##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
 For the quarterly period ended December 31, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
 Commission File Number 000-26667
 CRAFTMADE INTERNATIONAL, INC.
  DELAWARE
    
    75-2057054(State or other jurisdiction of
    
    (I.R.S. employerincorporation or organization)
    
    identification no.)
 650 SOUTH ROYAL LANE, SUITE 100
COPPELL, TEXAS 75019
 (972) 393-3800
 þ o
  (Check one):Large accelerated filer o
    
    
    
    Accelerated filer oNon-accelerated filer o
    
    
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ




---



##### 



CRAFTMADE INTERNATIONAL, INC.
AND SUBSIDIARIES
  
 TABLE OF CONTENTS
 Part I.
    
    Financial Information
    
    
    1Item 1.
    
    Financial Statements
    
    
    1Item 2.
    
    Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    19Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    33Item 4.
    
    Controls and Procedures
    
    
    33Part II.
    
    Other Information
    
    
    34Item 1.
    
    Legal Proceedings
    
    
    34Item 1A.
    
    Risk Factors
    
    
    34Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    34Item 3.
    
    Defaults Upon Senior Securities
    
    
    34Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    34Item 5.
    
    Other Information
    
    
    35Item 6.
    
    Exhibits
    
    
    36EX-10.7EX-31.1EX-31.2EX-32.1EX-32.2




---



##### Table of Contents



PART I
FINANCIAL INFORMATION
 
  CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 Three Months Ended
    
    Six Months EndedDecember 31,

    
    December 31,

    
    December 31,

    
    December 31,2008

    
    2007

    
    2008

    
    2007Net sales
    
    $
    37,262
    
    
    $
    20,812
    
    
    $
    67,427
    
    
    $
    43,550Cost of goods sold
    
    
    (29,556
    )
    
    
    (14,278
    )
    
    
    (51,251
    )
    
    
    (29,506
    )Gross profit
    
    
    7,706
    
    
    
    6,534
    
    
    
    16,176
    
    
    
    14,044Gross profit as a percentage of net sales
    
    
    20.7%

    
    
    31.4%

    
    
    24.0%

    
    
    32.2%Selling, general and administrative expenses
    
    
    (7,633
    )
    
    
    (4,977
    )
    
    
    (15,530
    )
    
    
    (10,518
    )Depreciation and amortization
    
    
    (262
    )
    
    
    (213
    )
    
    
    (500
    )
    
    
    (418
    )Total operating expenses
    
    
    (7,895
    )
    
    
    (5,190
    )
    
    
    (16,030
    )
    
    
    (10,936
    )Income (loss) from operations
    
    
    (189
    )
    
    
    1,344
    
    
    
    146
    
    
    
    3,108Interest expense, net
    
    
    (417
    )
    
    
    (298
    )
    
    
    (776
    )
    
    
    (620
    )Other income (expense)
    
    
    (4
    )
    
    
    -
    
    
    
    1
    
    
    
    -Income (loss) before income taxes and minority interest
    
    
    (610
    )
    
    
    1,046
    
    
    
    (629
    )
    
    
    2,488Income tax (expense) / benefit
    
    
    257
    
    
    
    (260
    )
    
    
    308
    
    
    
    (586
    )Income (loss) before minority interest
    
    
    (353
    )
    
    
    786
    
    
    
    (321
    )
    
    
    1,902Minority interest
    
    
    (192
    )
    
    
    (304
    )
    
    
    (353
    )
    
    
    (802
    )Net income (loss)
    
    $
    (545
    )
    
    $
    482
    
    
    $
    (674
    )
    
    $
    1,100Weighted average common shares outstanding:Basic
    
    
    5,705
    
    
    
    5,205
    
    
    
    5,705
    
    
    
    5,205Diluted
    
    
    5,705
    
    
    
    5,205
    
    
    
    5,705
    
    
    
    5,206Basic earnings (loss) per common share
    
    $
    (0.10
    )
    
    $
    0.09
    
    
    $
    (0.12
    )
    
    $
    0.21Diluted earnings (loss) per common share
    
    $
    (0.10
    )
    
    $
    0.09
    
    
    $
    (0.12
    )
    
    $
    0.21Cash dividends declared per common share
    
    $
    -
    
    
    $
    0.12
    
    
    $
    -
    
    
    $
    0.24
 
 1







---



##### Table of Contents



CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
 December 31,

    
    June 30,2008

    
    2008ASSETS
    
    (Unaudited)Current assetsCash
    
    $
    105
    
    
    $
    1,269Accounts receivable, net
    
    
    35,531
    
    
    
    23,644Inventories, net
    
    
    28,039
    
    
    
    22,420Income taxes receivable
    
    
    1,946
    
    
    
    1,485Deferred income taxes
    
    
    1,241
    
    
    
    1,332Prepaid expenses and other current assets
    
    
    2,328
    
    
    
    2,574Total current assets
    
    
    69,190
    
    
    
    52,724Property and equipment, net
    
    
    11,588
    
    
    
    11,060Goodwill
    
    
    14,664
    
    
    
    14,419Other intangibles, net
    
    
    1,198
    
    
    
    1,300Other assets
    
    
    1,966
    
    
    
    2,457Total non-current assets
    
    
    29,416
    
    
    
    29,236Total assets
    
    $
    98,606
    
    
    $
    81,960LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS EQUITYCurrent liabilitiesBook overdrafts
    
    $
    10
    
    
    $
    182Accounts payable
    
    
    16,407
    
    
    
    8,411Other accrued expenses
    
    
    2,288
    
    
    
    3,329Current portion of long-term obligations
    
    
    29,020
    
    
    
    507Total current liabilities
    
    
    47,725
    
    
    
    12,429Non-current liabilitiesLong-term obligations
    
    
    10,119
    
    
    
    27,759Deferred income taxes
    
    
    1,117
    
    
    
    1,117Total non-current liabilities
    
    
    11,236
    
    
    
    28,876Total liabilities
    
    
    58,961
    
    
    
    41,305Minority interest
    
    
    3,165
    
    
    
