##### Table of Contents



FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549
 þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 27, 2004 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period fromto Commission File No. 1-7604 CROWN CRAFTS, INC. 
 Delaware
    
    58-0678148(State or other jurisdiction of
incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 916 South Burnside Avenue, Gonzales, Louisiana 70737   (225) 647-9100   Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Indicate by check mark whether registrant is an accelerated filer (as defined
in Rule 12b-2 of the Exchange Act).  The number of shares of common stock, $0.01 par value, of the Registrant
outstanding as of June 27, 2004 was 9,504,937.




---



TABLE OF CONTENTS  ITEM 2  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 4  CONTROLS AND PROCEDURESPART II  OTHER INFORMATIONItem 1   Legal ProceedingsItem 2   Changes in Securities and Use of ProceedsItem 3   Defaults Upon Senior SecuritiesItem 4   Submission of Matters to a Vote of Security HoldersItem 5   Other InformationItem 6   Exhibits and Reports on Form 8-KSIGNATURESIndex to ExhibitsCertification by the Company's Chief Executive OfficerCertification by the Company's Chief Financial OfficerSection 1350 Certification by the Company's Chief Executive OfficerSection 1350 Certification by the Company's Chief Financial Officer    Table of Contents  CROWN CRAFTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 27, 2004 and March 28, 2004
(dollar amounts in thousands, except share and per share amounts) June 27, 2004
    
    March 28, 2004*ASSETSCurrent assets:Cash and cash equivalents
    
    $
    2,137
    
    
    $
    7Accounts receivable, net of allowances of $2,329 at
June 27, 2004 and $2,058 at March 28, 2004Due from factor
    
    
    8,737
    
    
    
    16,259Other
    
    
    978
    
    
    
    962Inventories, net
    
    
    19,199
    
    
    
    14,394Prepaid expense
    
    
    1,341
    
    
    
    1,622Other current assets
    
    
    187
    
    
    
    94Total current assets
    
    
    32,579
    
    
    
    33,338Property, plant and equipment  at cost:Land, buildings and improvements
    
    
    1,803
    
    
    
    1,803Machinery and equipment
    
    
    2,824
    
    
    
    2,802Furniture and fixtures
    
    
    666
    
    
    
    6645,293
    
    
    
    5,269Less accumulated depreciation
    
    
    3,554
    
    
    
    3,435Property, plant and equipment  net
    
    
    1,739
    
    
    
    1,834Other assets:Goodwill, net
    
    
    22,974
    
    
    
    22,974Other
    
    
    251
    
    
    
    241Total other assets
    
    
    23,225
    
    
    
    23,215Total Assets
    
    $
    57,543
    
    
    $
    58,387LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    6,130
    
    
    $
    5,117Accrued wages and benefits
    
    
    1,359
    
    
    
    1,408Accrued royalties
    
    
    1,221
    
    
    
    1,274Other accrued liabilities
    
    
    871
    
    
    
    688Current maturities of long-term debt
    
    
    3,016
    
    
    
    3,016Total current liabilities
    
    
    12,597
    
    
    
    11,503Non-current liabilities:Long-term debt
    
    
    26,611
    
    
    
    28,447Total non-current liabilities
    
    
    26,611
    
    
    
    28,447Commitments and contingencies
    
    
    
    
    
    
    Shareholders equity:Common stock  par value $0.01 per share, 74,000,000 shares
authorized, 9,505,000 shares outstanding
    
    
    95
    
    
    
    95Additional paid-in capital
    
    
    38,244
    
    
    
    38,244Accumulated deficit
    
    
    (20,004
    )
    
    
    (19,902
    )Total shareholders equity
    
    
    18,335
    
    
    
    18,437Total Liabilities and Shareholders Equity
    
    $
    57,543
    
    
    $
    58,387
  *
    
    The Consolidated Balance Sheet at March 28, 2004 has been derived from the audited balance sheet at that date. See notes to unaudited consolidated financial statements. 1




