##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
      Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    March 30, 2008ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934   Commission File
    No. 1-7604
 Crown Crafts, Inc.
 (Exact name of registrant as
    specified in its charter)
  Delaware

58-0678148(State of
    Incorporation)

(I.R.S. Employer
    Identification No.)916 S. Burnside Ave.
    Gonzales, Louisiana

70737(Zip Code)(Address of principal executive
    offices)   Registrants Telephone Number, including area code:
    (225) 647-9100
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Class

Name of Exchange on Which RegisteredCommon Stock, $0.01 par value

The NASDAQ Capital MarketCommon Share Purchase Rights

The NASDAQ Capital Market   Securities registered pursuant to Section 12(g) of the
    Act:
 None
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
    Large accelerated
    filer o

Accelerated filer
    o

Non-accelerated
    filer o
    (Do not check if a smaller reporting company)

Smaller reporting
    company þ   Rule 12b-2 o þ
      Documents
    Incorporated by Reference:




---





TABLE OF CONTENTS  PART IITEM 1. BusinessITEM 1A. Risk FactorsITEM 2. PropertiesITEM 3. Legal ProceedingsPART IIITEM 5. Market For Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesITEM 7. Managements Discussion and Analysis of Financial Condition and Results of OperationsITEM 8. Financial Statements and Supplementary DataITEM 9A(T). Controls and ProceduresPART IIIITEM 10. Directors, Executive Officers and Corporate GovernanceITEM 11. Executive CompensationITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersITEM 13. Certain Relationships and Related Transactions, and Director IndependenceITEM 14. Principal Accounting Fees and ServicesPART IVITEM 15. Exhibits and Financial Statement SchedulesSIGNATURESITEM 8. Financial Statements and Supplementary DataSubsidiariesConsent of Deloitte & Touche LLPRule 13a-14(a)/15d-14(a) Certification by the Chief Executive OfficerRule 13a-14(a)/15d-14(a) Certification by the Chief Financial OfficerSection 1350 Certification by the Chief Executive OfficerSection 1350 Certification by the Chief Financial Officer    Table of Contents  
  PART I
  Cautionary
    Notice Regarding Forward-Looking Statements
       
  ITEM 1.
    Business      Products
   2




---



##### Table of Contents



Product
    Design and Styling
    Raw
    Materials
      Product
    Sourcing
        Sales and
    Marketing
   3




---



##### Table of Contents



Customers
    Fiscal Year2008


2007Wal-Mart Stores, Inc.


44
%


39
%Toys R Us


18
%


23
%Target Corporation


15
%


16
%   Seasonality
    and Inventory Management
      Order
    Backlog
    Trademarks,
    Copyrights and Patents
  ® ® ® ® ® ®
  ®
     4




---



##### Table of Contents



Competition
    Government
    Regulation and Environmental Control
    Employees
    International
    Sales
   
  ITEM 1A.
    Risk
    Factors  The following risk factors as well as the other information
    contained in this report and other filings with the SEC should
    be considered in evaluating the Companys business.
    Additional risks and uncertainties not presently known to us or
    that we currently consider immaterial may also impair our
    business operations. If any of the following risks actually
    occur, operating results may be affected in future periods.
  The
    loss of one or more of the Companys key customers could
    result in a material loss of revenues.
    The
    loss of one or more of the Companys licenses could result
    in a material loss of revenues.
  ®
 5




---



##### Table of Contents



Changes
    in international trade regulations and other risks associated
    with foreign trade could adversely affect the Companys
    sourcing.
    The
    strength of our competitors may impact our ability to maintain
    and grow our sales, which could decrease the Companys
    revenues.
    The
    Companys ability to anticipate and respond to
    consumers tastes and preferences could adversely affect
    the Companys revenues.
    Customer
    pricing pressures could result in lower selling prices which
    could negatively affect the Companys operating
    results.
    Economic
    conditions could adversely affect the Companys raw
    material prices.
    Currency
    exchange rate fluctuations and other supplier related risks
    could increase the Companys expenses.
   6




---



##### Table of Contents



The
    Companys debt covenants may affect its liquidity or limit
    its ability to complete acquisitions, incur debt, make
    investments, sell assets or complete other significant
    transactions.
    The
    Companys ability to comply with its financing agreement is
    subject to future performance and other factors.
    Increases
    in interest rates could cause the Companys expenses to
    increase.
    Recalls
    or product liability claims could increase costs or reduce
    sales.
    The
    Companys success is dependent upon retaining key
    management personnel.
   
