<PAGE>   1

                                    FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                 (X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                   For the quarterly period ended July 1, 2001


              ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                   For the transition period from_____to_____

                           Commission File No. 1-7604

                                CROWN CRAFTS, INC
        -----------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

            Georgia                                     58-0678148
--------------------------------           ------------------------------------
(State or other jurisdiction of            (I.R.S. Employer Identification No.)
 incorporation or organization)

            1600 RiverEdge Parkway, Suite 200, Atlanta, Georgia 30328
         --------------------------------------------------------------
                    (Address of principal executive offices)

                                 (770) 644-6400
         --------------------------------------------------------------
              (Registrant's telephone number, including area code)

    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.

                                    Yes [X]  No [ ]

                   The number of shares of common stock, $1.00 par value, of the
Registrant outstanding as of August 15, 2001 was 9,421,437.


                                       1
<PAGE>   2

                                    FORM 10-Q

                       CROWN CRAFTS, INC. AND SUBSIDIARIES

                         PART 1 - FINANCIAL INFORMATION
                   ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS

                           CONSOLIDATED BALANCE SHEETS
                   July 1, 2001 (UNAUDITED) and April 1, 2001

<TABLE>
<CAPTION>
                                                                                July 1,       April 1,
dollar amounts in thousands, except share and per share amounts                  2001           2001
------------------------------------------------------------------------------------------------------
<S>                                                                             <C>           <C>
ASSETS
------------------------------------------------------------------------------------------------------
CURRENT ASSETS:
Cash and cash equivalents                                                       $    92        $   588
Restricted cash                                                                     514            508
Accounts receivable (net of allowances of $2,330 at July 1
      and $1,937 at April 1):
      Due from factor                                                             8,734         15,588
      Other                                                                       2,551          2,213
Inventories, net                                                                 20,478         19,564
Other current assets                                                              1,803          2,233
Assets held for sale                                                             12,924         21,661
------------------------------------------------------------------------------------------------------
Total current assets                                                             47,096         62,355
------------------------------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT - AT COST:
Land, buildings and improvements                                                  2,759          2,736
Machinery and equipment                                                           3,973          3,873
Furniture and fixtures                                                              492            489
------------------------------------------------------------------------------------------------------
                                                                                  7,224          7,098
Less accumulated depreciation                                                     3,401          3,184
------------------------------------------------------------------------------------------------------
Property, plant and equipment - net                                               3,823          3,914
------------------------------------------------------------------------------------------------------
OTHER ASSETS:
Goodwill (net of amortization of $5,471 at July 1 and $5,207 at April 1)         23,825         24,088
Other                                                                             1,073            321
------------------------------------------------------------------------------------------------------
Total other assets                                                               24,898         24,409
------------------------------------------------------------------------------------------------------
TOTAL ASSETS                                                                    $75,817        $90,678
======================================================================================================
</TABLE>

See notes to interim consolidated financial statements.


                                       2
<PAGE>   3

                       Crown Crafts, Inc. and Subsidiaries
                           CONSOLIDATED BALANCE SHEETS
                   July 1, 2001 (UNAUDITED) and April 1, 2001

<TABLE>
<CAPTION>
                                                                               July 1,        April 1,
dollar amounts in thousands, except share and per share amounts                  2001           2001
------------------------------------------------------------------------------------------------------
<S>                                                                            <C>            <C>
LIABILITIES AND SHAREHOLDERS' DEFICIT
------------------------------------------------------------------------------------------------------
CURRENT LIABILITIES:
Accounts payable                                                                 6,446           8,470
Accrued wages and benefits                                                       1,181           2,144
Accrued royalties                                                                  765           1,086
Other accrued liabilities                                                        2,347           3,316
Current maturities of long-term debt                                            36,660          44,016
------------------------------------------------------------------------------------------------------
Total current liabilities                                                       47,399          59,032
------------------------------------------------------------------------------------------------------
NON-CURRENT LIABILITIES:
Long-term debt                                                                  47,150          47,650
Deferred income taxes                                                               24              24
Other                                                                              745             745
------------------------------------------------------------------------------------------------------
Total non-current liabilities                                                   47,919          48,419
------------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES
------------------------------------------------------------------------------------------------------
SHAREHOLDERS' DEFICIT:
Common stock - par value $1.00 per share, 50,000,000 shares authorized
   Outstanding: 8,594,437 at July 1 and 8,608,843 at April 1                     8,594           8,609
Additional paid-in capital                                                      27,172          27,161
Accumulated deficit                                                            (55,337)        (52,477)
Cumulative currency translation adjustment                                          70             (66)
------------------------------------------------------------------------------------------------------
Total shareholders' deficit                                                    (19,501)        (16,773)
------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT                                   $ 75,817        $ 90,678
======================================================================================================
</TABLE>

See notes to interim consolidated financial statements.


