-- the significant ongoing costs and management time and effort of
compliance with the Sarbanes-Oxley Act, including with the internal control
provisions of Section 404 of that act;
-- the significant ongoing costs and management time and effort involved
in the preparation and filing of periodic and other reports with the SEC;
-- the limited trading volume and liquidity of the Company's shares of
common stock;
-- the small effect of the proposed transaction on the relative voting
power of continuing stockholders;
-- the business and operations of the Company are expected to continue
substantially as presently conducted;
-- enabling the Company's smallest stockholders, who represent a
disproportionately large number of the Company's record holders, to
liquidate their holdings in shares of common stock and receive a premium
over current market prices without incurring brokerage commissions;
-- the determination by Houlihan Smith & Company, Inc., the independent
financial advisor to the special committee, that the cash-out price of
fractional shares is fair from a financial point of view to both those
stockholders who would be cashed out in the proposed transaction and to
unaffiliated continuing stockholders; and
-- as a result of the deregistration and delisting, the ability of the
Company's management and employees to focus their time, effort and
resources on long-term growth and increasing long-term stockholder value.
In order to deregister its shares of common stock, the Company will need to
reduce its number of stockholders of record to below 300. To accomplish
this, the Board of Directors is proposing to amend the Company's
certificate of incorporation to effect a reverse stock split, which would
immediately be followed by a forward stock split. The special committee of
the Board of Directors has tentatively determined a reverse/forward stock
split ratio of 1-for-250 shares. As a result, and assuming this ratio is
used, record holders owning less than 250 shares of common stock will
receive a cash payment of $10.21 per share, and record holders owing 250 or
more shares of common stock will retain their current numbers of shares of
common stock without change. The Company also anticipates making this
payment available to its beneficial owners who own less than 250 shares of
common stock (assuming this ratio is used) at the time the reverse stock
split is completed.
The stock splits will be considered at a special meeting of the Company's
stockholders expected to be held before the end of the Company's current
fiscal year, which ends on June 30, 2008.
The special committee and the Board each have reserved the right to change
the ratio of the stock splits or to choose an alternative to the stock
splits to the extent they believe it is necessary or desirable in order to
accomplish the goal of reducing the number of record holders to below 300.
They may also abandon the proposed stock splits at any time prior to the
completion of the proposed transaction if they believe that the proposed
transaction is no longer in the best interests of the Company or its
stockholders.
Special Continuing Stockholder Protections
Both the special committee's recommendation and the full Board's approval
have been conditioned on the establishment of certain corporate governance
and other protections for those stockholders who will continue to own
shares of common stock after the proposed transaction. These measures,
certain of which are listed below, are intended to provide continuing
stockholders with financial and other information about the Company on a
regular basis, as well as to maintain a trading market in the Company's
shares of common stock.
-- Continuation of Trading Opportunities for our Stockholders. The
shares of common stock of the Company are expected to be quoted on the
OTCQX(SM) tier of Pink Sheets, LLC. The "Pink Sheets" is a tiered listing
service that offers financial and other information about issuers of
securities, and collects and publishes quotes of market makers for over-the-
counter securities through its website at www.pinksheets.com.
-- Availability of Financial Statements. The Company will continue to
prepare audited annual financial statements and unaudited quarterly
financial statements and will make them available to stockholders.
-- Availability of Annual and Quarterly Reports. The Company will
prepare and make available to stockholders annual and quarterly reports as
required by Pink Sheets.
-- Financial Statement Certification. The Company's financial statements
will continue to be certified by the Company's chief executive officer and
chief financial officer as required by Pink Sheets.
-- Independent Directors. After the proposed transaction, at least two
directors who are independent within the meaning of the rules of the
American Stock Exchange will continue to be members of the Board of
Directors.
-- Board Review of Certain Transactions. Any non-compensation
transaction with any member of the Board of Directors, any officer, any
member of our control stockholder group, and their immediate families will
be reviewed by the Board of Directors or by a committee of the Board with
at least one independent member. If the transaction would have been
required to be disclosed to stockholders under then current SEC rules and
regulations, it will likewise be publicly disclosed.
-- Material Event Disclosure. Material events periodically will be
disclosed to stockholders through the issuance of press releases or in
another acceptable manner.