  ITEM 2.
    Properties   7




---



##### Table of Contents



Approximate


Owned/Location

Use

Square Feet


LeasedGonzales, Louisiana

Administrative and sales office


17,761


LeasedBerea, Kentucky(*)

Vacant


54,100


OwnedCompton, California

Offices, warehouse and distribution center


157,400


LeasedCompton, California

Warehouse and distribution


35,217


LeasedRogers, Arkansas

Sales office


1,625


Leased     *
    
    This property is classified as held for sale in the
    Companys consolidated balance sheet (see Note 4).   
  ITEM 3.
    Legal
    Proceedings     8




---



##### Table of Contents



PART II
 
  ITEM 5.
    Market
    For Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities      Quarter

High


LowFiscal Year 2008First Quarter

$
4.81


$
3.65Second Quarter


4.65



3.71Third Quarter


4.11



3.33Fourth Quarter


3.90



3.12Fiscal Year 2007First Quarter

$
0.70


$
0.57Second Quarter


3.54



0.65Third Quarter


4.25



3.07Fourth Quarter


6.05



3.65     Issuer
    Purchases of Equity Securities
    Total Number of


Approximate DollarShares Purchased as


Value of Shares ThatPart of Publicly


May Yet be PurchasedTotal Number of


Average Price


Announced Plans or


Under the Plans orPeriod

Shares Purchased


Paid per Share(1)


Programs(2)


Programs(2)December 31, 2007 through February 3, 2008


66,889


$
3.48



66,889


$
4,912,924February 4, 2008 through March 2, 2008


192,754


$
3.62



192,754


$
4,214,494March 3, 2008 through March 30, 2008


77,796


$
3.67



77,796


$
3,929,068Total


337,439


$
3.61



337,439


$
3,929,068     (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 9




---



##### Table of Contents



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. During the three-month
    period ended December 30, 2007, 140,353 shares were
    repurchased at an average price per share, including broker
    fees, of $3.70.  Equity
    Compensation Plans
    Number ofSecurities to be



Number ofIssued Upon

Weighted-Average

SecuritiesExercise of

Exercise Price of

Remaining AvailableOutstanding

Outstanding

for Future IssuanceOptions, Warrants

Options, Warrants

Under EquityPlan Category

and Rights

and Rights

Compensation PlansEquity compensation plans approved by security holders:2006 Omnibus Incentive Plan


320,000


$
3.47



502,000  
  ITEM 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations    Results
    of Operations
    Fiscal Year2008


2007


$ Change


% ChangeDollars in thousandsNet sales by categoryBedding, blankets and accessories

$
57,765


$
47,869


$
9,896



20.7
%Bibs and bath


17,122



21,381



(4,259
)


(19.9
)%Total net sales


74,887



69,250



5,637



8.1
%Cost of products sold


56,281



51,170



5,111



10.0
%Gross profit


18,606



18,080



526



2.9
%% of net sales


24.8
%


26.1
%Marketing and administrative expenses


10,698



9,193



1,505



16.4
%% of net sales


14.3
%


13.3
%Interest expense


775



1,362



(587
)


(43.1
)%Gain on debt refinancing






4,069



(4,069
)


(100.0
)%Other income (expense)


126



(5
)


131



(2620.0
)%Income tax expense


2,828



3,640



(812
)


(22.3
)%Income from continuing operations after taxes


4,431



7,949



(3,518
)


(44.3
)%Discontinued operations  net of taxes


(78
)


(348
)


270



(77.6
)%Net income


4,353



7,601



(3,248
)


(42.7
)%% of net sales


5.8
%


11.0
%  10




---



##### Table of Contents



Net Sales:
    Gross Profit:
  Marketing and Administrative
    Expenses:
  Interest Expense:
  Gain on Debt Refinancing:
  Financial
    Position, Liquidity and Capital Resources
   11




