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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarter ended September 30, 2002
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission File Number: 0-24176
Marisa Christina, Incorporated
(Exact name of registrant as specified in its charter)
Delaware 11-3216809
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
8101 Tonnelle Avenue, North Bergen, New Jersey 07047-4601
(Address of principal executive offices) (Zip Code)
(201)-758-9800
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
The number of shares outstanding of the Company's Common Stock on November
13, 2002 were 7,295,065.
MARISA CHRISTINA, INCORPORATED AND SUBSIDIARIES
INDEX
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements:
Consolidated Balance Sheets -- September 30, 2002 (Unaudited)
and December 31, 2001 2
Consolidated Statements of Operations and Comprehensive Loss --
Three and Nine Months Ended September 30, 2002 and 2001
(Unaudited) 3
Consolidated Statements of Cash Flows -- Nine Months Ended
September 30, 2002 and 2001 (Unaudited) 4
Notes to Consolidated Financial Statements (Unaudited) 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Item 3. Quantitative and Qualitative Disclosures About Market Risk 10
Item 4: Controls and Procedures 11
PART II. OTHER INFORMATION
Item 1: Legal Proceedings 12
Item 6: Exhibits and Reports on Form 8-K 12
SIGNATURE 13
Certifications 14
PART I: FINANCIAL INFORMATION
ITEM 1: CONSOLIDATED FINANCIAL STATEMENTS
MARISA CHRISTINA, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31,
ASSETS 2002 2001 (1)
------------- -------------
Current assets: (UNAUDITED)
Cash and cash equivalents $ 291,023 $ 3,330,602
Trade accounts receivable, less allowance for doubtful
accounts of $420,000 in 2002 and $365,000 in 2001 8,114,556 3,160,273
Inventories 2,194,975 1,742,835
Prepaid expenses and other current assets 855,086 431,419
------------ ------------
Total current assets 11,455,640 8,665,129
Property and equipment, net 349,360 404,274
Other assets 104,192 129,192
------------ ------------
Total assets $ 11,909,192 $ 9,198,595
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Borrowings under credit facility $ 356,167 $ --
Trade accounts payable 2,318,680 833,437
Accrued expenses and other current liabilities 570,085 458,554
------------ ------------
Total current liabilities 3,244,932 1,291,991
------------ ------------
Stockholders' equity:
Preferred stock, $.01 par value. Authorized 1,000,000 shares;
none issued -- --
Common stock, $.01 par value. Authorized 15,000,000 shares;
8,586,769 shares issued 85,868 85,868
Additional paid-in capital 31,664,680 31,664,680
Accumulated other comprehensive loss (57,924) (57,924)
Accumulated deficit (18,924,088) (19,681,744)
Treasury stock, 1,291,704 common shares (4,104,276) (4,104,276)
------------ ------------
Total stockholders' equity 8,664,260 7,906,604
------------ ------------
Total liabilities and stockholders' equity $ 11,909,192 $ 9,198,595
============ ============
(1) Amounts were derived from the audited consolidated balance sheet as of
December 31, 2001.
See accompanying notes to consolidated financial statements.
2
MARISA CHRISTINA, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------------- -----------------------------
2002 2001 2002 2001
------------ ------------ ------------ ------------
Net sales $ 10,528,921 $ 12,606,662 $ 20,052,997 $ 26,187,567
Cost of goods sold 6,117,320 7,814,141 13,003,978 17,858,262
------------ ------------ ------------ ------------
Gross profit 4,411,601 4,792,521 7,049,019 8,329,305
Selling, general and administrative
expenses 2,548,336 3,047,849 6,429,985 7,900,690
------------ ------------ ------------ ------------
Operating earnings 1,863,265 1,744,672 619,034 428,615
Other income, net 18,945 31,442 106,152 149,694
Interest income (expense), net 18,115 (43,288) 58,370 (7,158)
------------ ------------ ------------ ------------
Earnings before income
tax expense 1,900,325 1,732,826 783,556 571,151
Income tax expense 22,916 -- 25,900 --
------------ ------------ ------------ ------------
Net earnings $ 1,877,409 $ 1,732,826 $ 757,656 $ 571,151
============ ============ ============ ============
Net earnings per weighted average common share:
Basic $ 0.26 $ 0.24 $ 0.10 $ 0.08
Diluted $ 0.26 $ 0.24 $ 0.10 $ 0.08
============ ============ ============ ============
See accompanying notes to consolidated financial statements.
