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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 March 31, 2003
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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
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
8101 Tonnelle Avenue, North Bergen, New Jersey 07047-4601
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(Address of principal executive offices) (Zip Code)
(201)-758-9800
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(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
Indicate by check mark whether the registrant is an actuated filer (as
defined in Exchange Act Rule 12b-2). Yes No X
The number of shares outstanding of the Company's Common Stock on May 12,
2003 was 7,295,065.
MARISA CHRISTINA, INCORPORATED AND SUBSIDIARIES
INDEX
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets -- March 31, 2003 (Unaudited) and
December 31, 2002 2
Consolidated Statements of Operations -- Three months ended March
31, 2003 and 2002 (Unaudited) 3
Consolidated Statements of Cash Flows -- Three months ended
March 31, 2003 and 2002 (Unaudited) 4
Notes to Consolidated Financial Statements
(Unaudited) 5
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures about Market Risk 12
Item 4. Controls and Procedures 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURE 14
CERTIFICATIONS
PART I: FINANCIAL INFORMATION
ITEM I: CONSOLIDATED FINANCIAL STATEMENTS
MARISA CHRISTINA, INCORPORATED AND SUBSIDIARIES
Consolidated Balance Sheets
March 31, 2003 and December 31, 2002
ASSETS 2003 2002(1)
------------ ------------
(Unaudited)
Current assets:
Cash and cash equivalents $ 2,949,176 4,721,614
Trade accounts receivable, less allowance for doubtful accounts
of $389,627 in 2003 and $348,860 in 2002 4,946,291 3,562,927
Inventories 1,348,925 1,843,190
Deferred taxes 739,000 739,000
Prepaid expenses and other current assets 511,576 322,912
------------ ------------
Total current assets 10,494,968 11,189,643
Property and equipment, net 299,656 320,061
Noncurrent deferred taxes 5,551,000 5,551,000
Other assets 77,325 106,004
------------ ------------
Total assets $ 16,422,949 17,166,708
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 1,017,999 1,506,579
Accrued expenses and other current liabilities 491,371 459,499
------------ ------------
Total current liabilities 1,509,370 1,966,078
------------ ------------
Stockholders' equity:
Preferred stock, $0.01 par value. Authorized 1,000,000 shares;
none issued -- --
Common stock, $0.01 par value. Authorized 15,000,000 shares;
issued 8,586,769 shares in 2003 and 2002 85,868 85,868
Additional paid-in capital 31,664,680 31,664,680
Accumulated other comprehensive loss (58,182) (58,182)
Accumulated deficit (12,674,511) (12,387,460)
Treasury stock, 1,291,704 common shares at cost (4,104,276) (4,104,276)
------------ ------------
Total stockholders' equity 14,913,579 15,200,630
Commitments and contingencies
------------ ------------
Total liabilities and stockholders' equity $ 16,422,949 17,166,708
============ ============
(1) Accounts were derived from the audited consolidated balance sheet as of
December 31, 2002.
See accompanying notes to consolidated financial statements.
2
MARISA CHRISTINA, INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Operations
Three months ended March 31, 2003 and 2002
(Unaudited)
2003 2002
----------- -----------
Net sales $ 5,306,645 6,264,156
Cost of goods sold 3,530,059 3,981,602
----------- -----------
Gross profit 1,776,586 2,282,554
Selling, general, and administrative expenses 2,120,821 2,069,754
----------- -----------
Operating income (loss) (344,235) 212,800
Other income, net 13,226 20,572
Interest income, net 11,916 18,285
----------- -----------
Income (loss) before income tax expense (benefit) (319,093) 251,657
Income tax expense (benefit) (32,042) 2,984
----------- -----------
Net income (loss) $ (287,051) 248,673
=========== ===========
Basic and diluted net income (loss) per common share $ (0.04) 0.03
=========== ===========
See accompanying notes to consolidated financial statements.
