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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 12B-25
Commission File Number 1-11812
NOTIFICATION OF LATE FILING
(Check One): /X/ Form 10-K and Form 10-KSB / / Form 20-F / / Form 11-K
/ / Form 10-Q and Form 10-QSB / / Form N-SAR
For Period Ended: December 31, 1997
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/ / Transition Report on Form 10-K / / Transition Report on Form 10-Q
/ / Transition Report on Form 20-F / / Transition Report on Form N-SAR
/ / Transition Report on Form 11-K
For the Transition Period Ended:
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READ ATTACHED INSTRUCTION SHEET BEFORE PREPARING FORM. PLEASE PRINT OR TYPE.
Nothing in this form shall be construed to imply that the Commission has
verified any information contained herein.
If the notification relates to a portion of the filing checked above,
identify the item(s) to which the notification relates: N/A
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PART I
REGISTRANT INFORMATION
Full name of registrant STARTER CORPORATION
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Former name if applicable
N/A
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Address of Principal Executive Office (STREET AND NUMBER)
370 JAMES STREET
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City, State and Zip Code NEW HAVEN, CONNECTICUT 06513
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PART II
RULE 12B-25 (b) AND (c)
If the subject report could not be filed without unreasonable effort or
expense and the registrant seeks relief pursuant to Rule 12b-25(b), the
following should be completed. (Check appropriate box.)
/X/ (a) The reasons described in reasonable detail in Part III of this form
could not be eliminated without unreasonable effort or expense;
/X/ (b) The subject annual report, semi-annual report, transition report on
Form 10-K, Form 20-F, Form 11-K or Form N-SAR, or portion thereof will be
filed on or before the 15th calendar day following the prescribed due date;
or the subject quarterly report or transition report on Form 10-Q, or
portion thereof will be filed on or before the fifth calendar day following
the prescribed due date; and
/ / (c) The accountant's statement or other exhibit required by Rule 12b-25(c)
has been attached if applicable.
PART III
NARRATIVE
State below in reasonable detail the reasons why Form 10-K and Form 10-KSB,
Form 20-F, Form 11-K, Form 10-Q and Form 10-QSB, Form N-SAR or the transition
report portion thereof could not be filed within the prescribed time period.
(Attach extra sheets if needed.)
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The Registrant entered into a new three year $160,000,000 secured revolving
credit facility with BankBoston, N.A. and Citibank, N.A. on March 31, 1998 (the
"New Credit Facility"), replacing its existing revolving credit facility. The
Registrant had been unable to comply with certain covenants of the previous
revolving credit facility and had been operating under a forbearance agreement
with respect to such previous facility that was to expire on March 31, 1998.
The replacement of such previous facility with the New Credit Facility
materially impacts the liquidity and capita resources of the Registrant and the
footnotes to its financial statements as of December 31, 1997. Many material
terms of the New Facility were not finalized until immediately prior to its
execution. As a result, the Registrant is unable, without unreasonable effort
and expense, to complete its Annual Report on Form 10-K for the year ended
December 31, 1997 for filing within the prescribed period.
PART IV
OTHER INFORMATION
(1) Name and telephone number of person to contact in regard to this
notification.
JOHN C. WARFEL (203) 781-4000
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(Name) (Area Code) (Telephone Number)
(2) Have all other periodic reports required under Section 13 or 15(d) of
the Securities Exchange Act of 1934 or Section 30 of the Investment Company Act
of 1940 during the preceding 12 months or for such shorter period that the
registrant was required to file such report(s) been filed? If the answer is no,
identify report(s).
/X/ Yes / / No
(3) Is it anticipated that any significant change in results of operations
from the corresponding period for the last fiscal year will be reflected by the
earnings statements to be included in the subject report or portion thereof?
/X/ Yes / / No
If so: attach an explanation of the anticipated change, both narratively
and quantitatively, and, if appropriate, state the reasons why a reasonable
estimate of the results cannot be made.