---



##### Table of Contents



Crown Crafts, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
For the Three-Month Periods Ended June 27, 2004 and June 29, 2003
(amounts in thousands, except per share amounts) June 27,
    
    June 29,2004
    
    2003Net sales
    
    $
    16,908
    
    
    $
    18,465Cost of products sold
    
    
    13,434
    
    
    
    14,304Gross profit
    
    
    3,474
    
    
    
    4,161Marketing and administrative expenses
    
    
    2,622
    
    
    
    3,161Income from operations
    
    
    852
    
    
    
    1,000Other income (expense):Interest expense
    
    
    (946
    )
    
    
    (1,035
    )Other  net
    
    
    16
    
    
    
    1(Loss) before income taxes
    
    
    (78
    )
    
    
    (34
    )Income tax expense
    
    
    24
    
    
    
    80Net (loss)
    
    
    (102
    )
    
    
    (114
    )Other comprehensive income, net of tax:Foreign currency translation adjustment
    
    
    
    
    
    
    6Comprehensive (loss)
    
    $
    (102
    )
    
    $
    (108
    )Basic (loss) per share
    
    $
    (0.01
    )
    
    $
    (0.01
    )Diluted (loss) per share
    
    $
    (0.01
    )
    
    $
    (0.01
    )Weighted average shares outstanding  basic
    
    
    9,505
    
    
    
    9,427Weighted average shares outstanding  diluted
    
    
    9,505
    
    
    
    9,427
 See notes to unaudited consolidated financial statements. 2




---



##### Table of Contents



Crown Crafts, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three-Month Periods Ended June 27, 2004 and June 29, 2003
(amounts in thousands) June 27,
    
    June 29,2004
    
    2003Operating activities:Net (loss)
    
    $
    (102
    )
    
    $
    (114
    )Adjustments to reconcile net (loss) to net cashprovided by operating activities:Depreciation of property, plant and equipment
    
    
    137
    
    
    
    145Discount accretion
    
    
    163
    
    
    
    144Changes in assets and liabilitiesAccounts receivable
    
    
    7,506
    
    
    
    3,739Inventories, net
    
    
    (4,805
    )
    
    
    (3,211
    )Other current assets
    
    
    188
    
    
    
    (40
    )Other assets
    
    
    (10
    )
    
    
    (11
    )Accounts payable
    
    
    1,013
    
    
    
    400Accrued liabilities
    
    
    81
    
    
    
    162Net cash provided by operating activities
    
    
    4,171
    
    
    
    1,214Investing activities:Capital expenditures
    
    
    (45
    )
    
    
    (35
    )Proceeds from disposition of assets
    
    
    3
    
    
    
    240Other
    
    
    
    
    
    
    7Net cash (used in) provided by investing activities
    
    
    (42
    )
    
    
    212Financing activities:Payment of long-term borrowing
    
    
    (3,945
    )
    
    
    (10,111
    )Long-term borrowing
    
    
    1,946
    
    
    
    8,530Issuance of common stock
    
    
    
    
    
    
    61Net cash used in financing activities
    
    
    (1,999
    )
    
    
    (1,520
    )Net increase (decrease) in cash and cash equivalents
    
    
    2,130
    
    
    
    (94
    )Cash and cash equivalents at beginning of year
    
    
    7
    
    
    
    194Cash and cash equivalents at end of year
    
    $
    2,137
    
    
    $
    100Supplemental cash flow information:Income taxes (refunded)
    
    $
    (2
    )
    
    $
    (21
    )Interest paid
    
    
    685
    
    
    
    770
 See notes to unaudited consolidated financial statements. 3




---



##### Table of Contents



CROWN CRAFTS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AT AND FOR THE THREE MONTH PERIODS ENDED JUNE 27, 2004 AND JUNE 29, 2003  1.
    
