1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 29, 2000
MARISA CHRISTINA, INCORPORATED
(Exact Name of Registrant as Specified in Charter)
Delaware 0-24176 11-3216809
(State or Other Jurisdiction (Commission file number) (IRS Employer
of Incorporation) Identification No.)
8101 Tonnelle Avenue, North Bergen, New Jersey 07047-4601
(Address of Principal Executive Offices) (Zip code)
Registrant's telephone number, including area code: (201) 758-9800
(Former Name or Former Address, if Changed Since Last Report)
2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On December 29, 2000, Marisa Christina, Incorporated (the "Company" or
"Marisa") completed the sale of substantially all the assets,
properties and rights of its Flapdoodles Division ("Flapdoodles") to
Flap 2001, Inc., a Delaware corporation owned by two of the Company's
directors ("Purchaser") for (i) $4.3 million in cash, (ii) 456,984
shares of Marisa's capital stock and 280,000 stock options to acquire
Marisa's capital stock held by the Purchaser and (iii) the assignment of
certain liabilities of Flapdoodles. Proceeds to the Company of $4.2
million, net of transaction and related costs, were used by the Company
to pay down borrowings under its credit facility. The Company estimates
that it will recognize a pre-tax loss of approximately $7.9
million on the sale.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(b) Pro Forma Financial Information:
(i) Pro Forma Consolidated Balance Sheet at September 30,
2000.
(ii) Pro Forma Consolidated Statement of Operations for the
year ended December 31, 1999.
(iii) Pro Forma Consolidated Statement of Operations for the
nine months ended September 30, 2000.
(iv) Notes to Pro Forma Consolidated Financial Statements
(c) Exhibits. The following exhibits are filed with this report, and
the foregoing description is modified by reference to such
exhibits:
(1) Marisa Christina, Incorporated Press Release dated
January 2, 2001.
(2) Asset Purchase Agreement dated as of December 29, 2000
by and among Flapdoodles, Inc., MF Showroom Holdings,
Inc., Mousefeathers, Inc., Flap 2001, Inc. and Marisa
Christina, Incorporated.
2
3
SIGNATURES
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 hereunto duly authorized.
Marisa Christina, Incorporated
/s/ S.E. Melvin Hecht
--------------------------------------
S.E. Melvin Hecht
Vice Chairman, Chief Financial Officer
And Treasurer
Date: January 16, 2001
3
4
MARISA CHRISTINA, INCORPORATED AND SUBSIDIARIES
PRO FORMA FINANCIAL INFORMATION
(UNAUDITED)
The pro forma financial information should be read in conjunction with the
consolidated financial statements and related notes of Marisa Christina,
Incorporated and subsidiaries ( the "Company" or "Marisa"), not included
elsewhere herein.
On December 29, 2000, the Company completed the sale of substantially all the
assets, properties and rights of its Flapdoodles division ("Flapdoodles") to
Flap 2001, Inc., a Delaware corporation owned by two of the Company's directors
(the "Purchaser") for (i) $4.3 million in cash, (ii) 456,984 shares of Marisa's
capital stock and 280,000 stock options to acquire Marisa's capital stock held
by the Purchaser and (iii) the assignment of certain liabilities of
Flapdoodles. Proceeds to the Company of $4.2 million, net of transaction and
related costs, were used by the Company to pay down borrowings under its credit
facility. The Company estimates that it will recognize a pre-tax loss of
approximately $7.9 million on the sale.
PRO FORMA CONSOLIDATED BALANCE SHEET
The pro forma consolidated balance sheet reflects the accounts of the Company as
of September 30, 2000 giving effect to the disposition of assets, as if it had
occurred on such date. The pro forma consolidated balance sheet reflects the
assets and liabilities of the Company following the disposition.