-- Codes of Ethics. The Company has already adopted and made publicly
available a Code of Business Conduct for Finance Professionals and a
General Code of Ethics for Employees. These codes will remain in place
after the proposed transaction.
-- Annual Stockholders Meetings. Annual stockholder meetings will
continue to be held.
These special stockholder protections will remain in effect for a minimum
of three years after the proposed transaction.
Allan Ginsburg, Chairman of the Board, noted, "Costs associated with public
reporting obligations are significant and have an impact on our results.
We firmly believe that to remain a public company in today's regulatory
environment is just not warranted, and that our stockholders and the value
of their shares will be best served by emphasizing long-term growth and
using our resources to that end." Mr. Ginsburg added, "We have adopted a
number of conditions to the proposed stock splits intended to maintain
liquidity and regular trading in our shares of common stock. With the
regular public dissemination of financial and other material information
about the Company and its businesses, and having our shares quoted on the
OTCQX(SM) tier of Pink Sheets, LLC, we expect our stockholders will have
the continued ability to trade our shares of common stock, while at the
same time benefiting from the increased value that the substantial savings
from this transaction should bring."
This press release is only a brief description of the proposed transaction.
It is not a request for or solicitation of a proxy or an offer to acquire
or sell any shares of common stock. The Company intends to file a proxy
statement and other required materials, including a Schedule 13e-3, with
the Securities and Exchange Commission concerning the proposed stock
splits. A copy of all final proxy materials will be sent to stockholders
prior to a special meeting of stockholders at which our stockholders will
be asked to vote on the proposals described in the materials you will
receive. The Company, its directors and executive officers may be
considered to be participants in the forthcoming solicitation of proxies
from the Company's stockholders. A list of the names of the Company's
directors and executive officers, and a description of their interests in
the Company, are set forth in the Company's proxy statement filed with the
SEC on October 29, 2007. Stockholders may obtain additional information
regarding the interests of participants by reading the proxy statement
related to the proposed transaction when it becomes available. We urge all
stockholders to read the proxy statement when it becomes available, as well
as all other relevant documents filed with the SEC, because those documents
will include important information. A free copy of all materials we file
with the Securities and Exchange Commission, including our Schedule 13e-3
and proxy statement, will be available at no cost on the SEC's website at
www.sec.gov. When those documents become available, the proxy statement and
other documents filed by the company may also be obtained without charge by
directing a request to jaclyn, inc., 197 West Spring Valley Avenue,
Maywood, New Jersey 07607, Attention: Secretary.
Forward-Looking Statements
Note: This press release may contain forward-looking statements that are
being made pursuant to the Private Securities Litigation Reform Act of
1995, which provides a "safe harbor" for forward-looking statements to
encourage companies to provide prospective information so long as those
statements are accompanied by meaningful cautionary statements identifying
important factors that could cause actual results to differ materially from
those discussed in the statement. Our forward-looking statements are
subject to a number of known and unknown risks and uncertainties that could
cause actual results, performance or achievements to differ materially from
those described or implied in the forward-looking statements, including,
but not limited to, general economic and business conditions; competition
in the accessories and apparel markets, potential changes in customer
spending; acceptance of our product offerings and designs; the variability
of consumer spending resulting from changes in domestic economic activity;
any significant variations between actual amounts and the amounts estimated
for those matters identified as our critical accounting estimates, as well
as other significant accounting estimates made in the preparation of our
financial statements; and the impact of hostilities in the Middle East and
in other geographic areas, as well as other geopolitical concerns.
Accordingly, actual results may differ materially from such forward-looking
statements. You are urged to consider all such factors, as well as those
included in our Annual Report on Form 10-K for the year ended June 30,
2007. Our forward-looking statements relating to the transaction discussed
above are based on our current expectations, assumptions, estimates and
projections about the Company and involve significant risks and
uncertainties, including the many variables that may impact our projected
cost savings, variables and risks related to consummation of the
transaction, SEC regulatory review of our filings related to the
transaction, and the continuing determination of the Board of Directors and
special committee that the transaction is in the best interests of all
stockholders. The Company assumes no obligation for updating any such
forward-looking statements to reflect actual results, changes in
assumptions or changes in other factors affecting such forward-looking
statements.
Contact Information: Company Contact: Anthony Christon Chief Financial Officer Jaclyn, Inc. (201) 909-6000