    Basis of Presentation:The accompanying unaudited consolidated financial
statements have been prepared in accordance with accounting principles
generally accepted in the United States of America applicable to interim
financial information and the rules and regulations of the Securities and
Exchange Commission. Accordingly, they do not include all of the
information and disclosures required by accounting principles generally
accepted in the United States of America for complete financial
statements. In the opinion of management, such interim consolidated
financial statements contain all adjustments necessary to present fairly
the financial position of Crown Crafts, Inc. (the Company) as of June
27, 2004 and the results of its operations and cash flows for the
three-month periods ended June 27, 2004 and June 29, 2003. Such
adjustments include normal recurring accruals. Operating results for the
three-month period ended June 27, 2004 are not necessarily indicative of
the results that may be expected for the year ending April 3, 2005. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the annual report on Form 10-K for the year
ended March 28, 2004 of the Company.Use of Estimates: The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.Goodwill, net: In July 2001, the Financial Accounting Standards Board
(FASB) issued SFAS 141, Business Combinations, and SFAS 142, Goodwill and
Other Intangible Assets. SFAS 141 requires business combinations initiated
after June 30, 2001 to be accounted for using the purchase method of
accounting and eliminates the use of the pooling-of-interests method. The
application of SFAS 141 did not affect any of the Companys previously
reported amounts included in goodwill or other intangible assets. SFAS 142
requires that the amortization of goodwill cease prospectively upon adoption
and that instead the carrying value of goodwill be evaluated using an
impairment approach. Identifiable intangible assets continue to be amortized
over their useful lives and reviewed for impairment in accordance with SFAS
121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of. SFAS 142 was effective for fiscal years beginning
after December 15, 2001, and was implemented by the Company on April 1, 2002.
Beginning in fiscal 2003, the Company discontinued amortizing goodwill but
continues to amortize other long-lived intangible assets. The Company
performed fair value based impairment tests on its goodwill in accordance
with SFAS 142 and determined that the fair value exceeded the recorded value
at March 31, 2003 and March 29, 2004.Stock Options:The Company accounts for its stock option plans using the
intrinsic value method established by APB Opinion 25, Accounting for Stock
Issued to Employees, and its related interpretations. Accordingly, no
compensation cost has been recognized in the Companys financial statements
for its stock-based compensation plans. The Company complies with the
disclosure requirements of SFAS 123, Accounting for Stock Based-Compensation,
as amended by SFAS 148, Accounting for Stock-Based Compensation  Transition
and Disclosure, which requires pro forma disclosure regarding net earnings
and earnings per share determined as if the Company had accounted for
employee stock options using the fair value method of that statement.For purposes of the pro forma disclosure, the fair value of each option was
estimated as of the date of grant using the Black-Scholes option-pricing
model and is amortized to expense ratably as the option vests. Had
compensation costs for the Companys stock option plans been determined based
on the fair value at the grant date, consistent with the method under SFAS
123, the Companys net earnings and earnings per share would have been as
indicated below: 4




---



##### Table of Contents



June 27, 2004
    June 29, 2003Net (loss), as reported
    
    $
    (102
    )
    
    $
    (114
    )Deduct: Total stock-based employee
compensation expense determined under
fair value based method for all awards
    
    
    (9
    )
    
    
    (10
    )Pro forma net (loss)
    
    $
    (111
    )
    
    $
    (124
    )(Loss) per share:Basic  as reported
    
    $
    (0.01
    )
    
    $
    (0.01
    )Basic  pro forma
    
    $
    (0.01
    )
    
    $
    (0.01
    )Diluted  as reported
    
    $
    (0.01
    )
    
    $
    (0.01
    )Diluted  pro forma
    
    $
    (0.01
    )
    
    $
    (0.01
    )
  2.
    