The aggregate sale price for the Flapdoodles assets sold is as follows:
Cash received $ 4,300,000
Fair value of the capital stock surrendered 456,984
Estimated liabilities assigned to the Purchaser 940,635
Transaction and related costs (75,000)
------------
Net proceeds $ 5,622,619
============
The estimated pre-tax loss to be recognized by the Company based on asset values
at September 30, 2000 is as follows:
Net proceeds $ 5,622,619
Less:
Accounts receivable 2,774,433
Inventories 3,607,260
Prepaid expenses and other assets 160,743
Equipment and leasehold improvements 1,069,504
Goodwill 5,903,101
------------
Estimated pre-tax loss $ (7,892,422)
============
The Company has not finalized the accounting for the asset disposition and,
accordingly, the loss to be recognized has not been finalized.
The pro forma consolidated balance sheet also reflects the pay down of
borrowings under the Company's credit facility.
4
5
MARISA CHRISTINA, INCORPORATED AND SUBSIDIARIES
PRO FORMA FINANCIAL INFORMATION
(UNAUDITED)
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
The pro forma consolidated statements of operations for the year ended December
31, 1999 and the nine months ended September 30, 2000 giving the effect to the
disposition of the assets of Flapdoodles as if such had occurred on January 1,
1999. The pro forma consolidated statement of operations for the year ended
December 31, 1999 has also been adjusted to eliminate the operating results of
the Company's Adrienne Vittadini Division ("AVE") which was sold on September 2,
1999. Results for the nine months ended September 30, 2000 are not necessarily
indicative of results expected for the full year. Pro forma results are not
necessarily indicative of results expected for the remainder of 2000 or future
years.
The pro forma adjustments include (i) the elimination of the operating results
of Flapdoodles and AVE for the year ended December 31, 1999 and of Flapdoodles
for the nine months ended September 30, 2000; and (2) the adjustment of interest
expense to reflect the pay down of borrowings under the Company's credit
facility with net proceeds of the sale.
5
6
MARISA CHRISTINA, INCORPORATED AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2000
(UNAUDITED)
ASSETS HISTORICAL ADJUSTMENTS PRO FORMA
------------- ------------------ --------------
Current assets:
Cash and cash equivalents $ 424,740 $ 4,300,000 (1) $ 524,740
(4,200,000) (2)
Accounts receivable 12,986,471 (2,774,433) (1) 10,212,038
Inventories 7,839,160 (3,607,260) (1) 4,231,900
Prepaid expenses and other current assets 898,986 (128,574) (1) 770,412
Income taxes recoverable 35,717 -- 35,717
------------- -------------- --------------
Total current assets 22,185,074 (6,410,267) 15,774,807
Property and equipment, net 1,197,768 (1,069,504) (1) 128,264
Goodwill, net 6,221,614 (5,903,101) (1) 318,513
Other assets 228,954 (32,169) (1) 196,785
------------- -------------- --------------
Total assets $ 29,833,410 $ (13,415,041) $ 16,418,369
============= ============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Loan payable $ 7,500,000 $ (4,200,000) (2) $ 3,300,000
Accounts payable 2,674,499 (754,865) (1) 1,919,634
Accrued expenses and other current liabilities 804,990 (110,770) (1) 694,220
------------- -------------- --------------
Total current liabilities 10,979,489 (5,065,635) 5,913,854
------------- -------------- --------------
Stockholders' equity:
Preferred stock, $.01 par value; 1,000,000 shares
authorized, none issued -- -- --
Common stock, $.01 par value; 15,000,000 shares
authorized, 8,586,769 shares issued historical
and proforma 85,868 -- 85,868
Additional paid-in capital 31,664,680 -- 31,664,680
Accumulated deficit (9,204,342) (7,892,422) (3) (17,096,764)
Accumulated other comprehensive loss (55,600) -- (55,600)
Treasury stock, 825,000 common shares
historical and 1,281,987 common shares
proforma at cost (3,636,685) (456,984) (1) (4,093,669)
------------- -------------- --------------
Total stockholders' equity 18,853,921 (8,349,406) 10,504,515
------------- -------------- --------------
Total liabilities and
stockholders' equity $ 29,833,410 $ (13,415,041) $ 16,418,369
============= ============== ==============
See accompanying notes to pro forma consolidated financial statements.