    3,562Stockholders equityPreferred stock, $1.00 par value, 2,000,000 shares authorized;
nil shares issued
    
    
    -
    
    
    
    -Common stock, $0.01 par value, 15,000,000 shares authorized;

10,204,420 shares issued
    
    
    102
    
    
    
    102Additional paid-in capital
    
    
    22,276
    
    
    
    22,215Retained earnings
    
    
    52,228
    
    
    
    52,902Less: treasury stock, 4,499,920 common shares at cost
    
    
    (38,126
    )
    
    
    (38,126
    )Total stockholders equity
    
    
    36,480
    
    
    
    37,093Total liabilities, minority interest and stockholders equity
    
    $
    98,606
    
    
    $
    81,960
 
 2







---



##### Table of Contents



CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
 Six Months EndedDecember 31,

    
    December 31,2008

    
    2007Net cash provided (used) in operating activities
    
    $
    (9,879
    )
    
    $
    3,271Cash flows from investing activitiesAdditional contingent consideration
    
    
    (369
    )
    
    
    (359
    )Additions property, equipment and tooling
    
    
    (879
    )
    
    
    (215
    )Cash used in investing activities
    
    
    (1,248
    )
    
    
    (574
    )Cash flows from financing activitiesNet proceeds from/(payments) on note payable
    
    
    (228
    )
    
    
    10,777Net proceeds from/(payments) on lines of credit
    
    
    11,124
    
    
    
    (11,933
    )Cash dividends
    
    
    -
    
    
    
    (1,249
    )Distributions to minority interest members
    
    
    (750
    )
    
    
    (1,225
    )Increase/(decrease) in book overdrafts
    
    
    (172
    )
    
    
    207Principal payments on capital lease
    
    
    (11
    )
    
    
    (26
    )Net cash provided (used) in financing activities
    
    
    9,963
    
    
    
    (3,449
    )Net decrease in cash
    
    
    (1,164
    )
    
    
    (752
    )Cash at beginning of period
    
    
    1,269
    
    
    
    928Cash at end of period
    
    $
    105
    
    
    $
    176
 
 3







---



##### Table of Contents



CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 Note 1  -  BASIS OF PREPARATION AND PRESENTATION
     4







---



##### Table of Contents



CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 Note 2 - ACQUISITIONS
 Acquisition of Certain Assets of Woodard LLC.
   5







---



##### Table of Contents



CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 
 Cash paid at closing
    
    $
    16,168GAAP value of 500,000 shares issued
    
    
    4,000
    (1)Value of 200,000 Warrants
    
    
    279
    (2)Purchase price adjustment (Settled April, 2008)
    
    
    (1,272
    )Total consideration
    
    $
    19,175
   Expected volatility
    
    
    33
    %Risk-free interest rate
    
    
    3.81
    %Expected lives
    
    10 yearsDividend yield
    
    
    5.8
    %
   6







---



##### Table of Contents



CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 Preliminary Purchase Price Allocation
 Initial estimated purchase price
    
    
    
    
    
    $
    20,168Less: Working capital adjustment
    
    
    
    
    
    
    (1,272
    )Value of warrants
    
    
    
    
    
    
    279Total Purchase Consideration
    
    
    
    
    
    
    19,175Acquired Assets (Adjusted to estimated fair value)Accounts receivable, net
    
    $
    12,708Inventories, net
    
    
    8,212Prepaid expenses and other current assets
    
    
    2,450Plant, property and equipment
    
    
    2,929Other assets
    
    
    1,528Total Assets
    
    
    
    
    
    
    27,827Assumed LiabilitiesAccounts payable
    
    $
    5,852Other accrued expenses
    
    
    1,702Other liabilities incurred during transactionProfessional fees associated with acquisition
    
    
    655Restructuring reserve
    
    
    692Deferred tax asset for restructuring reserve
    
    
    (249
    )Total Liabilities
    
    
    
    
    
    
    8,652Total Purchase Price
    
    
    
    
    
    $
    19,175
   7







---



##### Table of Contents



CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 Unaudited Pro Forma Results
(In thousands, except per share data)
 Three Months Ended

    
    Six Months EndedDecember 31,

    
    December 31,

    
    December 31,

    
    December 31,2008

    
    2007

    
    2008

    
    2007Net salesAs reported
    
    $
    37,262
    
    
    $
    20,812
    
    
    $
    67,427
    
    
    $
    43,550Pro forma
    
    
    37,262
    
    
    
    38,536
    
    
    
    67,427
    
    
    
    70,550Net income (loss)As reported
    
    $
    (545
    )
    
    $
    482
    
    
    $
    (674
    )
    
    $
    1,100Pro forma
    
    
    (545
    )
    
    
    (343
    )
    
    
    (674
    )
    
    
    (152
    )Basic earnings (loss) per shareAs reported
    
    $
    (0.10
    )
    
    $
    0.09
    
    
    $
    (0.12
    )
    
    $
    0.21Pro forma
    
    $
    (0.10
    )
    
    $
    (0.06
    )
    
    $
    (0.12
    )
    
    $
    (0.03
    )Diluted earnings (loss) per shareAs reported
    
    $
    (0.10
    )
    
    $
    0.09
    
    
    $
    (0.12
    )
    
    $
    0.21Pro forma
    
    $
    (0.10
    )
    
    $
    (0.06
    )
    
    $
    (0.12
    )
    
    $
    (0.03
    )Basic Shares Outstanding
    
    
    5,705
    
    
    
    5,205
    
    
    
    5,705
    
    
    
    5,205Proforma
    
    
    5,705
    
    
    
    5,705
    
    
    
    5,704
    
    
    
    5,704Diluted Shares Outstanding
    
    
    5,705
    
    
    
    5,205
    
    
    
    5,705
    
    
    
    5,205Proforma
    
    
    5,705
    
    
    
    5,705
    
    
    
    5,704
    
    
    