    Segment and Related Information:The Companys principal segments
include adult home furnishing products, consisting primarily of hand-woven
throws, and infant and juvenile products, consisting of infant bedding,
bibs, soft goods and juvenile products (primarily Pillow Buddies®).
Financial information attributable to the Companys business segments for
the three-month periods ended June 27, 2004 and June 29, 2003 was as
follows (in thousands): Three Months EndedJune 27,
    
    June 29,Net sales:
    
    2004
    
    2003Adult home furnishing products
    
    $
    360
    
    
    $
    416Infant & juvenile products
    
    
    16,548
    
    
    
    18,049$
    16,908
    
    
    $
    18,465Income (loss) from operations:Adult home furnishing products
    
    $
    (66
    )
    
    $
    (71
    )Infant & juvenile products
    
    
    918
    
    
    
    1,071$
    852
    
    
    $
    1,000
  3.
    
    Inventory:Major classes of inventory were as follows (in thousands): June 27, 2004
    March 28, 2004Raw Materials
    
    $
    996
    
    
    $
    1,116Work in Process
    
    
    869
    
    
    
    1,028Finished Goods
    
    
    17,334
    
    
    
    12,250$
    19,199
    
    
    $
    14,394
  Inventory is net of reserves for inventories classified as irregular or
discontinued of $0.7 million and $1.0 million at June 27, 2004 and March
28, 2004, respectively.  4.
    
    Financing ArrangementsFactoring Agreement:The Company assigns the majority of its trade accounts
receivable to a commercial factor. Under the terms of the factoring
agreement, the factor remits payments to the Company on the average due date
of each group of invoices assigned. The factor bears credit losses with
respect to assigned accounts receivable that are within approved credit
limits. The Company bears losses resulting from returns, allowances, claims
and discounts. 5




---



##### Table of Contents



Notes Payable and Other Credit Facilities: At June 27, 2004 and March 28,
2004, long-term debt consisted of: June 27,
    
    March 28,2004
    
    2004Promissory notes
    
    $
    23,550
    
    
    $
    24,054Floating rate revolving credit facilities
    
    
    
    
    
    
    1,495Non-interest bearing notes
    
    
    8,541
    
    
    
    8,541Original issue discount
    
    
    (2,464
    )
    
    
    (2,627
    )29,627
    
    
    
    31,463Less current maturities
    
    
    3,016
    
    
    
    3,016$
    26,611
    
    
    $
    28,447
  At June 27, 2004, the Companys credit facilities included the following:Revolving Creditof up to $19 million including a $3 million sub-limit for
letters of credit. The interest rate is prime plus 1.00% (5.00% at June
27, 2004) for base rate borrowings and LIBOR plus 2.75% (4.08% at June 27,
2004) for Euro-dollar borrowings. The maturity date is June 30, 2005.
The facility is secured by a first lien on all assets. There was no
balance at June 27, 2004. The Company had $11.1 million available at June
27, 2004. As of June 27, 2004, letters of credit of $1.325 million were
outstanding against the $3 million sub-limit for letters of credit
associated with the revolving credit facility.Senior Notesof $7.5 million with a fixed interest rate of 10% plus
additional interest contingent upon cash flow availability of 3%. The
maturity date is June 30, 2006 and the notes are secured by a first lien
on all assets. Minimum principal payments of $500,000 are due at the end
of each calendar quarter. In the event that required debt service exceeds
85% of free cash flow (EBITDA (as hereinafter defined) less capital
expenditures and cash taxes paid), the excess of contingent interest and
principal amortization over 85% will be deferred until maturity of the
Senior Notes in June 2006. Contingent interest plus additional principal
payments will be due annually up to 85% of free cash flow. On September
30, 2003, the Company made a payment to the lenders of $1.3 million
related to excess cash flow. The Company anticipates that it will make
another excess cash flow payment of $1.3 million on September 30, 2004.Senior Subordinated Notesof $16 million with a fixed interest rate of 10%
plus an additional 1.65% payable by delivery of a promissory note due July
23, 2007. The maturity date is July 23, 2007 and the notes are secured by
a second lien on all assets. In addition to principal and interest, a
payment of $8 million is due on the earliest of (i) maturity of the notes,
(ii) prepayment of the notes, or (iii) sale of the Company. The original
issue discount of $4.1 million on this non-interest bearing note at a
market interest rate of 12% is being amortized over the life of the notes.
The remaining balance of $2.5 million is included in the Consolidated
Balance Sheet as of June 27, 2004.These credit facilities contain covenants regarding minimum levels of
Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA),
maximum total debt to EBITDA, maximum senior debt to EBITDA, minimum EBITDA
to cash interest and minimum shareholders equity. The bank
facilities also place restrictions on the amounts the Company may expend on
acquisitions and purchases of treasury stock and currently prohibit the
payment of dividends. 6




