##### 





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, DC
    20549
  Form 10-Q
   þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    December 30, 2007o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission File
    No. 1-7604
  CROWN CRAFTS,
    INC.
 (Exact name of registrant as
    specified in its charter)
   Delaware

58-0678148(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)    916 South Burnside Avenue, Gonzales, Louisiana
    70737
  (Address of principal executive
    offices)
  (225) 647-9100
  (Registrants telephone
    number, including area code)
   þ o
  Rule 12b-2
  Large accelerated
    filer o

Accelerated
    filer o

Non-Accelerated
    filer þ

Smaller reporting
    company o(Do not check if a smaller reporting company)   Rule 12b-2 o þ




---



##### 





CROWN
    CRAFTS, INC. AND SUBSIDIARIES
 CONSOLIDATED
    BALANCE SHEETS
 December 30,
    2007 and April 1, 2007
  December 30, 2007


April 1, 2007(Unaudited)(Amounts in thousands, except share and per share amounts)ASSETSCurrent assets:Cash and cash equivalents

$
1


$
33Accounts receivable (net of allowances of $1,261 at
    December 30, 2007 and $989 at April 1, 2007):Due from factor


11,490



11,764Other


3,348



1,121Inventories, net


16,473



7,145Prepaid expenses


2,036



1,313Assets held for sale


663



Deferred income taxes


1,017



2,408Total current assets


35,028



23,784Property, plant and equipment  at cost:Land, buildings and improvements


203



1,322Machinery and equipment


2,344



2,502Furniture and fixtures


748



6543,295



4,478Less accumulated depreciation


2,644



3,037Property, plant and equipment  net


651



1,441Other assets:Goodwill, net


22,884



22,884Intangible assets, net


7,712



617Other


181



190Total other assets


30,777



23,691Total Assets

$
66,456


$
48,916LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
8,520


$
3,552Accrued wages and benefits


1,175



1,300Accrued royalties


1,442



671Other accrued liabilities


108



73Current maturities of long-term debt


2,508



19Total current liabilities


13,753



5,615Non-current liabilities:Long-term debt


12,813



5,780Deferred income taxes


698



698Total non-current liabilities


13,511



6,478Commitments and contingencies






Shareholders equity:Common stock  $0.01 par value per share;
    Authorized 74,000,000 shares; Issued 10,039,942 shares
    at December 30, 2007 and 10,003,692 shares at
    April 1, 2007


100



100Additional paid-in capital


39,091



38,619Treasury stock  at cost; 225,208 shares at
    December 30, 2007


(854
)


Accumulated earnings (deficit)


855



(1,896
)Total shareholders equity


39,192



36,823Total Liabilities and Shareholders Equity

$
66,456


$
48,916    1




---



##### 



CROWN
    CRAFTS, INC. AND SUBSIDIARIES
 CONSOLIDATED
    STATEMENTS OF INCOME
 For the
    Three and Nine-Month Periods Ended December 30, 2007 and
    December 31, 2006
  Three Months Ended


Nine Months EndedDecember 30,


December 31,


December 30,


December 31,2007


2006


2007


2006(Unaudited)(Amounts in thousands, except per share amounts)Net sales

$
18,431


$
15,368


$
50,902


$
52,041Cost of products sold


13,853



11,504



38,055



38,031Gross profit


4,578



3,864



12,847



14,010Marketing and administrative expenses


2,584



2,236



7,960



6,887Income from operations


1,994



1,628



4,887



7,123Other income (expense):Interest expense


(244
)


(195
)


(475
)


(1,204
)Gain on debt refinancing














4,069Other  net


178



2



154



162Income before income taxes


1,928



1,435



4,566



10,150Income tax expense


692



451



1,705



2,758Income from continuing operations after income taxes


1,236



984



2,861



7,392Loss from discontinued operations, net of income taxes


(12
)


(370
)


(110
)


(513
)Net income

$
1,224


$
614


$
2,751


$
6,879Weighted average shares outstanding  basic


9,903



9,953



9,966



9,716Weighted average shares outstanding  diluted


10,176



10,269



10,248



9,973Basic earnings (loss) per share:Income from continuing operations

$
0.12


$
0.10


$
0.29


$
0.76Loss from discontinued operations


(0.00
)


