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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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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): September 3, 1999
MARISA CHRISTINA, INCORPORATED
(Exact Name of Registrant as Specified in Charter)
Delaware 0-24176 11-3216809
(State or Other (Commission file number) (IRS Employer
Jurisdiction of Identification No.)
Incorporation)
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)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On September 2, 1999, Marisa Christina, Incorporated (the "Company")
completed the sale of substantially all the assets, properties and
rights of its Adrienne Vittadini Division ("AVE") to de V & P, Inc.
for $9.5 million in cash and the assignment of certain liabilities of
AVE. Proceeds to the Company of $8.1 million net of transaction and
related costs were used by the Company to pay down borrowings under
its bank credit facilities. The Company estimates that it will
recognize a pre-tax gain of approximately $800,000 on the sale.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(b) Pro Forma Financial Information:
(i) Pro Forma Consolidated Balance Sheet at June 30, 1999.
(ii) Pro Forma Consolidated Statement of Operations for the year
ended December 31, 1998.
(iii) Pro Forma Consolidated Statement of Operations for the six
months ended June 30, 1999.
(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
September 3, 1999.
(2) Asset Purchase Agreement between Adrienne Vittadini
Enterprise, Inc., Marisa Christina, Incorporated and V & P,
Inc. dated as of September 2, 1999.
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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
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S. E. Melvin Hecht
Vice Chairman, Chief Financial Officer
and Treasurer
Date: September 16, 1999
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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"), not included elsewhere herein.
On September 2, 1999, the Company completed the sale of substantially all the
assets, properties and rights of its Adrienne Vittadini Division ("AVE") to de V
& P, Inc. (the "Buyer") for $9.5 million in cash and the assignment of certain
liabilities of AVE. Proceeds to the Company of $8.1 million net of transaction
and related costs were used by the Company to pay down borrowings under its bank
credit facilities. The Company estimates that it will recognize a pre-tax gain
of approximately $800,000 on the sale.
PRO FORMA CONSOLIDATED BALANCE SHEET
The pro forma consolidated balance sheet reflects the accounts of the Company as
of June 30, 1999 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 AVE assets sold is as follows:
Cash received $ 9,500,000
Liabilities assigned to the Buyer 784,000
Transaction and related costs (1,400,000)
---------------
Net proceeds $ 8,884,000
===============
The estimated pre-tax gain to be recognized by the Company based on asset values
at June 30, 1999 is as follows:
Net proceeds $ 8,884,000
Less:
Accounts receivable (686,381)
Inventories (145,000)
Prepaid expenses and other current assets (247,127)
Equipment and leasehold improvements (431,120)
Goodwill (6,217,391)
Estimated increase in net assets to date of closing (356,981)
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Estimated pre-tax gain $ 800,000
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The Company has not finalized the accounting for the asset disposition and,
accordingly, the gain to be recognized has not been finalized.
The pro forma consolidated balance sheet also reflects the pay down of
borrowings under the Company's bank credit facilities and adjustment of deferred
income taxes.
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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, 1998 and the six months ended June 30, 1999 giving the effect to the
disposition of the assets of AVE as if such had occurred on January 1, 1998.
Results for the six months ended June 30, 1999 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 1999 or future years.
The pro forma adjustments include the following:
(1) The elimination of the operating results of AVE for the
year ended December 31, 1998 and the six months ended June 30,
1999.
(2) The adjustment of interest expense to reflect (i) the
pay down of borrowings under the Company's bank credit facilities
with proceeds of the sale and (ii) the elimination of the impact
of AVE seasonal borrowings under the bank credit facilities.
(3) The adjustment of the income tax benefit as the result
of the reduction in the Company's losses from the elimination of
AVE's operations as well as the lower interest expense.
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MARISA CHRISTINA, INCORPORATED AND SUBSIDIARIES
Pro Forma Consolidated Balance Sheet
June 30, 1999
(Unaudited)
ASSETS HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- -----------
Current assets:
Cash and cash equivalents $ 495,271 $ 93,019 (2) $ 588,290
Accounts receivable, less allowance for
doubtful accounts of $288,335 historical
and $267,781 pro forma 5,571,056 (686,381) (1) 4,884,675
Inventories 7,696,943 (145,000) (1) 7,551,943
Income taxes recoverable 1,866,454 -- 1,866,454
Prepaid expenses and other current assets 1,748,977 (247,127) (1) 1,501,850
------------ ----------- -------------
Total current assets 17,378,701 (985,489) 16,393,212
Property and equipment, net 2,592,706 (431,120) (1) 2,161,586
Goodwill, less accumulated amortization of
$5,143,884 historical and $2,690,586 pro forma 12,740,876 (6,217,391) (1) 6,523,485
Other assets 508,073 -- (1) 508,073
Deferred tax assets 4,859,392 (272,000) (3) 4,587,392
------------ ----------- -------------
Total assets $ 38,079,748 $(7,906,000) $ 30,173,748
============ =========== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Loans payable to banks $ 7,650,000 $(7,650,000) (2) $ --
Accounts payable 2,788,164 (597,935) (1) 2,190,229
Accrued expenses and other current liabilities 707,161 (186,065) (1) 521,096
------------ ----------- --------------
Total current liabilities 11,145,325 (8,434,000) 2,711,325
------------ ----------- --------------
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 1999 85,868 -- 85,868
Additional paid-in capital 31,653,186 -- 31,653,186
Retained earnings (accumulated deficit) (1,120,496) 528,000 (4) (592,496)
Accumulated other comprehensive loss (51,700) -- (51,700)
Treasury stock, 821,000 common shares in 1999
at cost (3,632,435) -- (3,632,435)
------------ ----------- --------------
Total stockholders' equity 26,934,423 528,000 27,462,423
------------ ----------- --------------
Total liabilities and
stockholders' equity $ 38,079,748 $(7,906,000) $ 30,173,748
============ =========== ==============
See accompanying notes to pro forma consolidated financial statements.