3
MARISA CHRISTINA, INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Three months ended March 31, 2003 and 2002
(Unaudited)
2003 2002
----------- -----------
Cash flows from operating activities:
Net income (loss) $ (287,051) 248,673
Adjustments to reconcile net income (loss) to net cash used in
operating activities:
Depreciation and amortization 36,375 36,328
Write-off of property and equipment -- 410
Bad debt expense 48,000 62,499
Changes in assets and liabilities:
Trade accounts receivable (1,431,364) (1,495,269)
Inventories 494,265 306,245
Prepaid expenses and other assets (159,985) (63,836)
Trade accounts payable (488,580) 167,529
Accrued expenses and other current liabilities 31,872 (119,909)
----------- -----------
Net cash used in operating activities (1,756,468) (857,330)
Cash flows used by investing activities--
acquisitions of property and equipment (15,970) (20,921)
----------- -----------
Net decrease in cash and cash equivalents (1,772,438) (878,251)
Cash and cash equivalents at beginning of period 4,721,614 3,330,602
----------- -----------
Cash and cash equivalents at end of period $ 2,949,176 2,452,351
=========== ===========
See accompanying notes to consolidated financial statements.
4
MARISA CHRISTINA, INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2003
(Unaudited)
(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, 2002.
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 ended March 31, 2003 and
2002 are not necessarily indicative of the operating results to be
expected for a full year.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) REVENUE AND RECEIVABLES
Revenue is recognized when title and risk of ownership transfers to
the customer, which is when the product is shipped to the customer.
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. As of March 31, 2003 and December 31, 2002, the
Company's reserves for sales allowances were $1,420,000 and
$1,163,000, respectively. Such amounts are recorded as reductions to
accounts receivable.
(b) STOCK OPTION PLAN
The Company applies the intrinsic-value-based method of accounting
prescribed by Accounting Principles Board (APB) Opinion No. 25,
Accounting for Stock Issued to Employees, and related
interpretations including FASB Interpretation No. 44, Accounting for
Certain Transactions Involving Stock Compensation, an interpretation
of APB Opinion No. 25, issued in March 2000, to account for its
fixed-plan stock options. Under this method, compensation expense is
recorded on the date of grant only if the current market price of
the underlying stock exceeded the exercise price. SFAS No. 123,
Accounting for Stock-Based Compensation, established accounting and
disclosure requirements using a fair-value-based method of
accounting for stock-based employee compensation plans. As allowed
by SFAS No. 123, the Company has elected to continue to apply the
intrinsic-value-based method of accounting described above, and has
adopted only the disclosure requirements of SFAS No. 123.
5
The following table illustrates the effect on net income (loss) if
the fair-value-based method had been applied to all outstanding and unvested
awards for the three months ended March 31, 2003 and 2002:
2003 2002
--------- -------
Net income (loss), as reported $(287,051) 248,673
Deduct total stock-based employee compensation
expense determined under fair-value-based method
for all rewards, net of tax (36,000) (22,000)
--------- -------
Pro forma net income (loss) $(323,051) 226,673
========= =======
Diluted net income (loss) per weighted average common share:
As reported $ (0.04) 0.03
Pro forma $ (0.04) 0.03
========= =======
(c) COMPREHENSIVE INCOME (LOSS)
Comprehensive income (loss) was equal to net income (loss) for the
three months ended March 31, 2003 and 2002.
(3) INVENTORIES
Inventories at March 31, 2003 and December 31, 2002 consist of the
following:
2003 2002
---------- ---------
Piece goods $ 19,775 68,900
Finished goods 1,329,150 1,774,290
---------- ---------
$1,348,925 1,843,190
========== =========
(4) 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
trade accounts receivable and inventory, and bear interest at the prime
rate plus 0.75%. The Company is required to pay an annual commitment fee
of $50,000. The credit facility contains various covenants that require
minimum levels of working capital and net tangible worth.
As of March 31, 2003, there were no borrowings outstanding and
approximately $186,000 of commercial letters of credit were outstanding
under the credit facility. Available borrowings at March 31, 2003 were
approximately $5.7 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 2003.