3
MARISA CHRISTINA, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
(UNAUDITED)
2002 2001
----------- -----------
Cash flows from operating activities:
Net income $ 757,656 $ 571,151
Adjustments to reconcile net income to net cash used in
operating activities:
Depreciation and amortization 107,743 143,071
Bad debt expense 187,497 177,358
Changes in operating assets and liabilities:
Trade accounts receivable (5,141,780) (5,710,627)
Inventories (452,140) (732,670)
Prepaid expenses and other assets (398,257) (244,280)
Trade accounts payable 1,485,243 (624,398)
Accrued expenses and other current liabilities 111,531 70,629
----------- -----------
Net cash used in operating activities (3,342,507) (6,349,766)
----------- -----------
Cash flows from investing activities:
Property and equipment additions (53,239) (317,633)
----------- -----------
Net cash used in investing activities (53,239) (317,633)
----------- -----------
Cash flows from financing activities:
Borrowings under credit facility, net 356,167 3,890,000
Other -- (6,284)
----------- -----------
Net cash provided by financing activities 356,167 3,883,716
----------- -----------
Net decrease in cash and cash equivalents (3,039,579) (2,783,683)
Cash and cash equivalents at beginning of period 3,330,602 3,240,052
----------- -----------
Cash and cash equivalents at end of period $ 291,023 $ 456,369
=========== ===========
Supplemental information:
Cash paid during the period for:
Income taxes $ 25,900 200
=========== ===========
Interest $ -- 58,783
=========== ===========
See accompanying notes to consolidated financial statements.
4
MARISA CHRISTINA, INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Nine months ended September 30, 2002 and 2001
(1) BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements include the
accounts of Marisa Christina, Incorporated and its wholly owned
subsidiaries (the Company). Significant intercompany accounts and
transactions are eliminated in consolidation.
The unaudited consolidated financial statements do not include all
information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally
accepted in the United States of America. For further information, such as
the significant accounting policies followed by the Company, refer to the
notes to the Company's audited consolidated financial statements, included
in its annual report on Form 10-K for the year ended December 31, 2001.
In the opinion of management, the unaudited consolidated financial
statements include all necessary adjustments (consisting of normal,
recurring accruals), for a fair presentation of the financial position,
results of operations and cash flows for the interim periods presented. The
results of operations for the three months and nine months ended September
30, 2002 and 2001 are not necessarily indicative of the operating results
to be expected for a full year.
(2) INVENTORIES
Inventories at September 30, 2002 and December 31, 2001 consist of the
following:
2002 2001
---------- ----------
Piece goods $ 20,240 $ 50,050
Finished goods 2,174,735 1,692,785
---------- ----------
$2,194,975 $1,742,835
========== ==========
(3) BORROWINGS UNDER CREDIT FACILITY
The Company has a $17.5 million line of credit facility with a finance
company, which may be utilized for commercial letters of credit, banker's
acceptances, commercial loans and letters of indemnity. Borrowings under
the facility are secured by certain of the Company's assets, primarily
inventory and trade accounts receivable, and bear interest at the prime
rate plus 0.75%. The Company is required to pay an annual commitment fee of
approximately $50,000. The credit facility contains various covenants that
require minimum levels of working capital and net tangible worth.
As of September 30, 2002, there were borrowings of approximately $356,000
and $116,000 of commercial letters of credit outstanding under the credit
facility. Available borrowings at September 30, 2002 were $9.1 million. The
arrangement expires on June 14, 2004 and is cancelable by either party with
90 days' written notice. The Company expects to have sufficient financing
to meet its working capital needs throughout 2002. As of December 31, 2001,
there were no borrowings outstanding under the credit facility.