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MARISA CHRISTINA, INCORPORATED AND SUBSIDIARIES
Pro Forma Consolidated Statement of Operations
Year ended December 31, 1998
(Unaudited)
HISTORICAL ADJUSTMENTS PRO FORMA
---------------- ---------------------- ---------------
Net sales $ 74,607,115 $ (19,690,389) (1) $ 54,916,726
Cost of goods sold 55,377,000 (15,381,636) (1) 39,995,364
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Gross profit 19,230,115 (4,308,753) 14,921,362
Selling, general and administrative expenses 24,952,758 (9,109,193) (1) 15,843,565
Restructuring charges 3,750,000 (3,750,000) (1) --
Asset impairment charge 16,525,306 (16,525,306) (1) --
---------------- ---------------- ---------------
Operating loss (25,997,949) 25,075,746 (922,203)
Other income, net 2,145,481 (1,923,399) (1) 222,082
Interest expense, net (682,558) 582,558 (2) (100,000)
---------------- ---------------- ---------------
Loss before income tax benefit (24,535,026) 23,734,905 (800,121)
Income tax benefit (8,226,807) 8,000,000 (3) (226,807)
---------------- ---------------- ---------------
Net loss $ (16,308,219) $ 15,734,905 $ (573,314)
================ ================ ===============
Net loss per share:
Basic $ (2.03) $ (0.07)
Diluted $ (2.03) $ (0.07)
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See accompanying notes to pro forma consolidated financial statements.
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MARISA CHRISTINA, INCORPORATED AND SUBSIDIARIES
Pro Forma Consolidated Statement of Operations
Six Months ended June 30, 1999
(Unaudited)
HISTORICAL ADJUSTMENTS PRO FORMA
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Net sales $ 24,990,359 $ (4,961,464) (1) $ 20,028,895
Cost of goods sold 20,274,167 (4,711,402) (1) 15,562,765
------------ ------------ ------------
Gross profit 4,716,192 (250,062) 4,466,130
Selling, general and administrative expense 9,998,068 (2,403,542) (1) 7,594,526
------------ ----------- ------------
Operating loss (5,281,876) 2,153,480 (3,128,396)
Other income, net 850,972 (750,888) (1) 100,084
Interest expense, net (430,820) 360,820 (2) (70,000)
------------ ----------- ------------
Loss before income tax benefit (4,861,724) 1,763,412 (3,098,312)
Income tax benefit (1,628,000) 600,000 (3) (1,028,000)
------------ ----------- ------------
Net loss $ (3,233,724) $ 1,163,412 $(2,070,312)
============ =========== ============
Net loss per share:
Basic $ (0.42) $ (0.27)
Diluted $ (0.42) $ (0.27)
============ ============
See accompanying notes to pro forma consolidated financial statements.
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MARISA CHRISTINA, INCORPORATED AND SUBSIDIARIES
Notes to Pro Forma Consolidated Financial Statements
As of June 30, 1999, the six months then ended and
the year ended December 31, 1998
(Unaudited)
PRO FORMA CONSOLIDATED BALANCE SHEET
(1) Eliminate asset sold and liabilities assigned to de V & P, Inc.
(2) Record pay down of borrowings under the Company's bank credit facilities
with the balance being added to cash reserves.
(3) Adjust deferred tax assets as a result of the sale.
(4) Recognize after-tax gain sale.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(1) Eliminate operating results of AVE.
(2) Adjust interest expense to reflect (i) the pay down of borrowings under
the Company's bank credit facilities with proceeds of the sale and (ii)
the elimination of the impact of AVE seasonal borrowings under the bank
credit facilities.
(3) Adjust income tax expense as a result of elimination of operating expenses
and the adjustment of interest expense.
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EXHIBIT INDEX
Exhibit Description
(c) (1) Marisa Christina, Incorporated Press release dated September 3, 1999
(c) (2) Asset Purchse Agreement between Adrienne Vittdini Enterprises, Inc.,
Marisa Christina, Inc. and V&P, Inc. dated September 2, 1999
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