6
MARISA CHRISTINA, INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2003
(Unaudited)
(5) NET INCOME (LOSS) PER COMMON SHARE
Basic and diluted net income (loss) per common share is based on the
weighted average number of common shares outstanding, which was 7,295,065
for the three months ended March 31, 2003 and 2002. The effect of stock
options outstanding during the three months ended March 31, 2003 and 2002
was not included in the computation of diluted net income per common share
because the effect would have been antidilutive.
(6) 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.
7
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with Marisa Christina's
consolidated financial statements.
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 receivables, customer sales allowances, valuation of inventories
and valuation of deferred tax assets.
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. As of March 31, 2003, the Company has allowances for bad debts of
approximately $390,000 and reserves for sales allowances of approximately
$1,420,000.
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.
8
VALUATIONS OF DEFERRED TAX ASSETS
Deferred income taxes arise from temporary differences between the tax bases of
assets and liabilities and their reported amounts in the financial statements.
Management makes an assessment of the realizability of the Company's deferred
tax assets. In making this assessment, management considers whether it is more
likely than not that some or all of the deferred tax assets will not be
realized. The ultimate realization of deferred tax assets is dependent upon the
generation of future taxable income during the periods in which those temporary
differences become deductible. Management considers the scheduled reversal of
deferred tax liabilities and projected future taxable income of the Company in
making this assessment. A valuation allowance is recorded to reduce the total
deferred income tax assets to its net realizable value. At March 31, 2003 and
December 31, 2002, the Company's deferred tax assets related primarily to a U.S.
net operating loss carryforward of $29.5 million which can be utilized over the
next seventeen years. Based on the Company's recent operating results and
projections of future profitability, management believes it is more likely than
not that the Company will generate sufficient taxable income to recover $6.3
million of its deferred tax assets. The recovery of the remaining net deferred
tax assets is significantly less certain and, accordingly, the Company has
established a valuation allowance for the balance of its deferred tax assets of
$4.9 million. If future taxable income is less than management's estimates, the
amount of the net deferred tax assets on the Company's consolidated balance
sheet will require an additional valuation allowance. Additionally, if the
Company is able to realize higher taxable income the valuation allowance could
be reduced.
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.
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's prospects for profitability
will continue in 2003.
The following table sets forth information with respect to the percentage
relationship to net sales of certain items in the consolidated statements of
operations of the Company for the three months ended March 31, 2003 and 2002.
2003 2002
--------------------------- ---------------------------
Net sales $ 5,306,645 100.0% $ 6,264,156 100.0%
----------- ----- ----------- -----
Gross profit 1,776,586 33.5% 2,282,554 36.4%
Selling, general, and administrative expenses 2,120,821 40.0% 2,069,754 33.0%
----------- ----- ----------- -----
Operating income (loss) (344,235) (6.5%) 212,800 3.4%
Other income, net 13,226 0.3% 20,572 0.3%
Interest income, net 11,916 0.2% 18,285 0.3%
Income tax expense (benefit) (32,042) (0.6%) 2,984 --
----------- ----- ----------- -----
Net income (loss) $ (287,051) (6.6%) $ 248,673 4.0%
=========== ===== =========== =====
9
THREE MONTHS ENDED MARCH 31, 2003 (2003) COMPARED WITH THREE MONTHS ENDED MARCH
31, 2002 (2002)
Net sales. Net sales decreased 15.3% from $6.3 million in 2002, to $5.3 million
in 2003, primarily as a result of lower sales to department stores, which were
impacted by a weaker economy.
Gross profit. Gross profit decreased 22.2% from $2.3 million in 2002, to $1.8
million in 2003. As a percentage of net sales, gross profit decreased from 36.4%
in 2002 to 33.5% in 2003. Gross profit as a percentage of net sales was
adversely impacted by price compression to the major department stores without a
corresponding decrease in the cost of goods sold.
Selling, general, and administrative expenses. Selling, general and
administrative expenses (SG&A) increased 2.5%. As a percentage of net sales,
SG&A increased from 33.0% in 2002 to 40.0% in 2003 as a result of a lower base
of sales in 2003.