                                       3
<PAGE>   4

                       Crown Crafts, Inc. and Subsidiaries
          CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
                Three months ended July 1, 2001 and July 2, 2000

<TABLE>
<CAPTION>
                                                       July 1,        July 2,
in thousands, except loss per share                     2001            2000
-------------------------------------------------------------------------------

<S>                                                   <C>             <C>
Net sales                                             $ 38,699        $ 58,194
Cost of products sold                                   31,175          53,747
-------------------------------------------------------------------------------
Gross profit                                             7,524           4,447
Marketing and administrative expenses                    7,968          11,976
Gain on disposition of assets                             (370)           (466)
-------------------------------------------------------------------------------
Loss from operations                                       (74)         (7,063)
Other income (expense):
      Interest expense                                  (3,300)         (3,934)
      Other - net                                          557             111
-------------------------------------------------------------------------------
Loss before income taxes                                (2,817)        (10,886)
Income tax expense                                          42              --
-------------------------------------------------------------------------------
Net loss                                                (2,859)        (10,886)
-------------------------------------------------------------------------------
Other comprehensive income, net of tax:
       Foreign currency translation adjustment             136              31
-------------------------------------------------------------------------------
Comprehensive loss, net of tax                        $ (2,723)       $(10,855)
-------------------------------------------------------------------------------

Basic loss per share                                  $  (0.32)       $  (1.26)
-------------------------------------------------------------------------------

Diluted loss per share                                $  (0.32)       $  (1.26)
-------------------------------------------------------------------------------

Weighted average shares outstanding - basic              8,605           8,609
-------------------------------------------------------------------------------

Weighted average shares outstanding - diluted            8,605           8,609
===============================================================================
</TABLE>

See notes to interim consolidated financial statements.


                                       4
<PAGE>   5

                       Crown Crafts, Inc. and Subsidiaries
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                Three months ended July 1, 2001 and July 2, 2000
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                             July 1,          July 2,
in thousands                                                  2001             2000
-------------------------------------------------------------------------------------
<S>                                                         <C>             <C>
OPERATING ACTIVITIES:
Net loss                                                    $ (2,859)       $(10,886)
Adjustments to reconcile net loss to net cash
     (used for) provided by operating activities:
     Depreciation of property, plant and equipment               242           3,068
     Amortization of goodwill                                    264             265
     Gain on disposition of assets                              (802)           (466)
     Changes in assets and liabilities
          Accounts receivable                                  3,546          11,130
          Inventories, net                                      (914)          2,540
          Other current assets                                   430           1,725
          Other assets                                          (752)            390
          Accounts payable                                    (2,024)         (5,266)
          Accrued liabilities                                 (2,253)         (2,269)
          Assets held for sale, net of sales                     464              --
-------------------------------------------------------------------------------------
Net cash (used for) provided by operating activities          (4,658)            231
-------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Capital expenditures                                             (50)           (328)
Proceeds from disposition of assets                            9,201             888
Other                                                            (93)             31
-------------------------------------------------------------------------------------
Net cash provided by investing activities                      9,058             591
-------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Payment of long-term debt                                     (7,856)           (878)
Increase (decrease) in advances from factor                    2,970          (1,086)
Stock repurchased                                                 (4)             --
-------------------------------------------------------------------------------------
Net cash used for financing activities                        (4,890)         (1,964)
-------------------------------------------------------------------------------------
NET DECREASE IN CASH AND CASH EQUIVALENTS                       (490)         (1,142)
Cash and cash equivalents at beginning of year                 1,096           1,453
-------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                  $    606        $    311
-------------------------------------------------------------------------------------
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid                                           $    112        $    281
Interest paid                                               $  3,707        $  4,082
SUPPLEMENTAL DISCLOSURE OF NON CASH
  INVESTING AND FINANCING ACTIVITIES
    Disposition escrow account                              $    514        $     --
=====================================================================================
</TABLE>

See notes to interim consolidated financial statements.