---



##### Table of Contents



Minimum annual maturities are as follows: (in thousands) Fiscal
    
    Revolver
    
    Senior Notes
    
    Sub Notes
    
    
    
    
    
    PIK Notes
    
    Total2005
    
    $
    
    
    
    $
    3,000
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    3,0002006
    
    
    
    
    
    
    2,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,0002007
    
    
    
    
    
    
    2,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,5002008
    
    
    
    
    
    
    
    
    
    
    24,000
    *
    
    
    
    
    
    
    541
    
    
    
    24,541Total
    
    $
    
    
    
    $
    7,500
    
    
    $
    24,000
    
    
    
    
    
    
    $
    541
    
    
    $
    32,041
  *
    
    Includes $8 million non-interest bearing note issued at an original issue
discount of $4.1 million.  As part of its refinancing in July 2001, the Company issued to its lenders
warrants for non-voting common stock that are convertible into common stock
equivalent to 65% of the shares of the Company on a fully diluted basis at
a price of 11.3 cents per share. The warrants are non-callable and expire
six years from their date of issuance. The value of the warrants of $2.4
million using the Black-Scholes option pricing model was credited to
additional paid-in capital in the second quarter of fiscal 2002. 
 ITEM 2  MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Company operates indirectly through its subsidiaries, Crown Crafts Infant
Products, Inc., Hamco, Inc. and Churchill Weavers, Inc., primarily in the
Infant and Juvenile Products segments within the Consumer Products industry. The Companys
offices are located in Huntington Beach and Compton, California; Gonzales,
Louisiana; Berea, Kentucky and Rogers, Arkansas. The Infant and Juvenile Products segments consist of bedding, bibs, soft
goods, Pillow Buddies® and accessories. The infant and juvenile products are marketed under a
variety of Company-owned trademarks, under trademarks licensed from others,
without trademarks as unbranded merchandise and with customers private labels.
The products are produced primarily by foreign contract manufacturers, then
warehoused and shipped from facilities in Compton, California and Gonzales,
Louisiana. Sales are generally made directly to retailers, primarily mass
merchants, large chain stores and gift stores. The Company also produces hand-woven adult throws, adult scarves and infant
blankets. Sales are generally made to major department stores, specialty shops
and designer showrooms. The infant and juvenile consumer products industry is highly competitive. The Company
competes with a variety of distributors and manufacturers and believes that it
is the largest producer of infant bed coverings and bibs, enjoying
approximately one-third of the infant bedding market share and one-half of the
infant bib market share within these segments. The Company competes on the
basis of quality, design, price, service and packaging. RESULTS OF OPERATIONS THREE-MONTH PERIOD ENDED JUNE 27, 2004 COMPARED TO THE THREE-MONTH PERIOD ENDED
JUNE 29, 2003 Total net sales for the first quarter of fiscal year 2005 decreased by $1.6
million, or 8.4%, to $16.9 million from $18.5 million for the first quarter of
fiscal year 2004. Net sales of throws decreased $56,000, or 13.5%, to
$360,000. Net sales of infant and juvenile products decreased by $1.5 million,
or 8.3%, to $16.5 million primarily as a result of a decrease in top line sales
volume resulting from the direct to retail shift of the Companys Classic Pooh
license and a decrease in bib, bath and bedding sales, as customers reduced
their buying in anticipation of new programs. During the first quarter of fiscal year 2005, cost of sales increased to 79.5%
of net sales from 77.5% for the same period in fiscal year 2004 due primarily
to a shift from sales of higher margin blankets and NoJo and Classis Pooh
brands to sales of a greater volume of lower margin merchandise. 7