(0.04
)


(0.01
)


(0.05
)Total basic earnings per share

$
0.12


$
0.06


$
0.28


$
0.71Diluted earnings (loss) per share:Income from continuing operations

$
0.12


$
0.10


$
0.28


$
0.74Loss from discontinued operations


(0.00
)


(0.04
)


(0.01
)


(0.05
)Total diluted earnings per share

$
0.12


$
0.06


$
0.27


$
0.69    2




---



##### 



CROWN
    CRAFTS, INC. AND SUBSIDIARIES
 CONSOLIDATED
    STATEMENTS OF CASH FLOWS
 For the
    Nine-Month Periods Ended December 30, 2007 and
    December 31, 2006
  Nine Months EndedDecember 30,


December 31,2007


2006(Unaudited)(Amounts in thousands)Operating activities:Net income

$
2,751


$
6,879Adjustments to reconcile net income to net cash provided by
    operating activities:Depreciation of property, plant and equipment


259



342Goodwill write-off






90Amortization of intangibles


340



7Deferred income taxes


1,390



1,895Loss (gain) on sale of property, plant and equipment


6



(11
)Discount accretion


169



295Gain on debt refinancing






(4,069
)Stock-based compensation


432



171Changes in assets and liabilities:Accounts receivable


(2,098
)


3,688Inventories, net


(5,246
)


(1,880
)Prepaid expenses


(724
)


(204
)Other assets


9



(108
)Accounts payable


4,968



2,694Accrued liabilities


680



800Net cash provided by operating activities


2,936



10,589Investing activities:Capital expenditures


(156
)


(161
)Acquisition costs to purchase Kimberly Grant brand






(550
)Acquisition costs to purchase Baby Products Line from Springs
    Global


(356
)


Proceeds from disposition of assets


19



11Net cash used in investing activities


(493
)


(700
)Financing activities:Retirement of debt






(17,077
)Payments on long-term debt


(223
)


(27
)(Repayments) proceeds under revolving line of credit, net


(1,438
)


3,468Debt issuance costs






(70
)Purchase of treasury stock


(854
)


Issuance of common stock


40



46Net cash used in financing activities


(2,475
)


(13,660
)Net decrease in cash and cash equivalents


(32
)


(3,771
)Cash and cash equivalents at beginning of period


33



3,790Cash and cash equivalents at end of period

$
1


$
19Supplemental cash flow information:Income taxes paid

$
984


$
294Interest paid


228



765Noncash investing and financing activity:Debt issued to purchase Baby Products Line from Springs Global:Funded through the revolving line of credit

$
6,014



Funded through long-term debt


5,000



Total debt issued to purchase Baby Products Line from Springs
    Global

$
11,014


$
    3




---



##### 



CROWN
    CRAFTS, INC. AND SUBSIDIARIES
 NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 AS OF AND
    FOR THE THREE AND NINE-MONTH PERIODS ENDED
 DECEMBER 30, 2007 AND DECEMBER 31, 2006
  Basis of Presentation: Form 10-K
  Revenue Recognition:
  Use of Estimates:
  Segment and Related Information:
  Impairment of Long-lived Assets, Identifiable Intangibles and
    Goodwill:
  Goodwill and Other
    Intangible Assets
 4




---



##### 



CROWN
    CRAFTS, INC. AND SUBSIDIARIES
 NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Provision for Income Taxes:
  Allowances Against Accounts Receivable:
  agreed-upon 01-9,
    Royalty Payments:
  Recently Issued Accounting Standards: Accounting for Uncertainty in
    Income Taxes  an interpretation of FASB Statement No.
    109
  Fair Value Measurements,
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities
 5




---



##### 



CROWN
    CRAFTS, INC. AND SUBSIDIARIES
 NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Business Combinations
  Share-Based Compensation:
    Share-Based Payment Accounting for Stock-Based Compensation Accounting for
    Stock Issued to Employees
     6