    5,704
  8







---



##### Table of Contents



CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 Acquisition of Marketing Impressions, Inc.
   Purchase Price Summary
(Dollars in thousands)
 As of December 31, 2008:Amount paid at closing, net of cash acquired
    
    $
    1,287Contingent payments earned
    
    
    2,687Acquisition-related costs
    
    
    220Total consideration as of December 31, 2008
    
    $
    4,194Percent of Adjusted Gross Profit 
July 1, 2006 to August 31, 2011
    
    
    22%Additonal Percent of Adjusted Gross Profit 
July 1, 2006 to June 30, 2007 (not to exceed $750)
    
    
    15%
  9







---



##### Table of Contents



CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
  Summary of Acquired Intangibles
(Dollars in thousands)
 Life

    
    Grossin Years

    
    AmountPatents and trademarks
    
    
    15
    
    
    $
    710Non-compete covenants
    
    
    7
    
    
    
    820$
    1,530
  10







---



##### Table of Contents



CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 Note
3 - EARNINGS (LOSS) PER SHARE
  Three Months Ended
    
    Six Months EndedDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,2008

    
    2007

    
    2008

    
    2007(In thousands, except per share data)Basic and diluted earnings (loss) per share:NumeratorNet income (loss)
    
    $
    (545
    )
    
    $
    482
    
    
    $
    (674
    )
    
    $
    1,100Denominator for basic earnings (loss) per shareWeighted average common shares outstanding
    
    
    5,705
    
    
    
    5,205
    
    
    
    5,705
    
    
    
    5,205Denominator for diluted earnings (loss) per shareWeighted average common shares outstanding
    
    
    5,705
    
    
    
    5,205
    
    
    
    5,705
    
    
    
    5,205Incremental shares for stock options/warrants
    
    
    -
    
    
    
    -

    
    
    
    -

    
    
    
    1Dilutive weighted average common shares
    
    
    5,705
    
    
    
    5,205
    
    
    
    5,705
    
    
    
    5,206Basic earnings (loss) per share
    
    $
    (0.10
    )
    
    $
    0.09
    
    
    $
    (0.12
    )
    
    $
    0.21Diluted earnings (loss) per share
    
    $
    (0.10
    )
    
    $
    0.09
    
    
    $
    (0.12
    )
    
    $
    0.21
 11







---



##### Table of Contents



CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 Note
4 - SEGMENT INFORMATION
     12







---



##### Table of Contents



CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
  Summary of Segment Information
 Three Months Ended

    
    Six Months EndedDecember 31,

    
    December 31,

    
    December 31,

    
    December 31,2008

    
    2007

    
    2008

    
    2007(In thousands)Net salesSpecialty
    
    $
    15,958
    
    
    $
    12,297
    
    
    $
    36,429
    
    
    $
    26,580Mass
    
    
    21,304
    
    
    
    8,515
    
    
    
    30,998
    
    
    
    16,970Total
    
    $
    37,262
    
    
    $
    20,812
    
    
    $
    67,427
    
    
    $
    43,550Gross profitSpecialty
    
    $
    4,962
    
    
    $
    4,487
    
    
    $
    11,618
    
    
    $
    9,495Mass
    
    
    2,744
    
    
    
    2,047
    
    
    
    4,558
    
    
    
    4,549Total
    
    $
    7,706
    
    
    $
    6,534
    
    
    $
    16,176
    
    
    $
    14,044Income from operationsSpecialty
    
    $
    384
    
    
    $
    996
    
    
    $
    826
    
    
    $
    1,902Mass
    
    
    (573
    )
    
    
    348
    
    
    
    (680
    )
    
    
    1,206Total
    
    $
    (189
    )
    
    $
    1,344
    
    
    $
    146
    
    
    $
    3,108
 13







---



##### Table of Contents



CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 Note
5 - STOCK-BASED COMPENSATION
   Stock-Based Compensation Expense
(Dollars in thousands)
 Six Months EndedDecember 31,

    
    December 31,2008

    
    2007Stock-based compensation expense recognized:Selling, general & administrative
    
    $
    61
    
    
    $
    56
  Future Stock-Based Compensation Expense
(Dollars in thousands)
 ExpectedFutureCompensationFiscal Year Ending
    
    CostJune 30, 2009 (remaining 6 months)
    
    $
    61June 30, 2010
    
    
    120June 30, 2011
    
    
    69June 30, 2012
    
    
    17$
    267
 14







---



##### Table of Contents



CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
  Summary of Stock Options
 Weighted

    
    
    
    
    
    WeightedAverage

    
    Exercise

    
    AverageExercise

    
    Price

    
    RemainingShares
    
    Price
    
    Range
    
    Life (Years)Outstanding at June 30, 2008
    
    
    162,400
    
    
    
    13.63Granted
    
    
    -
    
    
    
    -Exercised
    
    
    -
    
    
    
    -Forfeited
    
    
    (1,000
    )
    
    
    18.85$   6.75
    -Outstanding at December 31, 2008
    
    
    161,400
    
    
    $
    13.60
    
    
    $
    25.20
    
    
    
    8.1$   6.75

    -Exercisable at December 31, 2008
    
    
    49,200
    
    
    $
    17.37
    
    
    $
    25.20
    
    
    
    6.6
  15







---



##### Table of Contents



CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 Note
6  - INCOME TAXES
  Summary of Effective Tax Rate
 Three Months EndedDecember 31,
    
    December 31,2008

    
    2007Effective tax rate
    
    
    32.0%
    
    
    35.0%
     16







---



##### Table of Contents



CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
  Reconciliation
of Unrecognized Tax Benefits 
(Dollars in thousands)
 Increases/(Decreases) in UnrecognizedTax Benefits As a Result ofTax Positions from

    
    
    
    
    
    Lapse inJuly 1,

    
    Prior

    
    Current
    
    
    
    
    
    Statute of

    
    December 31,2008

    
    Periods

    
    Period

    
    Settlements

    
    Limitations

    
    2008Unrecognized tax benefits
    
    $
    290
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    $
    290
   Note
7  -   RELATED PARTY TRANSACTIONS
   17







