
|
$.01 |
$ (.06) |
|
|
|
|
|
|
|
|
DILUTED NET (LOSS) INCOME PER
SHARE |
$(.02) |
$ (.10) |
|
$.01 |
$ (.06) |
|
|
|
|
|
|
|
|
Basic weighted average number of shares outstanding |
16,423 |
15,739 |
|
16,089 |
15,700 |
|
Diluted weighted average number of shares outstanding |
16,423 |
15,739 |
|
16,671 |
15,700 |
|
|
|
|
|
|
|
MOVIE STAR,
INC.
CONSOLIDATED
CONDENSED BALANCE SHEETS
(In
Thousands, Except Share Information)
|
June 30, |
June
30, |
|
2007 |
2006 |
|
|
|
Assets
|
Current Assets |
|
|
|
Cash |
$ 53 |
$ 203 |
|
Receivables, net |
8,266 |
6,074 |
|
Inventory |
6,816 |
8,981 |
|
Deferred income taxes |
1,518 |
1,914 |
|
Prepaid expenses and other current assets |
291 |
801 |
|
Total current assets |
16,944 |
17,973 |
|
|
|
|
|
Property, plant and equipment,
net |
943 |
838 |
|
Deferred income taxes |
3,438 |
3,296 |
|
Goodwill |
537 |
537 |
|
Assets held for sale |
- |
174 |
|
Other assets |
476 |
403 |
|
|
|
|
|
Total assets |
$22,338 |
$23,221 |
Liabilities and Shareholders’ Equity
|
Current Liabilities |
|
|
|
Note payable |
$ 4,126 |
$ 4,955 |
|
Accounts payable |
2,275 |
3,273 |
|
Accrued expenses and other current
liabilities |
953 |
813 |
|
Total current liabilities |
7,354 |
9,041 |
|
|
|
|
|
|
|
|
|
Long-term liabilities |
379 |
398 |
|
|
|
|
|
Shareholders’ equity |
|
|
|
Common stock, $.01 par value – authorized
30,000,000 shares; |
|
|
|
issued 18,440,000 at June 30, 2007 and 17,755,000 shares at June 30, 2006 |
184 |
178 |
|
Additional paid-in capital |
5,552 |
4,834 |
|
Retained earnings |
12,507 |
12,361 |
|
Accumulated other comprehensive (loss)
income |
(20) |
27 |
|
Treasury stock, at cost—2,017,000 shares |
(3,618) |
(3,618) |
|
Total shareholders’ equity |
14,605 |
13,782 |
|
|
|
|
|
Total liabilities and
shareholders’ equity |
$22,338 |
$23,221 |
|
|
|
|
|
|
|
|