                                       5
<PAGE>   6

                                    FORM 10-Q

                       CROWN CRAFTS, INC. AND SUBSIDIARIES

               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

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 Company's financial
         position as of July 1, 2001 and the results of its operations and its
         cash flows for the three-month periods ended July 1, 2001 and July 2,
         2000. Such adjustments include normal recurring accruals and a pro rata
         portion of certain estimated annual expenses. Operating results for the
         three-month period ended July 1, 2001 are not necessarily indicative of
         the results that may be expected for the year ending April 1, 2001. For
         further information, refer to the consolidated financial statements and
         footnotes thereto included in the annual report of Form 10-K for the
         year ended April 1, 2001 of Crown Crafts, Inc. (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.

         Recently Issued Accounting Standards: In June 1998, the Financial
         Accounting Standards Board ("FASB") issued Statement of Financial
         Accounting Standards ("SFAS") 133, Accounting for Derivative Financial
         Instruments and Hedging Activities. SFAS 133, effective for the Company
         on April 2, 2001, establishes accounting and reporting standards for
         derivative instruments, including certain derivative instruments
         embedded in other contracts, (collectively referred to as derivatives)
         and for hedging activities. The Company has no contracts or other
         instruments to which SFAS 133 is applicable and the adoption of this
         standard, as amended, did not have a material impact on the Company's
         results of operations, financial position or cash flow.

         In 1999, Staff Accounting Bulletin 101 ("SAB") 101 Revenue Recognition
         was issued requiring that revenue be recognized when certain criteria
         are met. In addition, the Emerging Issues Task Force ("EITF") reached a
         consensus on issue EITF 00-10 in September 2000, Accounting for
         Shipping and Handling Fees and Costs. The Company has analyzed the
         implications of both SAB 101 and EITF 00-10, and these pronouncements
         did not have a material impact on the Company's consolidated financial
         statements.

         In June 2001 the FASB also approved SFAS 142, Goodwill and Other
         Intangible Assets. This statement prescribes that goodwill should no
         longer be amortized upon adoption of the standard. Instead. goodwill
         will be tested annually for impairment, and on an interim basis if
         certain impairment indicators are present. Additionally, intangible
         assets with an indefinite useful life may not be amortized. The company
         will adopt SFAS 142 on April 1, 2002.

         Reclassifications: Certain prior period financial statement balances
         have been reclassified to conform to the current period's presentation.

2.       In 1999, the Company adopted SFAS 131, Disclosures about Segments of an
         Enterprise and Related Information. The Company's principal segments
         include adult home furnishing and juvenile products, consisting of
         bedroom and bath products (adult comforters, sheets and towels), throws
         and juvenile products (primarily Pillow Buddies(R)). The second
         principal segment is infant products, consisting of infant bedding,
         bibs, and infant soft goods. The Company tracks revenues and operating
         profit information for these two business segments. Following the sale
         of the Adult Bedding and Bath business as of July 23, 2001 as described
         in Note 5 below, the Company will be primarily in the infant and
         juvenile products business.

         Financial information attributable to the Company's business segments
         for the quarters ended July 1, 2001 and July 2, 2000, was as follows
         (in thousands):


                                       6
<PAGE>   7

<TABLE>
<CAPTION>
                                   THREE MONTHS ENDED
Revenues:                      July 1, 2001   July 2, 2000
--------------------------     ---------------------------

<S>                            <C>            <C>
Adult home furnishing
     and juvenile products         19,288         37,953
Infant products                    19,411         20,241
                                  -------        -------
Total                             $38,699        $58,194
                                  =======        =======

<CAPTION>
                                     THREE MONTHS ENDED
Operating income (loss)        July 1, 2001     July 2, 2000
--------------------------     -----------------------------
<S>                            <C>              <C>
Adult home furnishing
     and juvenile products         (1,744)         (9,182)
Infant products                     1,670           2,119
                                  -------         -------
Total                             $   (74)        $(7,063)
                                  =======         =======
</TABLE>

Net sales by individual product groups within these business segments were as
follows (in thousands):