---



##### Table of Contents



March 30,


April 1,2008


2007Revolving line of credit

$
17,383


$
2,742Term loan


4,167



Non-interest bearing notes


4,000



4,000Original issue discount


(739
)


(966
)Capital leases


4



2324,815



5,799Less current maturities


2,504



19$
22,311


$
5,780     Revolving Line of Credit
    Term Loan
  Subordinated Notes
 12




---



##### Table of Contents



Fiscal

Revolver


Term Loan


Sub Notes


Other


Total2009





$
2,500






$
4


$
2,5042010






1,667











1,6672011

$
17,383






$
2,000







19,3832012










2,000







2,000Total

$
17,383


$
4,167


$
4,000


$
4


$
25,554       Critical
    Accounting Policies
    Revenue Recognition:
  Use of Estimates:
  Allowances Against Accounts Receivable:
  EITF 01-9,
 13




---



##### Table of Contents



Royalty Payments:
  Inventory Valuation: first-in,
      Provisions for Income Taxes:
 14




---



##### Table of Contents



Valuation of Long-Lived Assets, Identifiable Intangibles and
    Goodwill:
  Goodwill and Other
    Intangible Assets (SFAS No. 142)
  Recently-Issued
    Accounting Standards
  Accounting for Uncertainty in
    Income Taxes  an interpretation of FASB Statement
    No. 109
  Fair Value Measurements (SFAS No. 157),
  The
    Fair Value Option for Financial Assets and Financial Liabilities
    (SFAS No. 159)
  Business Combinations
 15




---



##### Table of Contents



ITEM 8.
    Financial
    Statements and Supplementary Data   
  ITEM 9A(T).
    Controls
    and Procedures  Disclosure
    Controls and Procedures
    Managements
    Annual Report on Internal Control Over Financial
    Reporting
  Rules 13a-15(f) 15d-15(f)
      Changes
    in Internal Control Over Financial Reporting
  Rule 13a-15(d)
 16




---



##### Table of Contents



PART III
 
  ITEM 10.
    Directors,
    Executive Officers and Corporate Governance  Regulation S-K Regulation S-K
 
  ITEM 11.
    Executive
    Compensation   
  ITEM 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters   
  ITEM 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence   
  ITEM 14.
    Principal
    Accounting Fees and Services   
  PART IV
 
  ITEM 15.
    Exhibits
    and Financial Statement Schedules  (a)(1).
    Financial Statements
    - Report of Independent Registered Public Accounting Firm- Consolidated Balance Sheets as of March 30, 2008 and
    April 1, 2007- Consolidated Statements of Income for the Fiscal Years Ended
    March 30, 2008 and April 1, 2007- Consolidated Statements of Changes in Shareholders
    Equity for the Fiscal Years Ended March 30, 2008 and
    April 1, 2007- Consolidated Statements of Cash Flows for the Fiscal Years
    Ended March 30, 2008 and April 1, 2007- Notes to Consolidated Financial Statements   (a)(2).
    Financial Statement Schedule
    Schedule II  Valuation and Qualifying Accounts


Page 18    17




---



##### Table of Contents



SCHEDULE II
  CROWN
    CRAFTS, INC. AND SUBSIDIARIES
  ANNUAL
    REPORT ON
    FORM 10-K
  Valuation and Qualifying AccountsColumn A

Column B


Column C


Column D


Column ECharged toBalance at


Costs and





Balance atBeginning


(Reversed from)





End ofof Period


Expenses


Deductions(1)


Period(In thousands)Accounts Receivable Valuation Accounts:Year Ended April 1, 2007Allowance for doubtful accounts

$
33


$
28


$
15


$
20Allowance for customer deductions

$
1,131


$
4,199


$
4,037


$
969Year Ended March 30, 2008Allowance for doubtful accounts

$
20


$
28


$
12


$
4Allowance for customer deductions

$
969


$
4,387


$
4,682


$
1,264Inventory Valuation Accounts:Year Ended April 1, 2007Allowance for discontinued and irregulars

$
527


$
(183
)

$



$
344Year Ended March 30, 2008Allowance for discontinued and irregulars

$
344


$
(19
)

$



$
325     (1)
    
    Deductions from the allowance for doubtful accounts represent
    the amount of accounts written off reduced by any subsequent
    recoveries. 18