5
MARISA CHRISTINA, INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Nine months ended September 30, 2002 and 2001
(4) NET EARNINGS PER WEIGHTED AVERAGE COMMON SHARE
Basic and diluted net earnings per common share are based on the weighted
average number of common shares outstanding, which was 7,295,065 for the
three and nine months ended September 30, 2002 and 7,297,536 and 7,299,035,
respectively, for the three and nine months ended September 30, 2001. The
effect of stock options outstanding during the three and nine months ended
September 30, 2002 and 2001 was not included in the computation of diluted
earnings per common share because the effect would have been antidilutive
since the average market price of the Company's common stock was less than
the exercise price of outstanding stock options.
(5) LEGAL PROCEEDINGS
The Company is involved, from time to time, in litigation and proceedings
arising out of the ordinary course of business. The Company is a party to a
lawsuit entitled Martha Wahlert V. Marisa Christina, Inc. and Nordstrom
Inc., alleging copyright infringement and other related claims, has been
commenced in the United States District Court for the Eastern District of
Texas. The lawsuit claims unspecified damages resulting from Marisa
Christina's sale to Nordstrom of 695 sweaters bearing a design which
allegedly infringes the Plaintiff's copyrighted design. Marisa Christina,
pursuant to an agreement, is indemnifying Nordstrom. Marisa Christina is
vigorously defending the lawsuit and believes that any possible adverse
determination would not be material.
6
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with Marisa Christina's
consolidated financial statements and the notes thereto that follow in this Form
10-Q for the three and nine months ended September 30, 2002.
Forward-Looking Statements
This report on Form 10-Q contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. The statements
regarding Marisa Christina in this document that are not historical in nature,
particularly those that utilize terminology such as "may," will," "should,"
"likely," "expects," "anticipates," "estimates," "believes" or "plans," or
comparable terminology are forward-looking statements based on current
expectations about future events, which Marisa Christina has derived from
information currently available. These forward-looking statements involve known
and unknown risks and uncertainties that may cause our results to be materially
different from results implied in such forward-looking statements. Those risks
include, among others, risks associated with the apparel industry, the
dependence on senior management, maintaining sufficient working capital
financing, price pressures and other competitive factors, and a softening of
retailer or consumer acceptance of the Company's products leading to a decrease
in anticipated revenues and gross profit margins.
Critical Accounting Policies
Critical accounting policies are those that are both important to the
presentation of our financial condition and results of operations and require
management's most difficult, complex or subjective judgments. The Company's most
critical accounting policies relate to estimates related to allowances for
uncollectible trade accounts receivable, customer sales allowances and valuation
of inventories.
Receivables
Allowances are provided for estimated uncollectible receivables based on review
of specific accounts and historical experience. Allowances and credits, which
are given to customers in connection with sales incentives and promotional
activities, are recognized as reductions of sales when the related sales revenue
is earned and recognized. Events or changes in market conditions that adversely
impact our customers or the Company's ability to generate sales, could impact
management's estimates of uncollectible receivables or require the Company to
offer greater sales incentives, which could negatively impact sales or profits
in the future.
Inventories
Inventories are stated at the lower of cost, by the first-in, first-out method
or market. In assessing the market value of its inventories, particularly those
with slower turnover, the Company considers the estimated sales value less costs
to dispose and a reasonable profit margin and assesses the likelihood of
realizing the recorded amounts of inventory. Changes in market conditions could
impact the Company's ability to achieve sales at the estimated selling prices
and could negatively impact the carrying value of the Company's inventory.
Recent Developments
NASDAQ CHANGES QUANTITATIVE LISTING STANDARDS
NASDAQ has changed its minimum $4 million net tangible assets listing standard
to an equity listing standard. The change requires NASDAQ's national market
companies to maintain equity of at least $10 million. This requirement is
effective for filings due by the Company after November 1, 2002. Currently, the
Company is not in compliance with the standard and may not be as of December 31,
2002.
7
OVERVIEW
In order to reverse the trend of continuing losses, the Company undertook a
number of initiatives over the past four years to reduce overhead, replace
certain sales and marketing personnel and exit unprofitable product lines. Most
significantly, in an effort to refocus its resources on its core business, the
Marisa Christina product lines (MC), the Company disposed of its Flapdoodles
division (Flapdoodles) in 2000 and its Adrienne Vittadini division (AVE) in
1999.
The Company returned to profitability in 2001 and 2002 primarily as a result of
these initiatives and focusing on its core business. While there can be no
assurance, management believes that the Company is better positioned for
profitability in the future.