<TABLE>
<CAPTION>
                             THREE MONTHS ENDED
                        July 1, 2001   July 2, 2000
-------------------     ---------------------------
<S>                     <C>            <C>
Bedroom products            18,111         26,685
Throws                         540         10,363
Infant and juvenile
     products               20,048         21,116
Other                           --             30
                           -------        -------
     Total                 $38,699        $58,194
                           =======        =======
</TABLE>

3.       No interest costs were capitalized during the three months ended July
         1, 2001, and July 2, 2000.

4.       Major classes of inventory were as follows (in thousands):

<TABLE>
<CAPTION>
                       July 1,        April 1,
                         2001           2001
                       -------        --------

<S>                    <C>            <C>
Raw materials          $ 3,573        $ 3,501
Work in process          1,364          1,545
Finished goods          15,541         14,518
                       -------        -------

                       $20,478        $19,564
                       =======        =======
</TABLE>

         Inventory is net of reserves for inventories classified as irregular or
         discontinued of $2.0 million and $2.2 million at July 1, 2001 and April
         1, 2001, respectively.

5.       During the three months ended July 1, 2001, the Company sold property,
         plant and equipment (primarily at Timberlake, North Carolina) with net
         proceeds of $9.2 million and a gain on sale of $802,000. The net
         proceeds were used to reduce debt.

         As part of the plan to reduce debt and restore profitability, the
         Company made a decision to exit the Adult Bedding and Bath Business and
         its net assets of $12.9 million were held for sale at July 1, 2001.
         Expected proceeds of the sale are $9.3 million cash plus assumption of
         liabilities of $3.6 million as well as certain contingent liabilities.
         Cash from the sale will be used to reduce debt. Included in the sale
         will be inventory, buildings, machinery and equipment located at
         Roxboro, North Carolina as well as various sales offices. The Adult
         Bedding and Bath Business had annual sales of approximately $76.5
         million in fiscal 2001 and was included in the adult home furnishing
         and juvenile products segment. The Adult Bedding and Bath Business
         includes the remainder of the bedroom products group following the sale
         of the Wovens division. The sale was completed on July 23, 2001.


                                       7
<PAGE>   8

                ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

THREE MONTHS ENDED JULY 1, 2001 COMPARED TO THE THREE MONTHS ENDED JULY 2, 2000

Net sales decreased $19.5 million or 33.5% to $38.7 million in the current year
quarter compared to $58.2 million in the prior year quarter. This was
attributable to a decrease of $8.6 million, or 32.1%, in bedroom products, a
$9.8 million decrease in throws and a decrease of $1.1 million, or 5.1%, in
sales of infant and juvenile products. The decrease in bedroom products resulted
from the decision to phase out the unprofitable Studio bedding line as well as
the sale of the Wovens division on November 14, 2000. The disposition of the
Wovens division resulted in lower sales of throws. Lower sales of infant and
juvenile products were due to changes in buying patterns by major retailers.

For the quarter ended July 1, 2001, gross profit as a percentage of net sales
increased to 19.4% from 7.6% for the quarter ended July 2, 2000. A variety of
factors impacted margins, including a change in product mix, but the increased
margin relates primarily to a lower manufacturing costs as a result of
outsourcing.

Marketing and administrative expenses decreased by $4.0 million or 33.5% in the
current year quarter compared to the same quarter in the prior fiscal year and
were 20.6% of net sales for both periods presented. The decrease is a result of
the Company's cost reduction and restructuring programs as well as the sale of
the Wovens division.

Interest expense for the quarter decreased by $0.6 million because of lower debt
and reduced interest rates.

Due to the accumulated losses, no federal income tax provision has been included
for the quarter ended July 1, 2001 and the prior year quarter. A provision for
estimated state and local taxes of $42,000 was included for the quarter ended
July 2001.

FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES

Net cash used for operating activities was $4.7 million for the three months
ended July 1, 2001 compared to net cash provided by operating activities of $0.2
million for the three months ended July 2, 2000. Net cash provided by investing
activities was $9.1 million compared to $0.6 million in the prior year period.
Net cash used for financing activities was $4.9 million, compared to $2.0
million in the prior year period. Total debt outstanding decreased to $83.8
million at July 1, 2001 from $91.7 million at April 1, 2001. This decrease
resulted from the repayment of debt from the sale of fixed assets.

