Company: CRWS
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001437749-25-034222
Chunk: 16

Company: CROWN CRAFTS INC
Filing Date: 2025-11-12
Form: 10-Q
Item: Item 2
Chunk 16
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 the revolving line of credit with CIT was $10.7 million, there was no letter of credit outstanding and $13.7 million was available under the revolving line of credit with CIT based on the Company’s eligible accounts receivable and inventory balances.
 
To reduce its exposure to credit losses and to enhance the predictability of its cash flow, the Company assigns the majority of its trade accounts receivable to CIT under factoring agreements. Under the terms of the factoring agreements, CIT remits customer payments to the Company as such payments are received by CIT. As such, the Company does not take advances on the factoring agreements.
 
CIT bears credit losses with respect to assigned accounts receivable from approved shipments, while the Company bears the responsibility for adjustments from customers related to returns, allowances, claims and discounts. CIT may at any time terminate or limit its approval of shipments to a particular customer. If such a termination or limitation occurs, then the Company either assumes (and may seek to mitigate) the credit risk for shipments to the customer after the date of such termination or limitation or discontinues shipments to the customer. Factoring fees, which are included in marketing and administrative expenses in the accompanying unaudited condensed consolidated statements of income, amounted to $110 thousand and $94 thousand for the three-month periods ended September 28, 2025, and September 29, 2024, respectively, and amounted to $180 thousand and $168 thousand for the six-month periods ended September 28, 2025 and September 29, 2024, respectively.
 
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On June 23, 2025, the Company and CIT amended the Company’s financing agreement with CIT to: (i) provide that, until the Company’s term loan is paid in full, the Company shall maintain at all times Excess Availability (as defined in the financing agreement) equal to or the greater of (a) the sum of the balance outstanding under the Company’s term loan plus $1.0 million or (b) $4.0 million (the “Availability Covenant”); and (ii) reinstate the fixed charge coverage ratio; provided however, that the fixed charge coverage ratio shall not be tested at any fiscal quarter end in which, during the immediately preceding fiscal quarter, the Company at all times has been in compliance with the Availability Covenant.  As of September 28, 2025, the Company has complied with the Excess Availability requirements.
 
The Company’s future performance is, to a certain extent