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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 June 30, 2003
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 [ ]
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
August 1, 2003 were 7,295,065.
MARISA CHRISTINA, INCORPORATED AND SUBSIDIARIES
INDEX
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements:
Consolidated Balance Sheets -- June 30, 2003 (Unaudited)
and December 31, 2002 2
Consolidated Statements of Operations -- Three and Six Months Ended June 30, 2003
and 2002 (Unaudited) 3
Consolidated Statements of Cash Flows -- Six Months Ended
June 30, 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. Internal Controls and Procedures 12
PART II. OTHER INFORMATION
Item 1: Legal Proceedings 13
Item 4: Submission of Matters to a Vote of Security Holders 13
Item 6: Exhibits and Reports on Form 8-K 13
SIGNATURE 14
SECTION 302 CERTIFICATIONS 15
SECTION 906 CERTIFICATION 17
PART I: FINANCIAL INFORMATION
ITEM I: CONSOLIDATED FINANCIAL STATEMENTS
MARISA CHRISTINA, INCORPORATED AND SUBSIDIARIES
Consolidated Balance Sheets
JUNE 30,
2003 DECEMBER 31,
Assets (UNAUDITED) 2002 (1)
------------ ------------
Current assets:
Cash and cash equivalents $ 3,570,044 4,721,614
Trade accounts receivable, less allowance for doubtful
accounts of $304,973 in 2003 and $348,860 in 2002 2,352,788 3,562,927
Inventories 2,573,960 1,843,190
Deferred taxes 1,310,048 739,000
Prepaid expenses and other current assets 421,594 322,912
------------ ------------
Total current assets 10,228,434 11,189,643
Property and equipment, net 277,900 320,061
Noncurrent deferred taxes 5,551,000 5,551,000
Other assets 63,073 106,004
------------ ------------
Total assets $ 16,120,407 17,166,708
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 1,706,342 1,506,579
Accrued expenses and other current liabilities 206,815 459,499
------------ ------------
Total current liabilities 1,913,157 1,966,078
------------ ------------
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 (58,182) (58,182)
Accumulated deficit (13,380,840) (12,387,460)
Treasury stock, 1,291,704 common shares (4,104,276) (4,104,276)
------------ ------------
Total stockholders' equity 14,207,250 15,200,630
Commitments and contingencies
------------ ------------
Total liabilities and stockholders' equity $ 16,120,407 $ 17,166,708
============ ============
(1) Amounts 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
(Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------------- ---------------------------
2003 2002 2003 2002
----------- ---------- ---------- ----------
Net sales $ 2,752,731 3,259,920 8,059,376 9,524,076
Cost of goods sold 2,347,384 2,905,056 5,877,443 6,886,658
----------- ---------- ---------- ----------
Gross profit 405,347 354,864 2,181,933 2,637,418
Selling, general and administrative
expenses 1,654,319 1,811,895 3,775,140 3,881,649
----------- ---------- ---------- ----------
Operating loss (1,248,972) (1,457,031) (1,593,207) (1,244,231)
Other income, net 62,538 66,635 75,764 87,207
Interest income, net 10,229 21,970 22,145 40,255
----------- ---------- ---------- ----------
Loss before income tax
expense (benefit) (1,176,205) (1,368,426) (1,495,298) (1,116,769)
Income tax expense (benefit) (469,876) -- (501,918) 2,984
----------- ---------- ---------- ----------
Net loss $ (706,329) (1,368,426) (993,380) (1,119,753)
=========== ========== ========== ==========
Net loss per common share:
Basic $ (0.10) (0.19) (0.14) (0.15)
Diluted $ (0.10) (0.19) (0.14) (0.15)
=========== ========== ========== ==========
See accompanying notes to consolidated financial statements.
3
MARISA CHRISTINA, INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Six Months Ended June 30, 2003 and 2002
(Unaudited)
2003 2002
----------- ----------
Cash flows from operating activities:
Net loss $ (993,380) (1,119,753)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation and amortization 71,533 71,658
Bad debt expense 100,000 124,998
Deferred income tax benefit (571,048) --
Changes in operating assets and liabilities:
Trade accounts receivable 1,110,139 1,492,855
Inventories (730,770) 211,975
Prepaid expenses and other assets (55,751) (558,858)
Trade accounts payable 199,763 75,559
Accrued expenses and other current liabilities (252,684) (118,770)
----------- ----------
Net cash provided by (used in) operating activities (1,122,198) 179,664
----------- ----------
Cash flows from investing activities:
Property and equipment additions (29,372) (39,665)
----------- ----------
Net increase (decrease) in cash and cash equivalents (1,151,570) 139,999
Cash and cash equivalents at beginning of period 4,721,614 3,330,602
----------- ----------
Cash and cash equivalents at end of period $ 3,570,044 3,470,601
=========== ==========
See accompanying notes to consolidated financial statements.