As of July 1, 2001, cash of $0.5 million was restricted and assigned as
collateral to secure indemnities related to the sale of the Wovens division. A
$1.7 million letter of credit for minimum royalties and a $0.7 million letter of
credit for workers' compensation liabilities are secured by accounts receivable
due from factor.

         At July 1, 2001 and April 1, 2001, long term debt consisted of:

<TABLE>
<CAPTION>
(in thousands)                 July 1         April 1
-----------------------------------------------------
<S>                            <C>            <C>
Bank Credit lines              $24,973        $30,249
Promissory notes                28,837         31,417
Floating rate revolving
credit facilities               30,000         30,000
                               -------        -------
                                83,810         91,666
Less current maturities         36,660         44,016
                               -------        -------
                               $47,150        $47,650
-----------------------------------------------------
</TABLE>


                                       8
<PAGE>   9

         On July 23, 2001 the Company completed a refinancing of its debt. The
         new credit facilities include the following:

         Revolving Credit of up to $19 million including a $3 million sub-limit
         for letters of credit, $ 14.0 million drawn at closing. Interest rate
         of LIBOR plus 2.75%, maturity June 30, 2004. Secured by a first lien on
         all assets.

         Senior Notes of $14 million. Interest rate of 10% plus additional
         interest contingent upon cash flow availability of 3%. Maturity June
         30, 2006. Secured by a first lien on all assets.

         Senior Subordinated Notes of $16 million. Interest rate of 10% plus an
         additional 1.65% payable by delivery of a promissory note due July 23,
         2007. Maturity July 23, 2007, 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% will be amortized over the life of the notes.

        The new credit facilities contain covenants regarding minimum levels of
Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"),
maximum total debt/EBITDA, maximum senior debt to EBITDA, minimum EBITDA to cash
interest, and minimum shareholders' equity. The covenants also include
restrictions on capital expenditures, dividends, and stock repurchases.

Minimum annual maturities adjusted to reflect the July 23, 2001 refinancing are
as follows: (in thousands)

<TABLE>
<CAPTION>
        FISCAL       REVOLVER     SENIOR NOTES     SUB NOTES         TOTAL
                     --------     ------------     ---------        -------

        <S>          <C>          <C>              <C>              <C>
         2002              --        $   250             --         $   250
         2003              --          2,000             --           2,000
         2004              --          2,000             --           2,000
         2005         $14,000          2,000             --          16,000
         2006              --          2,000             --           2,000
         2007              --          5,750             --           5,750
         2008              --             --        $24,000*         24,000
                      -------        -------        -------         -------
         Total        $14,000        $14,000        $24,000         $52,000
</TABLE>

         *includes $8,000 non-interest bearing note issued at an original issue
         discount of $4.1 million.

        In the event that required debt service exceeds 70% of free cash flow
(EBITDA less capital expenditures and cash taxes paid), the excess of contingent
interest and principal amortization over 70% will be deferred until maturity of
the Senior Notes in June 2006. Contingent interest plus additional principal
payments will be due annually up to 70% of free cash flow.

        As part of the refinancing, the Company issued to the 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 in six years. 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. Also in the second quarter of fiscal 2002, the Company recognized an
extraordinary item of $25.0 million representing cancellation of debt income in
connection with the refinancing.

        Below is a comparison of the July 1, 2001 balance sheet with the pro
forma impact of the refinancing and the disposition of the Adult Bedding and
Bath business:


                                       9
<PAGE>   10

                               CROWN CRAFTS, INC.
                             CONDENSED BALANCE SHEET

<TABLE>
<CAPTION>
  in millions of dollars                                                Pro forma
                                                          July 1, 2001 July 1, 2001
                                                          ------------ ------------

<S>                                                       <C>          <C>
Current assets                                                $34.2        $35.9
Assets held for sale                                           12.9           --
Fixed assets, net                                               3.8          3.8
Other assets                                                   24.9         23.9
                                                              -----        -----
  Total assets                                                $75.8        $63.6
                                                              =====        =====

Accounts payable                                              $ 6.4        $ 3.9
Accrued liabilities                                             4.3          4.0
Current maturities of long term debt                           36.7          0.7
                                                              -----        -----
  Total current liabilities                                    47.4          8.6
Long term debt                                                 47.1         47.1
Other liabilities                                               0.8           --
Shareholders' (deficit) equity                                (19.5)         7.9
                                                              -----        -----
  Total liabilities and shareholders' (deficit) equity        $75.8        $63.6
                                                              =====        =====
</TABLE>

         The Company's notes and the credit facilities contain similar
restrictive covenants requiring the Company to maintain certain ratios of
earnings to fixed charges and of total debt to total capitalization. In
addition, the bank revolving credit facilities contain certain covenants
requiring the Company to maintain minimum levels of shareholders' equity and
certain ratios of total debt to cash flow. 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. Other
covenants of these revolving credit facilities require the Company to maintain
certain financial ratios and place restrictions on the amounts the Company may
expend on acquisitions.