The Registrant's revenues decreased to $350.2 million in 1997 from $406.0
million in 1996. The Registrant's net loss for 1997 was $36.9 million, or $1.33
per share, compared to net income of $1.9 million, or $0.07 per share, for 1996.
The net loss for the year is primarily attributable to the rapid unexpected
deterioration in the athletic apparel industry in 1997 and the resulting
decreases in sales levels and margins. These decreases resulted in the
inability of the Registrant to recover its fixed selling, general and
administrative expenses which had increased significantly in 1997 due to
investments made in anticipation of growth in sales. In 1996 and 1997, the
Registrant made investments and built an infrastructure to support a business
that had experienced growth in the past and was expected to continue to grow.
In addition to anticipated general growth arising from the industry as a whole
the Registrant believed that its acquisitions in 1996 and 1997 provided a
vehicle to support further increases in its market share. Sales for the first
six months of 1997 were in line with internal projections. The market place
began to soften in the last half of 1997 and, at that time, the Registrant
began a plan to reduce selling, general and administrative expenses. Several
changes were made in the management team, including the elimination of several
positions. The cost containment initiatives are expected to result in reduced
costs during 1998 via reductions in the Registrant's workforce, reductions in
unprofitable outlet store operations, more cost effective marketing initiatives
and other spending reductions. However, there can be no assurance such cost
containment initiatives will result in the Registrant's return to
profitability. Reference is also made to the press release filed herewith.
STARTER CORPORATION
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(Name of Registrant as Specified in Charter)
has caused this notification to be signed on its behalf by the undersigned
thereunto duly authorized.
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Date: APRIL 1, 1998 By: /s/ John C. Warfel
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Name: John C. Warfel
Title: Senior Vice President
INSTRUCTION. The form may be signed by an executive officer of
the registrant or by any other duly authorized representative. The
name and title of the person signing the form shall be typed or
printed beneath the signature. If the statement is signed on behalf
of the registrant by an authorized representative (other than an
executive officer), evidence of the representative's authority to sign
on behalf of the registrant shall be filed with the form.
ATTENTION
Intentional misstatements or omissions of fact constitute Federal criminal
violations (SEE 18 U.S.C. 1001).
GENERAL INSTRUCTIONS
1. This form is required by Rule 12b-25 of the General Rules and
Regulations under the Securities Exchange Act of 1934.
2. One signed original and four conformed copies of this form and
amendments thereto must be completed and filed with the Securities and Exchange
Commission, Washington, D.C. 20549, in accordance with Rule 0-3 of the General
Rules and Regulations under the Act. The information contained in or filed with
the form will be made a matter of the public record in the Commission files.
3. A manually signed copy of the form and amendments thereto shall be
filed with each national securities exchange on which any class of securities of
the registrant is registered.
4. Amendments to the notifications must also be filed on Form 12b-25 but
need not restate information that has been correctly furnished. The form shall
be clearly identified as an amended notification.
5. ELECTRONIC FILERS. This form shall not be used by electronic filers
unable to timely file a report solely due to electronic difficulties. Filers
unable to submit a report within the time period prescribed due to difficulties
in electronic filing should comply with either Rule 201 or Rule 202 of
Regulation S-T or apply for an adjustment in filing date pursuant to Rule 13(b)
of Regulation S-T.
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FOR: Starter Corporation
APPROVED: John C. Warfel
Senior Vice President
(203) 781-4002
CONTACT: Christine DiSanto/Jim Cappuccio
Media Contact - Jeff Siegel
Morgen-Walke Associates
(212) 850-5600
STARTER CORPORATION ANNOUNCES FOURTH QUARTER
AND YEAR END RESULTS
New Haven, CT, March 31, 1998 - Starter Corporation (NYSE:STA) today
announced financial results for the fourth quarter and year ended December 31,
1997.