---



##### Table of Contents



CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
   Note 8  COMMITMENTS AND CONTINGENCIES
  18







---



##### Table of Contents



Item 2.   Managements Discussion and Analysis of Financial Condition and Results of Operations
 Disclosure Regarding Forward-looking Statements
  Critical Accounting Policies and Estimates
  19







---



##### Table of Contents



Results of Operations
   Three Months Ended December 31, 2008 Compared to Three Months Ended December 31, 2007
  Summary Income Statement by Segment
(Dollars in thousands)
 Three Months Ended
    
    
    Three Months EndedDecember 31, 2008

    
    December 31, 2007Specialty

    
    Mass

    
    Total

    
    Specialty

    
    Mass

    
    TotalNet sales
    
    $
    15,958
    
    
    $
    21,304
    
    
    $
    37,262
    
    
    $
    12,297
    
    
    $
    8,515
    
    
    $
    20,812Cost of goods sold
    
    
    (10,996
    )
    
    
    (18,560
    )
    
    
    (29,556
    )
    
    
    (7,810
    )
    
    
    (6,468
    )
    
    
    (14,278
    )Gross profit
    
    
    4,962
    
    
    
    2,744
    
    
    
    7,706
    
    
    
    4,487
    
    
    
    2,047
    
    
    
    6,534As a % of net sales
    
    
    31.1%
    
    
    
    12.9%
    
    
    
    20.7%
    
    
    
    36.5%
    
    
    
    24.0%
    
    
    
    31.4%Selling, general and administrative
    
    
    (4,381
    )
    
    
    (3,252
    )
    
    
    (7,633
    )
    
    
    (3,344
    )
    
    
    (1,633
    )
    
    
    (4,977
    )As a % of net sales
    
    
    27.5%
    
    
    
    15.3%
    
    
    
    20.5%
    
    
    
    27.2%
    
    
    
    19.2%
    
    
    
    23.9%Depreciation and amortization
    
    
    (197
    )
    
    
    (65
    )
    
    
    (262
    )
    
    
    (147
    )
    
    
    (66
    )
    
    
    (213
    )Total operating expenses
    
    
    (4,578
    )
    
    
    (3,317
    )
    
    
    (7,895
    )
    
    
    (3,491
    )
    
    
    (1,699
    )
    
    
    (5,190
    )Income (loss) from operations
    
    $
    384
    
    
    $
    (573
    )
    
    
    (189
    )
    
    $
    996
    
    
    $
    348
    
    
    
    1,344Interest expense, net
    
    
    
    
    
    
    
    
    
    
    (417
    )
    
    
    
    
    
    
    
    
    
    
    (298
    )Other expense
    
    
    
    
    
    
    
    
    
    
    (4
    )
    
    
    
    
    
    
    
    
    
    
    -Income (loss) before income taxes 
and minority interest
    
    
    
    
    
    
    
    
    
    
    (610
    )
    
    
    
    
    
    
    
    
    
    
    1,046Income taxes (expense) / benefit
    
    
    
    
    
    
    
    
    
    
    257
    
    
    
    
    
    
    
    
    
    
    
    (260
    )Income before minority interest
    
    
    
    
    
    
    
    
    
    
    (353
    )
    
    
    
    
    
    
    
    
    
    
    786Minority interest
    
    
    
    
    
    
    
    
    
    
    (192
    )
    
    
    
    
    
    
    
    
    
    
    (304
    )Net income (loss)
    
    
    
    
    
    
    
    
    
    $
    (545
    )
    
    
    
    
    
    
    
    
    
    $
    482
 Net Sales.
 20







---



##### Table of Contents



Net Sales of the Speciality Segment
(Dollars in thousands)
 Fans

    
    WoodardLighting &

    
    Outdoor

    
    SegmentThree Months Ended
    
    Accessories

    
    Furniture

    
    TotalDecember 31, 2008
    
    $
    9,135
    
    
    $
    6,823
    
    
    $
    15,958December 31, 2007
    
    
    12,297
    
    
    
    -
    
    
    
    12,297Dollar increase (decrease)
    
    $
    (3,162
    )
    
    $
    6,823
    
    
    $
    3,661Percent increase (decrease)
    
    
    (26%)

    
    
    100%

    
    
    30%
     21







---



##### Table of Contents



Net Sales of Mass Segment
(Dollars in thousands)
 Fans

    
    WoodardLighting &

    
    Outdoor

    
    SegmentThree Months Ended
    
    Accessories

    
    Furniture

    
    TotalDecember 31, 2008
    
    $
    6,633
    
    
    $
    14,671
    
    
    $
    21,304December 31, 2007
    
    
    8,515
    
    
    
    -
    
    
    
    8,515Dollar increase (decrease)
    
    $
    (1,882
    )
    
    $
    14,671
    
    
    $
    12,789Percent increase (decrease)
    
    
    (22%)


    
    
    100%

    
    
    150%
     Gross Profit.
  22







---



##### Table of Contents



Gross Profit as a Percentage of Net Sales of Specialty Segment
 Fans

    
    WoodardLighting &

    
    Outdoor

    
    SegmentThree Months Ended
    
    Accessories

    
    Furniture

    
    TotalDecember 31, 2008
    
    
    34.3%

    
    
    26.8%
    
    
    31.1%December 31, 2007
    
    
    36.5%

    
    
    -
    
    
    
    36.5%Percent decrease
    
    
    (2.2%)


    
    
    -
    
    
    
    (5.4%)
    Gross Profit as a Percentage of Net Sales of Mass
 Fans

    
    WoodardLighting &

    
    Outdoor

    
    SegmentThree Months Ended
    
    Accessories

    
    Furniture

    
    TotalDecember 31, 2008
    
    
    21.8%
    
    
    
    8.8%
    
    
    
    12.9%December 31, 2007
    
    
    24.0%
    
    
    
    -
    
    
    
    24.0%Percent decrease
    
    
    (2.2%)
    
    
    
    -
    
    
    