4
MARISA CHRISTINA, INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Six months ended June 30, 2003 and 2002
(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 and six month periods ended
June 30, 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
June 30, 2003 and December 31, 2002, the Company's reserves
for sales allowances were $780,800 and $1,163,000,
respectively. Such amounts are recorded as reductions to trade
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 (Continued)
MARISA CHRISTINA, INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Six months ended June 30, 2003 and 2002
(Unaudited)
The following table illustrates the effect on net loss if the
fair-value-based method had been applied to all outstanding and
unvested awards for the three and six months ended June 30, 2003 and
2002:
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- ---------------------------
2003 2002 2003 2002
--------- ---------- ---------- ----------
Net loss, as reported $(706,329) (1,368,426) (993,380) (1,119,753)
Deduct total stock-based employee
compensation expense determined
under fair-value-based method for
all rewards, net of tax (36,000) (22,000) (72,000) (44,000)
--------- ---------- ---------- ----------
Pro forma net loss $(742,329) (1,390,426) (1,065,380) (1,163,753)
========= ========== ========== ==========
Diluted net loss per weighted average
common share:
As reported $ (0.10) (0.19) (0.14) (0.15)
Pro forma $ (0.10) (0.19) (0.15) (0.16)
========= ========== ========== ==========
(C) COMPREHENSIVE LOSS
Comprehensive loss was equal to net loss for the three and six
months ended June 30, 2003 and 2002.
(3) INVENTORIES
Inventories at June 30, 2003 and December 31, 2002 consist of the
following:
2003 2002
---------- ---------
Piece goods $ 86,570 68,900
Finished goods 2,487,390 1,774,290
---------- ---------
$2,573,960 1,843,190
========== =========
(4) 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.
6 (Continued)
MARISA CHRISTINA, INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Six months ended June 30, 2003 and 2002
(Unaudited)
As of June 30, 2003, there were no borrowings and approximately
$356,000 of commercial letters of credit outstanding under the credit
facility. Available borrowings at June 30, 2003 were $3.7 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 the next twelve
months. As of December 31, 2002, there were no borrowings outstanding
and approximately $247,000 of commercial letters of credit outstanding
under the credit facility.
(5) NET LOSS PER COMMON SHARE
Basic and diluted net loss per common share are based on the weighted
average number of common shares outstanding, which was 7,295,065 for
the three and six months ended June 30, 2003 and 2002. The effect of
stock options outstanding during the three and six months ended June
30, 2003 and 2002 was not included in the computation of diluted loss
per common share because the effect would have been antidilutive.
(6) LEGAL PROCEEDINGS
The Company is involved, from time to time, in litigation and
proceedings arising out of the ordinary course of business. There are
no pending material legal proceedings or environmental investigations
to which the Company is a party or to which the property of the Company
is subject.
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 June 30, 2003, the Company has allowances for bad debts of
approximately $305,000 and reserves for sales allowances of approximately
$780,800.
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 (Continued)
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. 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 $6.9 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 few 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. The Company operations are
seasonal and year to date results are in line with historical trends and
management expectations. While there can be no assurance, management believes
that the Company will be profitable during the second half of 2003 and the full
year.
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 six months ended June 30, 2003 and
2002.
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------- -----------------
2003 2002 2003 2002
----- ----- ----- -----
Net sales 100.0 % 100.0 % 100.0 % 100.0 %
----- ----- ----- -----
Gross profit 14.7 10.9 27.1 27.7
Selling, general and administrative expenses 60.1 55.6 46.8 40.8
----- ----- ----- -----
Operating loss (45.4) (44.7) (19.7) (13.1)
Other income, net 2.3 2.0 0.9 0.9
Interest income, net 0.4 0.7 0.3 0.4
Income tax benefit 17.0 -- 6.2 --
----- ----- ----- -----
Net loss (25.7)% (42.0)% (12.3)% (11.8)%
===== ===== ===== =====
9
THREE MONTHS ENDED JUNE 30, 2003 (2003) COMPARED WITH THREE MONTHS ENDED JUNE
30, 2002 (2002)
Net sales. Net sales decreased 15.6% from $3.3 million in 2002 to $2.8 million
in 2003, primarily as a result of lower sales to department stores, which were
impacted by a continued weak economy and poor retail sales.
Gross profit. Gross profit increased 14.2% from $355,000 in 2002 to $405,000 in
2003, primarily due to a higher percent of shipping to specialty stores. As a
percentage of net sales, gross profit increased from 10.9% in 2002 to 14.7% in
2003, primarily as a result of improved pricing on selected items. Margins for
the second quarter are lower than amounts achieved on an annual basis due to the
impact of fixed, design and procurement costs during the Company's lowest sales
volume quarter.