---



##### Table of Contents



Marketing and administrative expenses decreased by $539,000, or 17.0%, in the
first quarter of fiscal year 2005 compared to the same quarter in the prior
year and were 15.5% of net sales for such quarter compared to 17.1% for the
corresponding quarter of the prior year. These expenses were greater in the
prior year primarily because of legal fees associated with the reincorporation
of the Company in Delaware and the closure of the Companys Mexican production
facility, both of which occurred in fiscal year 2004. Interest expense for the first quarter of fiscal year 2005 decreased by $89,000
compared to the first quarter of fiscal year 2004 because of a lower average
debt balance. Long-term debt was $26.6 million at June 27, 2004 compared to
$29.5 million at June 29, 2003. Included in the balance in the prior fiscal
year was revolving credit of $721,000, whereas there was no revolving credit
balance outstanding at June 27, 2004. Income tax expense for the quarter ended June 27, 2004 includes an expense for
state and local income taxes of $24,000. Income tax expense for the quarter
ended June 29, 2003 included a provision for federal alternative minimum taxes
and state and local income taxes of $80,000. The Company has net operating
loss carryforwards of $14.6 million which begin to expire in 2021. FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operating activities was $4.2 million for the first
quarter of fiscal year 2005 compared to net cash provided by operating
activities of $1.2 million for the first quarter of fiscal year 2004. The
increase in cash provided by operating activities was primarily due to changes
in inventory and receivable balances. Net cash used in investing activities
was $0.1 million in the first quarter of fiscal year 2005 compared to net cash
provided by investing activities of $0.2 million in the prior year period. The
decrease in cash provided by investing activities was due in large part to net
proceeds from the sale of assets disposed of in connection with the closure of
the Companys Mexican production facility in the prior fiscal year of $240,000.
Net cash used in financing activities was $2.0 million compared to net cash
used in financing activities of $1.5 million in the prior year period. The
increase in cash used in financing activities was due to a higher net payment
of long-term debt in the current fiscal year as compared to the prior fiscal
year. The Companys ability to make scheduled payments of principal, to pay the
interest on or to refinance its maturing indebtedness, to fund capital
expenditures or to comply with its debt covenants will depend upon future
performance. The Companys future performance is, to a certain extent, subject
to general economic, financial, competitive, legislative, regulatory and other
factors beyond its control. Based upon the current level of operations, the
Company believes that cash flow from operations together with revolving credit
availability will be adequate to meet liquidity needs. To reduce its exposure to credit losses and to enhance its cash flow, the
Company assigns the majority of its trade accounts receivable to a commercial
factor. The Companys factor establishes customer credit lines and accounts
for and collects receivable balances. Under the terms of the factoring
agreement, which expires in July, 2005, the factor remits payments to the
Company on the average due date of each group of invoices assigned. If a
customer fails to pay the factor on the due date, the Company is charged
interest at prime minus 0.5% (3.50% at June 27, 2004), until payment is
received. The factor bears credit losses with respect to assigned accounts
receivable that are within approved credit limits. The Company bears losses
resulting from returns, allowances, claims and discounts. The Companys factor
at any time may terminate or limit its approval of shipments to a particular
customer. If such a termination occurs, the Company may either assume the
credit risks for shipments after the date of such termination or cease
shipments to such customer. FORWARD-LOOKING INFORMATION This Form 10-Q contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements are based
upon managements current expectations, projections, estimates and assumptions.
Words such as expects, believes, anticipates and variations of such words
and similar expressions identify such forward-looking statements.
Forward-looking statements involve known and unknown risks and uncertainties
that may cause future results to differ materially from those suggested by the
forward-looking statements. These risks include, among others, general economic
conditions, changing competition, the level and pricing of future orders from
the Companys customers, the Companys dependence upon third-party suppliers,
including some located in foreign countries with unstable political situations,
the Companys ability to successfully implement new information technologies
and the Companys dependence upon licenses from third parties. 8