---



##### 



CROWN
    CRAFTS, INC. AND SUBSIDIARIES
 NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Stock Options:
  Weighted-Average


Number of OptionsExercise Price


OutstandingOutstanding at April 1, 2007

$
1.68



593,346Granted


4.08



112,000Exercised


1.11



36,250Forfeited


0.76



17,766Outstanding at December 30, 2007

$
2.15



651,330Exercisable at December 30, 2007

$
1.41



431,000     Options


OptionsIssued to


Issued toEmployees


DirectorsOptions Issued


100,000



12,000Dividend Yield






Expected Volatility


65.00
%


65.00
%Risk-free interest rate


4.51
%


4.42
%Expected life in years


5.75



3.25Forfeiture rate


5.00
%


5.00
%     3-Month Period


9-Month PeriodCost of


Marketing &





Cost of


Marketing &Products


Administrative


Total


Products


Administrative


TotalSold


Expense


Expense


Sold


Expense


ExpenseOptions granted in fiscal year 2007

$
12


$
36


$
48


$
38


$
121


$
159Options granted in fiscal year 2008


9



24



33



14



36



50Unvested options at April 2, 2007






1



1







2



2Total stock option compensation

$
21


$
61


$
82


$
52


$
159


$
211   Non-vested Stock:
   7




---



##### 



CROWN
    CRAFTS, INC. AND SUBSIDIARIES
 NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Inventory:
  December 30,


April 1,2007


2007Raw Materials

$
27


$
15Work in Process






12Finished Goods


16,446



7,118Total inventory

$
16,473


$
7,145     4.
    Financing
    Arrangements  Factoring Agreement:
  Long-term debt:
  December 30,


April 1,2007


2007Revolving line of credit

$
7,318


$
2,742Term loan


4,792



Non-interest bearing notes


4,000



4,000Original issue discount


(797
)


(966
)Capital leases


8



2315,321



5,799Less current maturities


2,508



19$
12,813


$
5,780     Revolving Line of Credit
 8




---



##### 



CROWN
    CRAFTS, INC. AND SUBSIDIARIES
 NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Term Loan
  Subordinated Notes
    Fiscal

Revolver


Term Loan


Sub Notes


Other


Total2008





$
625






$
4


$
6292009






2,500







4



2,5042010






1,667











1,6672011

$
7,318






$
2,000







9,3182012










2,000







2,000Total

$
7,318


$
4,792


$
4,000


$
8


$
16,118   5.
    Acquisitions  Kimberly Grant:
    AggregateGross


Estimated





AmortizationCarrying


Useful


Accumulated


Expense inAmount


Life


Amortization


FY 2008Tradename

$
466,387



15 years


$
31,099


$
23,319Existing designs


35,924



1 year



26,942



26,942Non-compete


97,689



15 years



6,465



4,887Totals

$
600,000






$
64,506


$
55,148   Springs:
 9




---



##### 



CROWN
    CRAFTS, INC. AND SUBSIDIARIES
 NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    AggregateGross


Estimated





AmortizationCarrying


Useful


Accumulated


Expense inAmount


Life


Amortization


FY 2008Licenses & existing designs

$
1,655,188



2 years


$
137,936


$
137,936Licenses & future designs


1,846,822



4 years



76,972



76,972Non-compete


114,981



4 years



4,811



4,811Customer relationships


3,817,538



10 years



63,604



63,604Totals

$
7,434,529






$
283,323


$
283,323     Three-MonthPeriods
Ended


Nine-MonthPeriods
EndedDecember 30,2007(Unaudited)


December 31,2006(Unaudited)


December
30,2007(Unaudited)


December 31,2006(Unaudited)Net Sales

$
20,434


$
24,732


$
68,929


$
80,132Total Operating
Expenses

$
18,587


$
22,809


$
65,079


$
72,125Net income

$
1,118


$
985


$
1,971


$
7,956Earnings per shareBasic

$
0.11


$
0.10


$
0.20


$
0.82Diluted

$
0.11


$
0.10


$
0.19


$
0.80   10




---



##### 



Discontinued Operations:
    Treasury Stock:
 ITEM 2 
    MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS
       11