Selling, general and administrative expenses. Selling, general and
administrative expenses (SG&A) decreased 8.7% from $1.8 million in 2002 to $1.7
million in 2003. As a percentage of net sales of the Company, SG&A increased
from 55.6% in 2002 to 60.1% in 2003 as a result of a lower sales base in 2003.
Other income, net. Other income, net, which consists of royalty and licensing
income, was $66,600 and $62,500 in 2002 and 2003, respectively.
Interest income, net. Interest income, net decreased from $22,000 in 2002 to
$10,200 in 2003, as a result of lower invested balances, and lower interest
rates.
Income tax benefit. Income tax changed from expense of $0 in 2002 to a benefit
of $469,876 in 2003. The Company expects the tax benefit to reverse in the third
and fourth quarters from profitable operations. 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 projections of future profitability, management believes
it is more likely than not that the Company will be able to recover $6.9 million
of its net deferred tax assets.
Net loss. Net loss decreased from $1.4 million in 2002 to $706,000 in 2003,
principally as a result of increased gross profit, lower operating expenses and
the income tax benefit.
SIX MONTHS ENDED JUNE 30, 2003 (2003) COMPARED WITH SIX MONTHS ENDED JUNE 30,
2002 (2002)
Net sales. Net sales decreased 15.4% from $9.5 million in 2002 to $8.1 million
in 2003, primarily as a result of lower sales to department stores, which were
impacted by a continued weak economy and poor department store retail sales.
Gross profit. Gross profit decreased 17.3% from $2.6 million in 2002 to $2.2
million in 2003 primarily as a result of the lower sales. As a percentage of net
sales, gross profit decreased from 27.7% in 2002 to 27.1% in 2003, primarily as
a result of certain fixed design and procurement costs on a lower sales base.
Selling, general and administrative expenses. Selling, general and
administrative expenses (SG&A) decreased 2.7% from $3.9 million in 2002 to $3.8
million in 2003. As a percentage of net sales of the Company, SG&A increased
from 40.8% in 2002 to 46.8% in 2003, due to a lower sales base in 2003.
Other income, net. Other income, net, which consists of royalty and licensing
income, was $87,200 in 2002 and $75,800 in 2003.
10
Interest income, net. Interest income, net decreased from $40,300 in 2002 to
$22,100 in 2003, principally as the result of lower invested balances and lower
interest rates.
Income tax benefit. Income tax changed from expense of $2,984 in 2002 to a
benefit of $501,918 in 2003. As of December 31, 2002, the Company had a 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.
Net loss. Net loss was $1.1 million in 2002 and $1.0 million in 2003.
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 season. 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.
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. 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 June 30, 2003, there were no borrowings and approximately $356,000 of
commercial letters of credit outstanding under the credit facility. Available
borrowings at June 30, 2003 were $3.7 million.
During the six months ended June 30, 2003, the Company had capital expenditures
of approximately $29,000, primarily for upgrading computer systems. Capital
expenditures for the remainder of 2003 are expected to be approximately $96,000.
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 June 30, 2003
include approximately $300,000 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 throughout 2003. 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 June 30, 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 June 30, 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 involved, from time to time, in litigation and proceedings
arising out of the ordinary course of business. There are no pending material
legal proceedings or environmental investigations to which the Company is party
or to which the property of the Company is subject.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The following are the results of the balloting at the Registrant's Annual
Meeting of Stockholders held on May 8, 2003:
FOR WITHHELD
------------------ ------------------
1. Election of Directors:
Michael H. Lerner 5,524,172 17,450
S.E. Melvin Hecht 5,529,672 11,950
Brett J. Meyer 5,530,572 11,050
Robert Davidoff 5,535,072 6,550
Barry S. Rosenstein 5,540,572 1,050
G. Michael Dees 5,529,672 11,950
Lawrence D. Glaubinger 5,535,072 6,550
David W. Zalaznick 5,529,672 11,950
2. Ratification of the appointment of KPMG LLP as the independent public
accountants of the Company for the year ending December 31, 2003.
FOR AGAINST ABSTAIN
--------------- ---------- ----------
5,540,622 1,000 --
3. In their discretion, the proxies are authorized to vote such other matters
as may properly come before this annual meeting of shareholders.
FOR AGAINST ABSTAIN
--------------- ---------- ----------
5,515,388 20,734 5,500
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
Reports on Form 8-K -- The following reports on Form 8K were filed during the
quarter ended June 30, 2003:
Marisa Christina Incorporated News Release dated May 13, 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: August 8, 2003 /s/ S. E. Melvin Hecht
----------------------------
S. E. Melvin Hecht
Vice Chairman,
Chief Financial Officer
and Treasurer
14