6
7
MARISA CHRISTINA, INCORPORATED AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2000
(UNAUDITED)
HISTORICAL ADJUSTMENTS PRO FORMA
------------ ----------------- ------------
Net sales $ 45,735,237 $ (15,106,061) (1) $ 30,629,176
Cost of goods sold 34,428,685 (11,711,073) (1) 22,717,612
------------ ------------- ------------
Gross profit 11,306,552 (3,394,988) 7,911,564
Selling, general and administrative expense 12,773,495 (4,665,631) (1) 8,107,864
Outlet store loss 1,005,417 (1,005,417) (1) --
------------ ------------- ------------
Operating loss (2,472,360) 2,276,060 (196,300)
Other income, net 116,964 -- 116,964
Interest expense, net (456,894) 360,000 (2) (96,894)
------------ ------------- ------------
Loss before income tax expense (2,812,290) 1,916,060 (176,230)
Income tax expense 226,000 -- 226,000
------------ ------------- ------------
Net loss $ (3,038,290) $ 1,916,060 $ (402,230)
============ ============= ============
Basic and diluted net loss per common share $ (0.39) (4) $ (0.06)
============ ============
See accompanying notes to pro forma consolidated financial statements.
7
8
MARISA CHRISTINA, INCORPORATED AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
(UNAUDITED)
HISTORICAL ADJUSTMENTS PRO FORMA
------------- ------------------ -------------
Net sales $ 62,507,833 $(19,927,022) (1) $ 34,541,406
(8,039,405) (3)
Cost of goods sold 46,719,629 (14,150,896) (1) 25,639,662
(6,929,071) (3)
------------- ------------- -------------
Gross profit 15,788,204 (6,886,460) 8,901,744
Selling, general and administrative expenses 20,035,812 (8,116,126) (1) 8,580,912
(3,338,774) (3)
------------- ------------- -------------
Operating earnings (loss) (4,247,608) 4,568,440 320,832
Other income, net 1,226,739 (13,252) (1) 208,956
(1,004,531) (3)
Gain on sale of Adrienne Vittadini Enterprises 645,899 (645,899) (3) --
Interest expense, net (752,938) 447,200 (2) (305,738)
------------- ------------- -------------
Earnings (loss) before income tax expense (3,127,908) 3,351,958 224,050
Income tax expense 5,151,372 -- 5,151,372
------------- ------------- -------------
Net loss $ (8,279,280) $ 3,351,958 $ (4,927,322)
============= ============= =============
Basic and diluted net loss per common share $ (1.07) (4) $ (0.67)
============= =============
See accompanying notes to pro forma consolidated financial statements.
8
9
MARISA CHRISTINA, INCORPORATED AND SUBSIDIARIES
Notes to Pro Forma Consolidated Financial Statements
As of September 30, 2000, the nine months ended September 30, 2000 and
the year ended December 31, 1999
(Unaudited)
PRO FORMA CONSOLIDATED BALANCE SHEET
(1) Eliminate assets sold and liabilities assigned to Flap 2001, Inc.
(2) Record pay down of borrowings under the Company's credit facility.
(3) Recognize loss on sale of Flapdoodles.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(1) Eliminate operating results of Flapdoodles.
(2) Adjust interest expense to reflect the pay down of borrowings under the
Company's credit facility with net proceeds of the sale.
(3) Eliminate operating results of AVE.
(4) Adjust weighted average common shares outstanding for common shares
surrendered of 456,984.
9
10
EXHIBIT INDEX
Exhibit Description
- ------- -----------
(c) (1) Marisa Christina, Incorporated Press release dated January 2, 2001
(c) (2) Asset Purchase Agreement dated Decembe 29, 2000, by and among
Flapdoodles, Inc., MF Showroom Holdings, Inc., Mousefeathers, Inc.,
Flap2001, Inc. and Marisa Christina, Incorporated
10