The following table sets forth information with respect to the percentage
relationship to net sales of certain items of the consolidated statements of
operations of the Company for the three and nine months ended September 30, 2002
and 2001.
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- -------------------
2002 2001 2002 2001
------ ------ ------ ------
Net sales 100.0% 100.0% 100.0% 100.0%
------ ------ ------ ------
Gross profit 41.9 38.0 35.2 31.8
Selling, general and administrative expenses 24.2 24.2 32.1 30.2
------ ------ ------ ------
Operating earnings 17.7 13.8 3.1 1.6
Other income, net 0.2 0.2 0.5 0.6
Interest income (expense), net 0.1 (0.3) 0.3 --
Income tax expense 0.2 -- 0.1 --
------ ------ ------ ------
Net earnings 17.8% 13.7% 3.8% 2.2%
====== ====== ====== ======
THREE MONTHS ENDED SEPTEMBER 30, 2002 (2002) COMPARED WITH THREE MONTHS ENDED
SEPTEMBER 30, 2001 (2001)
Net sales. Net sales decreased 16.5% from $12.6 million in 2001 to $10.5 million
in 2002, primarily as a result of discontinuing the unprofitable product label
and a general downturn in the economy.
Gross profit. Gross profit decreased 7.9% from $4.8 million in 2001 to $4.4
million in 2002, primarily as a result of lower sales. As a percentage of net
sales, gross profit increased from 38.0% in 2001 to 41.9% in 2002, primarily as
a result of improved pricing on selected products.
Selling, general and administrative expenses. Selling, general and
administrative expenses (SG&A) decreased 16.4% from $3.0 million in 2001 to $2.5
million in 2002, primarily as a result of cost reductions associated with a
discontinued label and lower variable selling costs. As a percentage of net
sales, SG&A remained consistent at 24.2% in 2001 and 2002.
Other income, net. Other, net, which consists of royalty and licensing income,
was $31.4 thousand and $18.9 thousand in 2001 and 2002, respectively.
Interest income (expense), net. Interest income (expense), net changed from
$43.3 thousand expense in 2001 to $18.1 thousand income in 2002, as a result of
higher invested cash balances, and lower interest rates on amounts invested and
borrowed. In addition, the Company has had lower average outstanding borrowings
under its credit facility in 2002 than in 2001.
8
Income tax expense. Income tax expense in 2002 relates to alternative minimum
tax expense in certain states. The Company does not have current federal tax
expense due to its net operating loss carryforwards which were approximately
$31.0 million, at December 31, 2001 and will be used to offset future taxable
income through 2018. As of December 31, 2001, the aggregate deferred tax assets
are recorded net of a full valuation allowance of $11.5 million.
Net earnings. Net earnings increased 8.3% from $1.7 million in 2001 to $1.9
million in 2002.
NINE MONTHS ENDED SEPTEMBER 30, 2002 (2002) COMPARED WITH NINE MONTHS ENDED
SEPTEMBER 30, 2001 (2001)
Net sales. Net sales decreased 23.4% from $26.2 million in 2001 to $20.1 million
in 2002, primarily as a result of discontinuing the unprofitable product label
and a general downturn in the economy post September 11.
Gross profit. Gross profit decreased 15.4% from $8.3 million in 2001 to $7.0
million in 2002, primarily as a result of the lower sales. As a percentage of
net sales, gross profit increased from 31.8% in 2001 to 35.2% in 2002, primarily
as a result of improved pricing on selected products.
Selling, general and administrative expenses. Selling, general and
administrative expenses (SG&A) decreased 18.6% from $7.9 million in 2001 to $6.4
million in 2002, primarily as a result of cost reductions associated with a
discontinued label and lower variable selling costs. As a percentage of net
sales, SG&A increased from 30.2% in 2001 to 32.1% in 2002, due to a lower sales
level in 2002.
Other income, net. Other income, net, which consists of royalty and licensing
income, was $149.7 thousand in 2001 and $106.2 thousand in 2002.
Interest income (expense), net. Interest income (expense), net decreased from
$7.2 thousand expense in 2001 to $58.4 thousand income in 2002, principally as
the result of higher invested cash balances and lower interest rates on amounts
invested and borrowed. In addition, the Company had lower average outstanding
borrowings under its credit facility in 2002 than in 2001.