    (11.1%)
   Selling, General and Administrative Expenses.
 23







---



##### Table of Contents



Selling, General and Administrative Expenses
(Dollars in thousands)
 Increase/Three Months Ended

    
    (Decrease)December 31,

    
    December 31,

    
    Over Prior2008

    
    2007

    
    Year PeriodHistorical Craftmade
    
    $
    4,922
    
    
    $
    4,977
    
    
    $
    (55
    )Woodard Incremental
    
    
    2,711
    
    
    
    -
    
    
    
    2,711$
    7,633
    
    
    $
    4,977
    
    
    $
    2,656
  Historical Craftmade
Selling, General and Administrative Expenses
(Dollars in thousands)
 Increase/Three Months Ended
    

    (Decrease)December 31,

    
    December 31,

    
    Over Prior2008

    
    2007

    
    Year PeriodAdvertising
    
    $
    297
    
    
    $
    487
    
    
    $
    (190
    )Commissions
    
    
    562
    
    
    
    649
    
    
    
    (87
    )Bad Debt
    
    
    80
    
    
    
    20
    
    
    
    60Bank Charges
    
    
    95
    
    
    
    41
    
    
    
    54Contract Labor
    
    
    267
    
    
    
    181
    
    
    
    86Other
    
    
    3,621
    
    
    
    3,599
    
    
    
    22$
    4,922
    
    
    $
    4,977
    
    
    $
    (55
    )
  Interest Expense.
 Minority Interest.
 24







---



##### Table of Contents



Provision for Income Taxes.
 Six Months Ended December 31, 2008 Compared to Six Months Ended December 31, 2007
  Summary Income Statement by Segment
(Dollars in thousands)
 Six Months Ended
    
    
    Six Months EndedDecember 31, 2008
    
    December 31, 2007Specialty
    
    Mass
    
    Total
   
    Specialty
    
    Mass
    
    TotalNet sales
    
    $
    36,429
    
    
    $
    30,998
    
    
    $
    67,427
    
    
    $
    26,580
    
    
    $
    16,970
    
    
    $
    43,550Cost of goods sold
    
    
    (24,811
    )
    
    
    (26,440
    )
    
    
    (51,251
    )
    
    
    (17,085
    )
    
    
    (12,421
    )
    
    
    (29,506
    )Gross profit
    
    
    11,618
    
    
    
    4,558
    
    
    
    16,176
    
    
    
    9,495
    
    
    
    4,549
    
    
    
    14,044As a % of net sales
    
    
    31.9%
    
    
    
    14.7%
    
    
    
    24.0%
    
    
    
    35.7%
    
    
    
    26.8%
    
    
    
    32.2%Selling, general and administrative
    
    
    (10,423
    )
    
    
    (5,107
    )
    
    
    (15,530
    )
    
    
    (7,306
    )
    
    
    (3,212
    )
    
    
    (10,518
    )As a % of net sales
    
    
    28.6%
    
    
    
    16.5%
    
    
    
    23.0%
    
    
    
    27.5%
    
    
    
    18.9%
    
    
    
    24.2%Depreciation and amortization
    
    
    (369
    )
    
    
    (131
    )
    
    
    (500
    )
    
    
    (287
    )
    
    
    (131
    )
    
    
    (418
    )Total operating expenses
    
    
    (10,792
    )
    
    
    (5,238
    )
    
    
    (16,030
    )
    
    
    (7,593
    )
    
    
    (3,343
    )
    
    
    (10,936
    )Income (loss) from operations
    
    $
    826
    
    
    $
    (680
    )
    
    
    146
    
    
    $
    1,902
    
    
    $
    1,206
    
    
    
    3,108Interest expense, net
    
    
    
    
    
    
    
    
    
    
    (776
    )
    
    
    
    
    
    
    
    
    
    
    (620
    )Other income
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    -Income (loss) before income taxes

and minority interest
    
    
    
    
    
    
    
    
    
    
    (629
    )
    
    
    
    
    
    
    
    
    
    
    2,488Income taxes (expense) / benefit
    
    
    
    
    
    
    
    
    
    
    308
    
    
    
    
    
    
    
    
    
    
    
    (586
    )Income before minority interest
    
    
    
    
    
    
    
    
    
    
    (321
    )
    
    
    
    
    
    
    
    
    
    
    1,902Minority interest
    
    
    
    
    
    
    
    
    
    
    (353
    )
    
    
    
    
    
    
    
    
    
    
    (802
    )Net income (loss)
    
    
    
    
    
    
    
    
    
    $
    (674
    )
    
    
    
    
    
    
    
    
    
    $
    1,100
 Net Sales.
  25







---



##### Table of Contents



Net Sales of the Speciality Segment
(Dollars in thousands)
 Fans
    
    WoodardLighting &
    
    Outdoor
    
    SegmentSix Months Ended
    
    Accessories
    
    Furniture
    
    TotalDecember 31, 2008
    
    $
    21,495
    
    
    $
    14,934
    
    
    $
    36,429December 31, 2007
    
    
    26,580
    
    
    
    -
    
    
    
    26,580Dollar increase (decrease)
    
    $
    (5,085
    )
    
    $
    14,934
    
    
    $
    9,849Percent increase (decrease)
    
    
    (19%
    )
    
    
    100%
    
    
    
    37%
     Net Sales of Mass Segment
(Dollars in thousands)
 Fans
    
    WoodardLighting &
    
    Outdoor
    
    SegmentSix Months Ended
    
    Accessories
    
    Furniture
   
    TotalDecember 31, 2008
    
    $
    13,992
    
    
    $
    17,006
    
    
    $
    30,998December 31, 2007
    
    
    16,970
    
    
    
    -
    
    
    
    16,970Dollar increase (decrease)
    
    $
    (2,978
    )
    
    $
    17,006
    
    
    $
    14,028Percent increase (decrease)
    
    
    (18%
    )
    
    
    100%
    
    
    
    83%
  26







---



##### Table of Contents



Gross Profit.
  Gross Profit as a Percentage of Net Sales of Specialty Segment
 Fans
    