Revenues decreased to $80.8 million in the fourth quarter of 1997 from
$113.3 million in the fourth quarter of 1996. The Company reported an operating
loss of $24.8 million compared to an operating loss of $4.9 million in the
fourth quarter of 1996. The net loss for the fourth quarter of 1997 was $34.7
million, or $1.24 per share, compared to a net loss of $3.8 million, or $0.14
per share, in the fourth quarter of 1996.
Revenues for the year decreased to $350.2 million in 1997 from $406.0
million in 1996. The Company reported an operating loss of $24.2 million in
1997, compared to operating income of $8.3 million in the previous year. The
net loss for 1997 was $36.9 million, or $1.33 per share, compared to net income
of $1.9 million, or $0.07 per share, for 1996.
Starter also announced that it has obtained a three-year, $160 million line
of credit from Bank Boston, N.A. and Citibank, N.A. for working capital, which
replaces its existing line of credit.
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David A. Beckerman, Chairman and Chief Executive Officer, stated, "We are
very unhappy with our financial results this year. As we previously indicated,
our results continue to be affected by difficult industry conditions and a
softness in the licensed product market."
Mr. Beckerman continued, "In spite of our performance in 1997, I believe
that Starter's financial results will improve in 1998. Initiatives, such as the
Quick Response capability we began in 1997, have already begun to provide
improved results, which we expect to continue into the second half of 1998.
However, the first six months of 1998 will continue to be soft, due to the
normal seasonal nature of our business."
"We are continually reviewing our operations to improve our results. We
have made several changes in our management team, including the elimination of
several positions. We have also reduced our costs by over $20 million, via
reductions in our workforce at all three of our locations and decreased spending
in a number of other categories. Additionally, we are currently in the process
of re-evaluating our marketing expenditures to determine which programs are most
effective. We will continue to explore all avenues to increase our revenues and
reduce our expenses."
This press release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Actual results could
differ materially from those set forth in such statements due to various
factors. Such factors include product demand and market acceptance risks, the
effect of changing economic conditions, the impact of competitive products and
pricing risks associated with product development and the effect of the
Company's accounting policies and other risk factors detailed in the Company's
Securities and Exchange Commission filings.
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Starter is a leading designer and marketer of quality Outerwear,
Activewear, Printables and Accessories, and is a licensee of all the major North
American professional sports leagues and universities. Starter also designs and
markets its own branded apparel.
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STARTER CORPORATION
Consolidated Statements of Operations
(In thousands, except share and per share data)
<TABLE>
<CAPTION>
Three Months Ended Year Ended
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12/31/97 12/31/96 12/31/97 12/31/96
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<S> <C> <C> <C> <C>
Net sales $80,828 $113,303 $350,229 $405,961
Gross profit 15,539 29,405 104,997 127,310
Royalty income 920 1,131 3,729 3,449
Selling, general and
administrative expenses (41,276) (35,414) (132,950) (122,426)
Income (loss) from operations (24,817) (4,878) (24,224) 8,333
Other income (expense) (200) 119 103 446
Interest expense (2,729) (1,626) (7,272) (5,647)
Income (loss) before
income taxes (27,746) (6,385) (31,393) 3,132
Income taxes 6,930 (2,590) 5,544 1,255
Net income (loss) ($34,676) ($3,795) ($36,937) $1,877
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Loss per share ($1.24) ($0.14) ($1.33) $0.07
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Average common and common
equivalent shares outstanding 27,867,652 27,704,760 27,846,962 27,199,843
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</TABLE>
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STARTER CORPORATION
SELECTED BALANCE SHEET DATA
(IN THOUSANDS)
12/31/97 12/31/96
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Accounts receivable-trade, net of allowance $38,424 $55,910
Inventories 71,940 76,964
Total current assets 122,401 152,973
Property, plant and equipment, net 25,506 27,939
Total assets 160,521 188,895
Notes payable to banks 41,624 34,666
Total current liabilities 88,444 79,790
Total stockholders' equity 67,435 103,253
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