Income tax expense. Income tax expense in 2002 relates to alternative minimum
tax expense in certain states. The Company does not have current federal tax
expense due to its net operating loss carryforwards which were approximately
$31.0 million, at December 31, 2001 and will be used to offset future taxable
income through 2018. As of December 31, 2001, the aggregate deferred tax assets
are recorded net of a full valuation allowance of $11.5 million.
Net income. Net income increased 32.7% from $571.2 thousand in 2001 to $757.7
thousand in 2002.
SEASONALITY
The Company's business is seasonal, with a substantial portion of its revenues
and earnings occurring during the second half of the year as a result of the
Fall and Holiday selling seasons. This is due to both a larger volume of unit
sales in these seasons and traditionally higher prices for Fall and Holiday
season garments, which generally require more costly materials than the
Spring/Summer and Resort seasons. Merchandise from the Fall collection, the
Company's largest selling season, and Holiday, the Company's next largest
season, are shipped in the last two fiscal quarters. Merchandise for Resort,
Spring/Summer and Early Fall, the Company's lower volume seasons, is shipped
primarily in the first two quarters. In addition, prices of products in Resort,
Spring/Summer and Early Fall collections average 5% to 50% lower than in other
selling seasons.
9
LIQUIDITY AND CAPITAL RESOURCES
The Company has a $17.5 million line of credit facility with a finance company,
which may be utilized for commercial letters of credit, banker's acceptances,
commercial loans and letters of indemnity. Borrowings under the facility are
secured by certain of the Company's assets, primarily inventory and trade
accounts receivable, and bear interest at the prime rate plus 0.75%. The
arrangement expires on June 14, 2004 and is cancelable by either party within 90
days written notice. The Company is required to pay an annual commitment fee of
approximately $50,000. The credit facility contains various covenants that
require minimum levels of working capital and net tangible worth. As of
September 30, 2002, there were borrowings of approximately $356,000 and $116,000
of commercial letters of credit outstanding under the credit facility. Available
borrowings at September 30, 2002 were $9.1 million.
During the nine months ended September 30, 2002, the Company had capital
expenditures of approximately $53,000, primarily for upgrading computer systems.
Capital expenditures for the remainder of 2002 are expected to be approximately
$47,000. These capital expenditures will be funded by internally generated funds
and, if necessary, borrowings under the Company's credit facility. The Company's
contractual cash obligations related to operating leases as of September 30,
2002 include approximately $150,000 for the remainder of 2002; $528,000 in 2003;
$529,000 in 2004; $452,000 in 2005, and $5,000 in 2006.
EXCHANGE RATES
Although it is Company policy to contract for the purchase of imported
merchandise in United States dollars, reductions in the value of the dollar
could result in the Company paying higher prices for its products. During the
last three fiscal years, however, currency fluctuations have not had an impact
on the Company's cost of merchandise. The Company does not engage in hedging
activities with respect to such exchange rate risk.
IMPACT OF INFLATION
The Company has historically been able to adjust prices, and therefore,
inflation has not had, nor is it expected to have, a significant effect on the
operations of the Company.
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's major market risk exposure is to changing interest rates. However,
interest expense has not been and is not expected to be a material expense of
the Company throughout 2002. The Company has implemented management monitoring
processes designed to minimize the impact of sudden and sustained changes in
interest rates. As of September 30, 2002, the Company's borrowings under its
credit facility were approximately $350,000 and was subject to variable interest
rates based on prime. A 100 basis-point change in such rates during the quarter
ended September 30, 2002 and for the nine months ended September 30, 2002 would
have changed the Company's interest income by approximately $5,000.
Currently, the Company does not use foreign currency forward contracts or
commodity contracts and does not have any material foreign currency exposure.
All purchases from foreign contractors are made in United States dollars and the
Company's investment in its foreign subsidiary was $140,000 at September 30,
2002.