    WoodardLighting &
    
    Outdoor
    
    SegmentSix Months Ended
    
    Accessories
    
    Furniture
    
    TotalDecember 31, 2008
    
    
    34.1
    %
    
    
    28.7
    %
    
    
    31.9
    %December 31, 2007
    
    
    35.7
    %
    
    
    -
    
    
    
    35.7
    %Percent decrease
    
    
    (1.6
    %)
    
    
    -
    
    
    
    (3.8
    %)
    27







---



##### Table of Contents



Gross Profit as a Percentage of Net Sales of Mass
 Fans
    
    WoodardLighting &
    
    Outdoor
    
    SegmentSix Months Ended
    
    Accessories
    
    Furniture
    
    TotalDecember 31, 2008
    
    
    22.5
    %
    
    
    8.3
    %
    
    
    14.7
    %December 31, 2007
    
    
    26.8
    %
    
    
    -
    
    
    
    26.8
    %Percent decrease
    
    
    (4.3
    %)
    
    
    -
    
    
    
    (12.1
    %)
   Selling, General and Administrative Expenses.
 Selling, General and Administrative Expenses
(Dollars in thousands)
 Increase/Six Months Ended
    
    
    (Decrease)December 31,
    
    
    December 31,
    
    
    Over Prior2008
    
    2007
    
    Year PeriodHistorical Craftmade
    
    $
    10,244
    
    
    $
    10,518
    
    
    $
    (274
    )Woodard Incremental
    
    
    5,286
    
    
    
    -
    
    
    
    5,286$
    15,530
    
    
    $
    10,518
    
    
    $
    5,012
  28







---



##### Table of Contents



Historical Craftmade
Selling, General and Administrative Expenses
(Dollars in thousands)
 Increase/Six Months Ended
    
    (Decrease)December 31,
    
    December 31,
    
    Over Prior2008
    
    2007
    
    Year PeriodAdvertising
    
    $
    778
    
    
    $
    1,002
    
    
    $
    (224
    )Commissions
    
    
    1,254
    
    
    
    1,410
    
    
    
    (156
    )Group insurance
    
    
    456
    
    
    
    605
    
    
    
    (149
    )Accounting, legal and consulting
    
    
    1,189
    
    
    
    1,247
    
    
    
    (58
    )Contract labor
    
    
    464
    
    
    
    359
    
    
    
    105Bank charges
    
    
    151
    
    
    
    86
    
    
    
    65Travel
    
    
    304
    
    
    
    243
    
    
    
    61Bad debt
    
    
    97
    
    
    
    41
    
    
    
    56Other
    
    
    5,551
    
    
    
    5,525
    
    
    
    26$
    10,244
    
    
    $
    10,518
    
    
    $
    (274
    )
  Interest Expense.
 Minority Interest.
 Provision for Income Taxes.
 29







---



##### Table of Contents



Liquidity and Capital Resources
       Recent Accounting Pronouncements
  30







---



##### Table of Contents



31







---



##### Table of Contents



Long-Term Obligations
  Summary of Long Term Obligations
 (Dollars in thousands)
 OutstandingBalance
    
    CurrentCommitment
    
    Dec. 31, 2008
    
    Interest Rate
    
    MaturityRevolving line of credit
    
    $
    50,000
    
    
    $
    28,496
    
    
    LIBOR plus 1.50%
    
    
    December 31, 2009Note payable
- facility
    
    
    n/a
    
    
    
    10,552
    
    
    6.5%
    
    
    
    December 10, 2017Capital lease obligation
    
    
    n/a
    
    
    
    91
    
    
    
    
    
    
    November 5, 2010Sub-total
    
    
    
    
    
    
    39,139Less: current amounts due
    
    
    
    
    
    
    29,020Long-term obligations
    
    
    
    
    
    $
    10,119
      32







---



##### Table of Contents



Item 3.
    
    Quantitative and Qualitative Disclosures About Market RiskMarket risks at December 31, 2008 have not changed significantly from those discussed in
Item 7A of the Companys Annual Report on Form 10-K for the year ended June 30, 2008, as
filed with the SEC on September 26, 2008.
 
 Item 4.
    
    Controls and ProceduresDisclosure Controls and ProceduresAs of the end of the period covered by this report, the Company conducted an evaluation,
under the supervision and with the participation of the principal executive officer and
principal financial officer, of the Companys disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this
evaluation, the principal executive officer and principal financial officer concluded
that, as of the end of the period covered by this report, the Companys disclosure
controls and procedures are effective. Notwithstanding the foregoing, a control system,
no matter how well designed and operated, can provide only reasonable, not absolute,
assurance that it will detect or uncover failures within the Company to disclose material
information otherwise required to be set forth in the Companys periodic reports.Changes in Internal ControlsThere was no change in the Companys internal control over financial reporting (as such
term is defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the
Companys most recently completed fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the Companys internal control over financial
reporting.
 33







---



##### Table of Contents



PART II
OTHER INFORMATION
 
 Item 1.
    
    Legal ProceedingsThe Company is involved in various claims, lawsuits and proceedings arising in the
ordinary course of business. There are uncertainties inherent in the ultimate outcome of
such matters and it is difficult to determine the ultimate costs that we may incur. We
believe the resolution of such uncertainties and the incurrence of such costs will not
have a material adverse effect on our consolidated financial position, results of
operations or cash flows.
 
 Item 1A.
    
    Risk FactorsThe Company published an extensive list of risk factors in the Companys Annual Report on
Form 10-K for the fiscal year ended June 30, 2008, as filed with the SEC on September 26,
2008. While there have been no material changes in the specific risk factors noted at that
time, the overall level of business risk across most industries, including those which the
Company participates in, have increased significantly since June 30, 2008. The current
broad economic downturn has affected all aspects of business, including but not limited to
employment levels, consumer spending, inflation, interest rates, availability of credit,
and foreign exchange rates. These factors have and will continue to affect the Company and
its suppliers, customers, employees, bank partners and competitors. Management is focused
on continuing to create value for our shareholders, but there can be no certainty as to
the length and severity of this current severe downturn or to the impact on the Companys
future operating results.
 
