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EXHIBIT 99
Marisa Christina Announces Third Quarter 1997 Results;
Reports Revised Outlook for Fourth Quarter And 1998
NEW YORK, Nov. 11 /PRNewswire/ -- Marisa Christina, Inc. (Nasdaq: MRSA)
today reported results for the third quarter and nine months ended September 30,
1997.
Net income for the 1997 third quarter was $634,000, or $0.08 per share,
compared with $2.1 million, or $0.25 per share, in the year ago quarter. Net
sales were $28.4 million versus $33.1 million in the 1996 third quarter.
For the first nine months of 1997, net income was $1.6 million, or $0.19
per share, compared with $4.7 million, or $0.55 per share, in the same period of
1996. Net sales were $73.5 million versus $82.8 million in the comparable 1996
period.
The Company noted that while Flapdoodles continued its growth and strong
profitability, third quarter results were adversely impacted by weaker sales and
customer demand at the Marisa Christina and Adrienne Vittadini divisions. The
Company further noted that customer sales, as well as bookings for the Fall,
Holiday, Cruise and Spring seasons at both its Marisa Christina and Adrienne
Vittadini divisions have been disappointing, which will negatively impact
results for the next three quarters. To the extent the Company's customers
experience weaker demand at the retail level, the Company may have to provide
additional markdown allowances, as well as make provisions for losses on excess
purchase commitments for Cruise and Spring 1998 merchandise. The combination of
these factors could result in the Company reporting a fourth quarter charge of
up to $6 million for inventory and markdown reserves. Management will not be
able to quantify the required provisions until completion of discussion with
major customers as to their sell through for the retail selling seasons, and the
final tally of orders for Spring 98 goods, which cannot be completed until mid
first quarter of 1998.
In addition, the decline in operating results of the Adrienne Vittadini
division will require management to evaluate the future prospects of the
division to determine if there has been any impairment in the goodwill recorded
in the acquisition of the Adrienne Vittadini division in January 1996. This
assessment will not be made until after year end.
Michael Lerner, Chairman and Chief Executive Officer, commented: "In order
to meet the challenges we face because of changing consumer habits and a shift
in the buying patterns of major department stores to megabrands, we are
aggressively instituting a set of initiatives to strengthen our management team
as well as to cut costs and streamline operations. These initiatives, some of
which are expected to result in non-recurring charges during the fourth quarter
of 1997, are summarized as follows:
-- "We have commenced a search for a President of the Adrienne Vittadini
division, as well as for a new Vice President of Sales. It will be
the charge of these individuals to realize the potential of this
division. We have recently completed our search for a new Vice
President of Sales for the Marisa Christina Division. The search fees
and related costs will approximate $300,000.
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-- "In October, we consolidated the administrative and warehousing
facilities of Adrienne Vittadini and Marisa Christina as well as
conformed their computer and information systems, thus eliminating
the need to maintain Adrienne Vittadini's hardware and software.
Costs associated with the move, including severance costs, settling
union related issues, and other related matters will result in a
charge of approximately $1 million, most of which will be incurred
and paid in the fourth quarter. Cost savings resulting from these
actions could reach approximately $800,000 in 1998.
-- "We are investigating the possibility of terminating or renogitating
the Adrienne Vittadini and Marisa Christina showroom leases with the
goal of moving into less expensive and continguous showrooms. If
realized, the termination of existing leases and write-off of the
related leasehold improvements could result in a fourth quarter
charge of approximately $1.5 million. Cost savings under new lease
arrangements could be up to $750,000 annually.
"Based on the current forecasts for the fourth quarter, encompassing the
impact of all the factors enumerated, (including markdowns as well non-recurring
charges), net sales for full year 1997 are likely to be approximately $90
million with the Company's having a net loss of up to $3.8 million or $0.45 per
share, excluding any charge for the impairment of goodwill."
Mr. Lerner continued: "Each of the initiatives we are taking is both an
immediate response to our current operating environment as well as an important
investment in the future of this Company. While our challenges are serious, we
are in sound financial condition and are fully focused on building value for our
shareholders." He further stated: "We look at 1998 as a year of rebuilding and
stabilization. Our preliminary projections are in the approximate range of $90
million in net sales and earnings of between $0.25 to $0.30 per share for 1998.
We are hopeful that if our initiatives are successful we will be able to surpass
these estimates."
Mr. Lerner also noted that at its most current board meeting, the Board of
Directors reaffirmed their authorization of the Company's open market share
repurchase program of up to $10 million. This open market program may be
commenced or discontinued at any time by the Company.
Marisa Christina, Inc. designs, manufactures, sources and markets a broad
line of high quality "better" and "bridge" clothing for women and children. The
Marisa Christina label includes sweaters characterized by classic, timeless
styling and unique details. Flapdoodles apparel consists of casual children's
and infant's sportswear, swimwear, and outerwear featuring vibrant colors,
all-natural fabrics and unique patterns. The Adrienne Vittadini line includes
women's knit-oriented casual coordinates and licensed products characterized by
distinctive and elegant designer styling.
Except for historical information contained herein, the statements in this
release are forward-looking statements that are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve known and unknown risks and uncertainties
which may cause the Company's actual results in future periods to differ
materially from forecasted results. Those risks include, among others, risks
associated with the success of future advertising and marketing programs, the
receipt and timing of future customer orders, 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. Those and other risks are described in the Company's filings
with the Securities and Exchange Commission (SEC), copies of which are available
from the SEC or may be obtained upon receipt from the Company.
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MARISA CHRISTINA, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
Net sales $ 28,375 $ 33,148 $ 73,546 $ 82,808
Cost of goods sold 19,975 21,524 51,097 53,581
Gross profit 8,400 11,624 22,449 29,216
Selling, general and
administrative expenses 7,726 8,650 21,512 22,552
Operating earnings 674 2,974 937 6,664
Other income, net 485 804 1,982 1,722
Interest expense, net (112) (289) (277) (645)
Earnings before provision
for income taxes 1,047 3,489 2,642 7,741
Provision for income taxes 413 1,388 1,044 3,015
Net earnings $ 634 $ 2,101 $ 1,598 $ 4,726
Earnings per share $ 0.08 $ 0.25 $ 0.19 $ 0.55
Weighted average shares
outstanding 8,385 8,422 8,385 8,530
SOURCE Marisa Christina, Inc.
- -0- 11/11/97
/CONTACT: Investor Relations - June Filingeri, Press - Stacy Berns, or Jeff
Siegel, of Morgen-Walke Associates, 212-850-5600, for Marisa Christina/(MRSA)