         On August 31, 2000, the Company concluded a restructuring of its debt.
The agreements extended the maturity of the debt to April 3, 2001 and adjusted
financial and other covenants based on the Company's projections. The
restructured loan covenants limited capital expenditures for fiscal 2001 to $4.4
million, limited the level of advances on factored accounts receivable, required
certain levels of borrowing base assets relative to the debt, and required
certain levels of cash flow on a monthly basis. At certain times during the
year, the Company was not in compliance with certain of these covenants and
obtained amendments of the loan agreements to waive such noncompliance.
Compliance and reporting to the lenders is daily with respect to the level of
factor advances and borrowing base assets, and monthly with respect to other
covenants. In exchange, the Company issued to the Lenders warrants exercisable
for 5% of the Company's issued and outstanding stock exercisable not later than
December 31, 2005. These warrants were cancelled in connection with the July 23,
2001 refinancing. As of August 31, 2000, the interest rate on the credit
facilities was increased by 1% to each bank's base rate plus 2% and on the notes
placed with an insurance company to 11.77%. The margin over Base Rate increased
to 4% in the quarter ended April 1, 2001. Effective April 3, 2001, the Lenders
extended the maturity of the loans to June 30, 2001 and subsequently to August
6, 2001 with a margin over base rate of 1%.

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 for the next year.

To reduce its exposure to credit losses and to enhance its cash flow forecasts,
the Company factors the majority of its trade accounts receivable. The Company's
factor establishes customer credit lines, and accounts for and collects
receivable balances. The factor remits payment to the Company on the due dates
of the factored invoices. The factor assumes all responsibility for credit
losses on sales within approved credit lines, but may deduct from its
remittances to the Company the amounts of customer deductions for returns,
allowances, disputes and discounts. The Company's factor may at any time
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.


                                       10
<PAGE>   11

FORWARD-LOOKING INFORMATION

This Form 10Q contains forward-looking statements within the meaning of the
federal securities law. 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
are intended to 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 anticipated. 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, the Company's ability to integrate its
acquisitions and new licenses, and the Company's ability to implement
improvements in its acquired businesses.

                      ITEM 3 - QUANTITATIVE AND QUALITATIVE
                          DISCLOSURES ABOUT MARKET RISK

The Company is exposed to market risk from changes in interest rates on debt,
commodity prices and foreign exchange rates.

The Company's exposure to interest rate risk relates to its floating rate debt,
$55.0 million of which was outstanding at July 1, 2001. Each 1.0 percentage
point increase in interest rates would impact pretax earnings by $0.6 million at
the debt level of July 1, 2001 (excludes $28.8 million of fixed rate debt.)

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.

The Company's exposure to foreign exchange rates relates to its Mexican
manufacturing subsidiary. During the fiscal year ended April 1, 2001, this
subsidiary manufactured products for the Company with a value of approximately
$4.4 million. The Company's investment in the subsidiary was approximately $3.0
million at July 1, 2001.


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<PAGE>   12

                                    FORM 10-Q

                       CROWN CRAFTS, INC. AND SUBSIDIARIES

                           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

         None

Item 3 - Defaults Upon Senior Securities

         None

Item 4 - Submission of Matters to Vote of Security Holders

         None

Item 5 - Other Information

         None

Item 6 - Exhibits and Reports on Form 8-K

         There were no reports on Form 8-K during the quarter ended July 1,
         2001.


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<PAGE>   13

                                    FORM 10-Q

                       CROWN CRAFTS, INC. AND SUBSIDIARIES

                                  JULY 1, 2001

                                   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: September 21, 2001                     /s/  Carl A. Texter
      ----------------------                 -----------------------------------
                                             CARL A. TEXTER
                                             (Chief Accounting Officer)


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