10
ITEM 4. CONTROLS AND PROCEDURES
Within the 90 days prior to the date of this report, the Company carried out an
evaluation, under the supervision and with the participation of the Company's
management, including the Company's President and Chief Executive Officer along
with the Company's Chief Financial Officer, of the effectiveness of the design
and operation of the Company's disclosure controls and procedures pursuant to
Exchange Act Rule 13a-14. Based upon that evaluation, the Company's President
and Chief Executive Officer along with the Company's Chief Financial Officer
concluded that the Company's disclosure controls and procedures are effective in
timely alerting them to material information relating to the Company (including
its consolidated subsidiaries) required to be included in the Company's periodic
SEC filings. There have been no significant changes in the Company's internal
controls or in other factors which could significantly affect internal controls
subsequent to the date the Company carried out its evaluation.
11
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is a party to a lawsuit entitled Martha Wahlert V. Marisa Christina,
Inc. and Nordstrom Inc., alleging copyright infringement and other related
claims, has been commenced in the United States District Court for the Eastern
District of Texas. The lawsuit claims unspecified damages resulting from Marisa
Christina's sale to Nordstrom of 695 sweaters bearing a design which allegedly
infringes the Plaintiff's copyrighted design. Marisa Christina, pursuant to an
agreement, is indemnifying Nordstrom. Marisa Christina is vigorously defending
the lawsuit and believes that any possible adverse determination would not be
material.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits - 99.1 Certification of Chief Executive Officer and President and Chief
Financial Officer and Treasurer.
Reports on Form 8-K -- no reports on Form 8-K were filed during the quarter
ended September 30, 2002.
12
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: November 13, 2002 /s/ S. E. Melvin Hecht
-----------------------------------------
S. E. Melvin Hecht
Vice Chairman,
Chief Financial Officer and Treasurer
13
MARISA CHRISTINA, INCORPORATED
SECTION 302(A) CERTIFICATION
CERTIFICATIONS
I, Michael H. Lerner, certify that:
1. I have reviewed this quarterly repot of Form 10-Q of Marisa Christina,
Incorporated (Marisa Christina or the Company);
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of
Marisa Christina as of, and for, the periods presented in this quarterly
report;
4. S.E. Melvin Hecht and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-14
and 15d-14) for Marisa Christina and we have:
a) designed such disclosure controls and procedures to ensure that
material Information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entitles, particularly during the period in which this quarterly report
is being prepared;
b) evaluated the effectiveness of Marisa Christina's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. S.E. Melvin Hecht and I have disclosed, based on our most recent evaluation,
to our auditors and the audit committee of Marisa Christina's board of
directors:
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the Company's ability to record,
process, summarize and report financial data and have identified for
the Company's auditors any material weaknesses in Internal controls;
and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Company's Internal
controls; and
6. S.E. Melvin Hecht and I have indicated in this quarterly report whether or
not there were significant changes in Internal controls or in other factors
that could significantly affect Internal controls subsequent to the date of
our most recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
November 13, 2002
/s/ Michael H. Lerner
- ---------------------------------------
Chairman of the Board of Directors,
Chief Executive Officer and President
14
MARISA CHRISTINA, INCORPORATED
SECTION 302(A) CERTIFICATION
CERTIFICATIONS
I, S.E. Melvin Hecht, certify that:
1. I have reviewed this quarterly repot of Form 10-Q of Marisa Christina,
Incorporated (Marisa Christina or the Company);
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of
Marisa Christina as of, and for, the periods presented in this quarterly
report;
4. Michael H. Lerner and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-14
and 15d-14) for Marisa Christina and we have:
a) designed such disclosure controls and procedures to ensure that
material Information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entitles, particularly during the period in which this quarterly report
is being prepared;
b) evaluated the effectiveness of Marisa Christina's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. Michael H. Lerner and I have disclosed, based on our most recent evaluation,
to our auditors and the audit committee of Marisa Christina's board of
directors:
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the Company's ability to record,
process, summarize and report financial data and have identified for
the Company's auditors any material weaknesses in Internal controls;
and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Company's internal
controls; and
6. Michael H. Lerner and I have indicated in this quarterly report whether or
not there were significant changes in Internal controls or in other factors
that could significantly affect Internal controls subsequent to the date of
our most recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
November 13, 2002
/s/ S.E. Melvin Hecht
- ----------------------------------------
Vice Chairman of the Board of Directors,
Chief Financial Officer and Treasurer
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