---



##### 



RESULTS
    OF OPERATIONS
    Three-Month Period Ended


Nine-Month Period EndedDecember 30,


December 31,


$


%


December 30,


December 31,


$


%2007


2006


Change


Change


2007


2006


Change


ChangeDollars in thousands


Dollars in thousandsNet Sales by CategoryBedding, Blankets and Accessories

$
14,770


$
10,633


$
4,137



38.9
%

$
38,601


$
36,688


$
1,913



5.2
%Bibs and Bath


3,661



4,735



(1,074
)


(22.7
)%


12,301



15,353



(3,052
)


(19.9
)%Total Net Sales


18,431



15,368



3,063



19.9
%


50,902



52,041



(1,139
)


(2.2
)%Cost of Products Sold


13,853



11,504



2,349



20.4
%


38,055



38,031



24



0.1
%Gross Profit


4,578



3,864



714



18.5
%


12,847



14,010



(1,163
)


(8.3
)%% of Net Sales


24.8
%


25.1
%










25.2
%


26.9
%Marketing and Administrative Expenses


2,584



2,236



348



15.6
%


7,960



6,887



1,073



15.6
%% of Net Sales


14.0
%


14.5
%










15.6
%


13.2
%Interest Expense


244



195



49



25.1
%


475



1,204



(729
)


(60.5
)%Gain on Debt Refinancing














100.0
%






4,069



(4,069
)


100.0
%Other (Expense) Income


178



2



176



8800.0
%


154



162



(8
)


(4.9
)%Income Tax Expense


692



451



241



53.4
%


1,705



2,758



(1,052
)


(38.2
)%Income from continuing operations after taxes


1,236



984



252



25.6
%


2,861



7,392



(4,531
)


(61.3
)%Discontinued Operations  net of taxes


(12
)


(370
)


358



(96.9
)%


(110
)


(513
)


404



(78.6
)%Net Income


1,224



614



610



99.3
%


2,751



6,879



(4,128
)


(60.0
)%% of Net Sales


6.6
%


4.0
%










5.4
%


13.2
%   Net Sales:
        Gross Profit:
 12




---



##### 



Marketing and Administrative
    Expenses:
  Interest Expense:
  Other Income  Net:
  FINANCIAL
    POSITION, LIQUIDITY AND CAPITAL RESOURCES
     13




---



##### 



FORWARD-LOOKING
    INFORMATION
    ITEM 3 
    QUANTITATIVE AND QUALITATIVE
    DISCLOSURES ABOUT MARKET RISK
    ITEM 4 
    CONTROLS AND PROCEDURES
  Rules 13a-15(e) 15d-15(e) Rules 13a-15 15d-15
  Rules 13a-15 15d-15
 14




---



##### 



PART II 
    OTHER INFORMATION
  Item 1 
    Legal
    Proceedings  Form 10-K
  Item 1A 
    Risk
    Factors  Form 10-K
  Item 2 
    Unregistered
    Sales of Equity Securities and Use of Proceeds  (c) Issuer
    Purchases of Equity Securities.
    Total Number of


Approximate DollarShares Purchased as


Value of Shares ThatTotal Number of





Part of Publicly


May Yet be PurchasedShares


Average Price


Announced Plans or


Under the Plans orPeriod

Purchased


Paid per Share(1)


Programs(2)


Programs(2)October 1, 2007 through November 4, 2007


25,574


$
4.02



25,574


$
5,562,362November 5, 2007 through December 2, 2007


22,086


$
3.94



22,086


$
5,475,242December 3, 2007 through December 30, 2007


92,693


$
3.56



92,693


$
5,145,688Total


140,353


$
3.70



140,353


$
5,145,688     (1)
    
    Includes broker fees of $0.03 per share.(2)
    
    In June 2007, the Companys board of directors formed a
    Capital Committee which is authorized to cause the Company to
    spend up to $6 million in the aggregate to repurchase from
    its stockholders shares of the outstanding common stock of the
    Company between July 1, 2007 and July 1, 2008 and to
    determine the terms and conditions under which any such
    repurchases would be made. During the three-month period ended
    September 30, 2007, 84,855 shares were repurchased at
    an average price per share, including broker fees, of $3.95.  Item 3 
    Defaults
    Upon Senior Securities    Item 4 
    Submission
    of Matters to a Vote of Security Holders    Item 5 
    Other
    Information   15




---



##### 



Item 6 
    Exhibits  ExhibitNo.

