Company: CRWS
Filing Date: 2025-08-13
Form Type: 10-Q
Source: 0001437749-25-026346
Chunk: 6

Company: CROWN CRAFTS INC
Filing Date: 2025-08-13
Form: 10-Q
Item: Item 1
Chunk 6
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7 million. Of this amount, $21.9 million was due from CIT under the factoring agreements, which represented the maximum loss that the Company could have incurred if CIT had failed completely to perform its obligations under the factoring agreements.   The Company evaluates the fair value of its debt using the three level fair value heirarchy. Fair value should be based on the assumptions market participants would use when pricing the liability and establishes a fair value hierarchy that prioritizes the inputs used to develop those assumptions and measure fair value. The hierarchy requires companies to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs in the fair value hierarchy are as follows:   
●   Level 1 – Includes the most reliable sources, and includes quoted prices in active markets for identical assets or liabilities.
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●   Level 2 – Includes observable inputs. Observable inputs include inputs other than quoted prices that are observable for the liability, interest rates and forward rate curves, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the liabilities.
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●   Level 3 – Includes unobservable inputs and should be used only when observable inputs are unavailable.
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   The following table presents fair value of debt as of  June 29, 2025:
    
                                                                                                         Fair Value Measurement Using                                                             
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                                           Quoted Prices in Active Markets for Identical Assets                Significant Other Observable Inputs               Significant Unobservable Inputs  
                              Fair Value   (Level 1)                                                           (Level 2)                                         (Level 3)                        
Term loan                         $6,147   $-                                                                  $6,147                                            $-                               
Revolving line of credit           7,564                                -                                                          7,564                                           -              
Total debt                       $13,711   $-                                                                  $13,711                                           $-                               
    The Company uses a valuation model to determine the fair value of its revolving line of credit and the term loan with CIT. The Company uses a discounted cash flow model to project the future principal and interest payments over the remaining life of the loans. The significant inputs used in the model are observable market data including SOFR Forward Curves.            Net debt issuance costs are presented as a direct reduction of the Company’s long-term debt in the consolidated balance sheets and amounted to $27,000 and $30,000 as of  June 29, 2025 and  March 30, 2025, respectively.