 Item 2.
    
    Unregistered Sales of Equity Securities and Use of ProceedsNot Applicable
 
 Item 3.
    
    Defaults Upon Senior SecuritiesNot Applicable
 
 Item 4.
    
    Submission of Matters to a Vote of Security Holders
  Number of Votesof Common StockNominee
    
    For
    
    
    WithheldJames R. Ridings
    
    
    4,527,741
    
    
    
    365,764William E. Bucek
    
    
    4,553,503
    
    
    
    340,002A. Paul Knuckley
    
    
    4,520,770
    
    
    
    372,735R. Don Morris
    
    
    4,666,828
    
    
    
    226,677Lary C. Snodgrass
    
    
    4,670,183
    
    
    
    223,322
  Number of Votes
    
    Number of VotesVoted For
    
    Voted Against
    
    
    Abstentions4,878,469
    
    
    11,305
    
    
    
    3,731
 34







---



##### Table of Contents



Item 5.
    
    Other Information
  35







---



##### Table of Contents



Item 6.
    
    Exhibits
 ExhibitNumber
    
    Description2.1
    
    Asset Purchase Agreement dated as of December 18, 2007, by and among
Woodard, LLC, Henry Crown and Company d/b/a CC Industries, Inc. and Craftmade
International, Inc., previously filed as Exhibit 2.1 to Form 8-K on January 4, 2008
(File No. 000-26667), and incorporated by reference herein.Pursuant to Item 601(b)(2) of Regulation S-K, the Company has not filed
herewith the schedules and exhibits to the foregoing exhibit and agrees to
furnish supplementally to the Securities and Exchange Commission, upon request,
any omitted schedules or similar attachments to the foregoing exhibit.2.2
    
    Stock Purchase Agreement between Craftmade International, Inc., Trade
Source International, Inc., and Robert W. Lackey, dated September 15, 2006,
previously filed as Exhibit 10.1 to Form 8-K dated September 15, 2006 (File
No. 000-26667), and incorporated by reference herein.Pursuant to Item 601(b)(2) of Regulation S-K, the Company has not filed
herewith the schedules and exhibits to the foregoing exhibit and agrees to
furnish supplementally to the Securities and Exchange Commission, upon request,
any omitted schedules or similar attachments to the foregoing exhibit.2.3
    
    Agreement for the Purchase and Sale of Personal Goodwill between Trade
Source International, Inc. and Robert Lackey, dated September 15, 2006, previously
filed as Exhibit 10.2 to Form 8-K dated September 15, 2006 (File No. 000-26667),
and incorporated by reference herein.2.4
    
    Agreement for the Purchase and Sale of Personal Goodwill between Trade
Source International, Inc. and Robert Lackey, Jr., dated September 15, 2006,
previously filed as Exhibit 10.3 to Form 8-K dated September 15, 2006 (File
No. 000-26667), and incorporated by reference herein.2.5
    
    Intellectual Property Assignment by and between Trade Source
International, Inc., Robert W. Lackey, Robert W. Lackey, Jr., RWL Incorporated
f/k/a Robert W. Lackey Corporation and R.L. Products Corporation, dated
September 15, 2006, previously filed as Exhibit 10.4 to Form 8-K dated September
15, 2006 (File No. 000-26667), and incorporated by reference herein.2.6
    
    Non-Competition Agreement between Trade Source International, Inc. and
Robert W. Lackey, dated September 15, 2006, previously filed as Exhibit 10.5 to
Form 8-K dated September 15, 2006 (File No. 000-26667), and incorporated by
reference herein.2.7
    
    Non-Competition Agreement between Trade Source International and Robert
W. Lackey, Jr., dated September 15, 2006, previously filed as Exhibit 10.6 to
Form 8-K dated September 15, 2006 (File No. 000-26667), and incorporated by
reference herein.2.8
    
    Consulting Agreement by and between Craftmade International, Inc.,
Trade Source
 36







---



##### Table of Contents



International, Inc. and Imagine One Resources, LLC, dated
September 15, 2006, previously filed as Exhibit 10.7 to Form 8-K dated September
15, 2006 (File No. 000-26667), and incorporated by reference herein.2.9
    
    Partially Subordinate Security Agreement among Trade Source
International, Inc., Marketing Impressions, Inc., Prime Home Impressions, LLC, and
Robert Lackey, (Lackey), as collateral agent for Lackey, Robert W. Lackey, Jr.,
Imagine One Resources, LLC, RWL Corporation and R.L. Products Corporation, dated
September 15, 2006, previously filed as Exhibit 10.8 to Form 8-K dated September
15, 2006 (File No. 000-26667), and incorporated by reference herein.2.10
    
    Subordination Agreement by and among Robert W. Lackey (Lackey), as
collateral agent for Lackey, Robert W. Lackey, Jr., Imagine One Resources, LLC, RWL
Corporation, R.L. Products Corporation, and The Frost National Bank, Trade Source
International, Inc., Marketing Impressions, Inc., Prime/Home Impressions, LLC and
Craftmade International, Inc., dated September 15, 2006, previously filed as
Exhibit 10.9 to Form 8-K dated September 15, 2006 (File No. 000-26667), and
incorporated by reference herein.2.11
    
    Agreement and Plan of Merger by and among Craftmade International,
Inc., Bill Teiber Co., Inc., Teiber Lighting Products, Inc., Todd Teiber and Edward
Oberstein dated March 1, 2005, previously filed as Exhibit 10.1 to Form 8-K dated
March 1, 2005 (File No. 000-26667), and incorporated by reference herein.2.12
    
    Agreement and Plan of Merger, dated as of July 1, 1998, by and among
Craftmade International, Inc., Trade Source International, Inc. a Delaware
corporation, Neall and Leslie Humphrey, John DeBlois, the Wiley Family Trust, James
Bezzerides, the Bezzco Inc. Employee Retirement Trust and Trade Source
International, Inc, a California corporation, filed as Exhibit 2.1 to Form 8-K
filed July 15, 1998 (File No. 33-33594-FW) and incorporated by reference herein.3.1
    