---



##### Table of Contents



ITEM 3  QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK The Company is exposed to market risk from changes in interest rates on debt,
changes in commodity prices, the concentration of the Companys customers and
the Companys reliance upon licenses. The Companys exposure to interest rate
risk relates to the Companys floating rate debt, of which there was no balance
outstanding at June 27, 2004 and a balance outstanding of $1.5 million at March
28, 2004. Each 1.0 percentage point increase in interest rates would impact
pretax earnings by $15,000 at the debt level of March 28, 2004. The Companys
exposure to commodity price risk primarily relates to changes in the price of
cotton, which is a principal raw material in a substantial number of the
Companys products. Additionally, the Companys top three customers represent
78% of gross sales, and 39% of the Companys gross sales is of licensed
products. The Company could be materially impacted by the loss of one or more
of these customers or licenses. 
 
 ITEM 4  CONTROLS AND PROCEDURES The Companys Chief Executive Officer and Chief Financial Officer have
evaluated the effectiveness of the Companys disclosure controls and procedures
(as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the
period covered by this report, as required by paragraph (b) of Rule 13a-15 or
15d-15 of the Exchange Act. Based on such evaluation, such officers have
concluded that, as of the end of the period covered by this report, the
Companys disclosure controls and procedures are effective in alerting them on
a timely basis to material information relating to the Company (including its
consolidated subsidiaries) required to be included in the Companys periodic
filings under the Exchange Act. Since such evaluation, there have not been any
significant changes in the Companys internal controls or in other factors that
could significantly affect such controls. 
 
 PART II  OTHER INFORMATION 
 
 Item 1   Legal Proceedings From time to time, the Company is involved in various legal proceedings
relating to claims arising in the ordinary course of its business. Neither the
Company nor any of its subsidiaries is a party to any such legal proceeding the
outcome of which, individually or in the aggregate, is expected to have a
material adverse effect on the Companys financial condition or results of
operations. 
 
 Item 2   Changes in Securities and Use of Proceeds  None 
 
 Item 3   Defaults Upon Senior Securities  None 
 
 Item 4   Submission of Matters to a Vote of Security Holders  None 
 
 Item 5   Other Information  None   9




---



##### Table of Contents



Item 6   Exhibits and Reports on Form 8-K  (a)
    
    Exhibits 31.1
    
    Rule 13a-14(a)/15d-14(a) Certification by the Companys Chief Executive Officer31.2
    
    Rule 13a-14(a)/15d-14(a) Certification by the Companys Chief Financial Officer32.1
    
    Section 1350 Certification by the Companys Chief Executive Officer32.2
    
    Section 1350 Certification by the Companys Chief Financial Officer
  (b)
    
    Reports on Form 8-K  The Company filed the following Current Reports on Form 8-K during
the quarter ended June 27, 2004:  (1)
    
    The Companys Current Report on Form 8-K filed with the SEC on June 16,
2004, setting forth under Item 12 of such report a press release
discussing the Companys financial results for the fourth quarter and
fiscal year 2004, both of which ended March 28, 2004. 
 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 thereunto duly authorized. CROWN CRAFTS, INC.Date: August 11, 2004
    /s/ Amy Vidrine SamsonAMY VIDRINE SAMSONChief Financial Officer
(duly authorized signatory and
Principal Financial and Accounting
Officer) 10




---



##### Table of Contents



Index to Exhibits ExhibitNumber
    
    Description31.1
    
    Rule 13a-14(a)/15d-14(a) Certification by the Companys Chief Executive Officer31.2
    
    Rule 13a-14(a)/15d-14(a) Certification by the Companys Chief Financial Officer32.1
    
    Section 1350 Certification by the Companys Chief Executive Officer32.2
    
    Section 1350 Certification by the Companys Chief Financial Officer
 11