Exhibit2
.1

Asset Purchase Agreement dated as of November 5, 2007 by
    and between Springs Global US, Inc. and Crown Crafts Infant
    Products, Inc.(1)10
.1

Noncompetition and Non-Disclosure Agreement dated as of
    November 5, 2007 by and between Springs Global US, Inc. and
    Crown Crafts Infant Products, Inc.(1)10
.2

Warehousing Agreement dated as of November 5, 2007 by and
    between Springs Global US, Inc. and Crown Crafts Infant
    Products, Inc.(1)10
.3

Transition Services Agreement dated as of November 5, 2007
    by and between Springs Global US, Inc. and Crown Crafts Infant
    Products, Inc.(1)10
.4

First Amendment to Financing Agreement dated as of
    November 5, 2007 by and among Crown Crafts, Inc., Churchill
    Weavers, Inc., Hamco, Inc., Crown Crafts Infant Products, Inc.
    and The CIT Group/Commercial Services, Inc.(1)10
.5

First Amendment to Mortgage, Assignment of Leases and Rents, and
    Security Agreement dated November 5, 2007 from Churchill
    Weavers, Inc. to The CIT Group/Commercial Services, Inc.(1)31
.1

Rule 13a-14(a)/15d-14(a)
    Certification by the Companys Chief Executive Officer(2)31
.2

Rule 13a-14(a)/15d-14(a)
    Certification by the Companys Chief Financial Officer(2)32
.1

Section 1350 Certification by the Companys Chief
    Executive Officer(2)32
.2

Section 1350 Certification by the Companys Chief
    Financial Officer(2)     (1)
    
    Incorporated herein by reference to Registrants Current
    Report on
    Form 8-K
    dated November 9, 2007.(2)
    
    Filed herewith. 16




---



##### 



SIGNATURES
      /s/  Amy
    Vidrine Samson      February 13, 2008
 17




---



##### 



Index
    to Exhibits
  ExhibitNo.

Exhibit2
.1

Asset Purchase Agreement dated as of November 5, 2007 by and
    between Springs Global US, Inc. and Crown Crafts Infant
    Products, Inc.(1)10
.1

Noncompetition and Non-Disclosure Agreement dated as of November
    5, 2007 by and between Springs Global US, Inc. and Crown Crafts
    Infant Products, Inc.(1)10
.2

Warehousing Agreement dated as of November 5, 2007 by and
    between Springs Global US, Inc. and Crown Crafts Infant
    Products, Inc.(1)10
.3

Transition Services Agreement dated as of November 5, 2007 by
    and between Springs Global US, Inc. and Crown Crafts Infant
    Products, Inc.(1)10
.4

First Amendment to Financing Agreement dated as of November 5,
    2007 by and among Crown Crafts, Inc., Churchill Weavers, Inc.,
    Hamco, Inc., Crown Crafts Infant Products, Inc. and The CIT
    Group/Commercial Services, Inc.(1)10
.5

First Amendment to Mortgage, Assignment of Leases and Rents, and
    Security Agreement dated November 5, 2007 from Churchill
    Weavers, Inc. to The CIT Group/Commercial Services, Inc.(1)31
.1

Rule 13a-14(a)/15d-14(a) Certification by the Companys
    Chief Executive Officer(2)31
.2

Rule 13a-14(a)/15d-14(a) Certification by the Companys
    Chief Financial Officer(2)32
.1

Section 1350 Certification by the Companys Chief Executive
    Officer(2)32
.2

Section 1350 Certification by the Companys Chief Financial
    Officer(2)     (1)
    
    Incorporated herein by reference to Registrants Current
    Report on
    Form 8-K
    dated November 9, 2007.(2)
    
    Filed herewith. 18