    Certificate of Incorporation of the Company, filed as Exhibit 3(a)(2)
to the Companys Post Effective Amendment No. 1 to Form S-8 (File No. 33-33594-FW),
and incorporated by reference herein.3.2
    
    Certificate of Amendment of Certificate of Incorporation of the
Company, dated March 24, 1992, and filed as Exhibit 4.2 to the Companys Form S-8
(File No. 333-44337), and incorporated by reference herein.3.3
    
    Amended and Restated Bylaws of the Company, filed as Exhibit 3(b)(2) to
the Companys Post Effective Amendment No. 1 to Form S-8 (File No. 33-33594-FW),
and incorporated by reference herein.4.1
    
    Specimen Common Stock Certificate, filed as Exhibit 4.4 to the
Companys registration statement on Form S-3 (File No. 333-70823), and incorporated
by reference herein.4.2
    
    Rights Agreement, dated as of June 23, 1999, between Craftmade
International, Inc. and Harris Trust and Savings Bank, as Rights Agent, previously
filed as Exhibit 4 to Form 8-K dated July 9, 1999 (File No. 000-26667), and
incorporated by reference herein.
 37







---



##### Table of Contents



10.1
    
    Promissory Note dated November 14, 2007, in the original principal
amount of $11,000,000 payable to the order of Allianz Life Insurance Company of
North America and executed by CM Real Estate, LLC., previously filed as Exhibit
10.1 to Form 8-K on November 20, 2007 (File No. 000-26667), and incorporated by
reference herein.10.2
    
    Deed of Trust, Mortgage and Security Agreement by CM Real Estate, LLC,
effective November 14, 2007, previously filed as Exhibit 10.2 to Form 8-K on
November 20, 2007 (File No. 000-26667), and incorporated by reference herein.10.3
    
    Guaranty Agreement dated November 14, 2007, by Craftmade International,
Inc. in favor of Allianz Life Insurance Company of North America, previously filed
as Exhibit 10.3 to Form 8-K on November 20, 2007 (File No. 000-26667), and
incorporated by reference herein.10.4
    
    Lease Agreement dated as of November 14, 2007, between CM Real Estate,
LLC and Craftmade International, Inc., previously filed as Exhibit 10.4 to Form 8-K
on November 20, 2007 (File No. 000-26667), and incorporated by reference herein.10.5
    
    Third Amended and Restated Loan Agreement Among Craftmade
International, Inc., the Frost National Bank, As Administrative Agent, and the
Other Lenders Party Hereto, dated December 31, 2007, previously filed as Exhibit
10.1 to Form 8-K on January 7, 2008 (File No. 000-26667), and incorporated by
reference herein.10.6
    
    First Amendment to Credit Agreement, effective September 30, 2008,
Among Craftmade International, Inc., the Frost National Bank, As Administrative
Agent, and the Other Lenders Party Thereto, dated November 10, 2008, previously
filed as Exhibit 10.6 to Form 10-Q on November 14, 2008 (File No. 000-26667), and
incorporated by reference herein.10.7*
    
    Waiver to Third Amended and Restated Loan Agreement, dated February
13, 2009, Among Craftmade International, Inc., the Frost National Bank, As
Administrative Agent, and the Other Lenders Party Thereto.10.8
    
    Revolving Promissory Note Between Craftmade International, Inc., and
The Frost National Bank, dated December 31, 2007, previously filed as Exhibit 10.2
to Form 8-K on January 7, 2008 (File No. 000-26667), and incorporated by reference
herein.10.9
    
    Revolving Promissory Note Between Craftmade International, Inc., and
Whitney National Bank, dated December 31, 2007, previously filed as Exhibit 10.3 to
Form 8-K on January 7, 2008 (File No. 000-26667), and incorporated by reference
herein.10.10
    
    Revolving Promissory Note Between Craftmade International, Inc., and
Commerce Bank, N.A., dated December 31, 2007, previously filed as Exhibit 10.4 to
Form 8-K on January 7, 2008 (File No. 000-26667), and incorporated by reference
herein.10.11
    
    Craftmade International, Inc. 2006 Long-Term Incentive Plan,
previously filed as Exhibit 10.1 to Form 8-K dated November 28, 2006 (File No.
000-26667), and incorporated by reference herein.10.12
    
    Incentive Stock Option Agreement, previously filed as Exhibit 10.2 to
Form 8-K dated November 28, 2006 (File No. 000-26667), and incorporated by
reference herein.
 38







---



##### Table of Contents



10.13
    
    Non-qualified Stock Option Agreement, previously filed as Exhibit 10.3
to Form 8-K dated November 28, 2006 (File No. 000-26667), and incorporated by
reference herein.10.14
    
    Stock Appreciation Rights Agreement, previously filed as Exhibit 10.4
to Form 8-K dated November 28, 2006 (File No. 000-26667), and incorporated by
reference herein.10.15
    
    Restricted Stock Award Agreement, previously filed as Exhibit 10.5 to
Form 8-K dated November 28, 2006 (File No. 000-26667), and incorporated by
reference herein.31.1*
    
    Certification of J. Marcus Scrudder, Chief Executive Officer of the
Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2*
    
    Certification of C. Brett Burford, Chief Financial Officer of the
Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1*
    
    Certification of J. Marcus Scrudder, Chief Executive Officer of the
Company, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2*
    
    Certification of C. Brett Burford, Chief Financial Officer of the
Company, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 *
    
    Each document marked with an asterisk is filed or furnished
herewith.
 39







---



##### Table of Contents



SIGNATURES
  CRAFTMADE INTERNATIONAL, INC.(Registrant)Date: February 17, 2009
    
    /s/ J. Marcus ScrudderJ. MARCUS SCRUDDERChief Executive OfficerDate: February 17, 2009
    
    /s/ C. Brett BurfordC. BRETT BURFORDChief Financial Officer
 40