Interest income, net. Interest income, net decreased from $18,285 in 2002 to
$11,916 in 2003 as a result of lower interest rates and lower invested balances.
Income tax expense (benefit). Income tax changed from expense of $2,984 in 2002
to a benefit of $32,042 in 2003. As of December 31, 2002, the Company had net
operating loss carryforwards of approximately $29.5 million, which can be used
to offset future taxable income. The net operating loss carryforwards expire in
varying amounts during 2018, 2019 and 2020.
Over the past several years, the Company has implemented a number of initiatives
which have returned the Company to profitability. Based on the Company's recent
operating results and projection of future profitability, management believes it
is more likely than not that the Company will be able to recover $6.3 million of
its net deferred tax assets and has reduced its valuation allowance to $4.9
million at December 31, 2002.
Net income (loss). Net income (loss) changed from income of $248,673 in 2002 to
a loss of ($287,051) in 2003, principally as a result of lower net sales and
gross profit.
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,
is 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 the
Resorts, Spring/Summer and Early Fall collections average 5% to 10% lower than
in other selling seasons.
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. Available borrowings at March 31,
2003 were approximately $5.7 million. 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 $50,000. The credit facility
contains various covenants that require minimum levels of working capital and
net tangible worth. The Company expects to have sufficient financing to meet its
working capital needs through 2003.
10
The Company used cash flows in operating activities of $1.8 million and $0.9
million during the three months ended March 31, 2003 and 2002, respectively,
principally related to the increases in accounts receivable which were related
to the sale of spring-season goods.
During the first quarter of 2003, the Company had capital expenditures of
approximately $16,000, primarily for upgrading computer systems. Capital
expenditures for the remainder of 2003 are expected to be approximately
$109,000. 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 March
31, 2003 include $447,000 for the remainder of 2003; $590,000 in 2004; $449,000
in 2005, $50,000 in 2006, and $37,000 in 2007.
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.
11
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. The Company has implemented management monitoring processes
designed to minimize the impact of sudden and sustained changes in interest
rates. The Company's floating rate debt is based on the prime rate; however,
there were no borrowings outstanding at March 31, 2003.
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 March 31, 2003.
ITEM 4: CONTROLS AND PROCEDURES
Within 90 days prior to the date of this report, the Company carried out, under
the supervision and with the participation of the Company's management,
including the Company's Chief Executive Officer and the Company's Chief
Financial Officer, an evaluation of the effectiveness of the design and
operation of the Company's disclosure controls and procedures pursuant to Rule
13a-14 of the Securities Exchange Act of 1934. Based on that evaluation, the
Company's Chief Executive Offer and Chief Financial Officer concluded that the
Company's disclosure controls and procedures are effective in timely alerting
them to material information which is required to be included in the periodic
reports that the Company must file with the Securities and Exchange Commission.
There have been no significant changes in the Company's internal controls or in
other factors that could significantly affect the internal controls subsequent
to the date the Company completed its evaluation.
12
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
Reports on Form 8-K -- no reports on Form 8-K were filed by the Company during
the quarter ended March 31, 2003.
13
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: May 14, 2003 /s/ S. E. Melvin Hecht
----------------------------------------------------
S. E. Melvin Hecht
Vice Chairman, Chief Financial Officer and Treasurer
14
MARISA CHRISTINA, INCORPORATED
SECTION 302(A) CERTIFICATION
CERTIFICATIONS
I, S.E. Melvin Hecht, certify that:
1. I have reviewed this quarterly report 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 entities, 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.
May 14, 2003
/s/ S.E. Melvin Hecht
- -------------------------------------
Vice Chairman of the Board of Directors,
Chief Financial Officer, and Treasurer
MARISA CHRISTINA, INCORPORATED
SECTION 302(A) CERTIFICATION
CERTIFICATIONS
I, Michael H. Lerner, certify that:
1. I have reviewed this quarterly report 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 entities, 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.
May 14, 2003
/s/ Michael H. Lerner
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Chairman of the Board of Directors,
Chief Executive Officer, and President