---



##### Table of Contents



(a)(3).
    Exhibits
  Regulation S-K
  ExhibitNumber



Description of Exhibits2
.1



Asset Purchase Agreement dated as of November 5, 2007 by
    and between Springs Global US, Inc. and Crown Crafts Infant
    Products, Inc.(8)3
.1



Amended and Restated Certificate of Incorporation of the
    Company(3)3
.2



Bylaws of the Company(3)4
.1



Instruments defining the rights of security holders are
    contained in the Amended and Restated Certificate of
    Incorporation of the Company(3)4
.2



Instruments defining the rights of security holders are
    contained in the Bylaws of the Company(3)4
.3



Amended and Restated Rights Agreement dated as of August 6,
    2003 between the Company and SunTrust Bank, as Rights Agent,
    including the Form of Right Certificate
    (Exhibit A) and the Summary of Rights to Purchase
    Common Shares (Exhibit B).(2)4
.4



Amendment No. 1 to Amended and Restated Rights Agreement
    dated as of July 12, 2006 between the Company and
    Computershare Investor Services, LLC(5)4
.5



Crown Crafts, Inc. 2006 Omnibus Incentive Plan.(6)4
.6



Form of Incentive Stock Option Agreement.(6)4
.7



Form of Non-Qualified Stock Option Agreement (Employees).(6)4
.8



Form of Non-Qualified Stock Option Agreement (Directors).(6)4
.9



Form of Restricted Stock Grant Agreement (Form A).(6)4
.10



Form of Restricted Stock Grant Agreement (Form B).(6)4
.11



Amendment No. 2 to Amended and Restated Rights Agreement
    dated as of August 30, 2006 between the Company and
    Computershare Investor Services, LLC(7)10
.1



Employment Agreement dated July 23, 2001 by and between the
    Company and E. Randall Chestnut(1)10
.2



Amended and Restated Severance Protection Agreement dated
    April 20, 2004 by and between the Company and E. Randall
    Chestnut(4)10
.3



Amended and Restated Employment Agreement dated April 20,
    2004 by and between the Company and Amy Vidrine Samson(4)10
.4



Amended and Restated Employment Agreement dated April 20,
    2004 by and between the Company and Nanci Freeman(4)10
.5



Financing Agreement dated as of July 11, 2006 by and among
    the Company, Churchill Weavers, Inc., Hamco, Inc., Crown Crafts
    Infant Products, Inc. and The CIT Group/Commercial Services,
    Inc.(5)10
.6



Stock Pledge Agreement dated as of July 11, 2006 by and
    among the Company, Churchill Weavers, Inc., Hamco, Inc., Crown
    Crafts Infant Products, Inc. and The CIT Group/Commercial
    Services, Inc.(5)10
.7



Mortgage, Assignment of Leases and Rents, Fixture Filing and
    Security Agreement dated July 11, 2006 from Churchill
    Weavers, Inc. to The CIT Group/Commercial Services, Inc.(5)10
.8



Secured Subordinated Promissory Note dated July 11, 2006
    issued by the Company to Wachovia Bank, National Association(5)10
.9



Secured Subordinated Promissory Note dated July 11, 2006
    issued by the Company to Banc of America Strategic Solutions,
    Inc.(5)10
.10



Secured Subordinated Promissory Note dated July 11, 2006
    issued by the Company to The Prudential Insurance Company of
    America(5)10
.11



Security Agreement dated as of July 11, 2006 by and among
    the Company, Churchill Weavers, Inc., Hamco, Inc., Crown Crafts
    Infant Products, Inc. and Wachovia Bank, National Association,
    as Agent(5)10
.12



Mortgage, Assignment of Leases and Rents, Fixture Filing and
    Security Agreement dated July 11, 2006 from Churchill
    Weavers, Inc. to Wachovia Bank, National Association, as Agent(5)10
.13



Noncompetition and Non-Disclosure Agreement dated as of
    November 5, 2007 by and between Springs Global US, Inc. and
    Crown Crafts Infant Products, Inc.(8) 19




---



##### Table of Contents



ExhibitNumber



Description of Exhibits10
.14



Warehousing Agreement dated as of November 5, 2007 by and
    between Springs Global US, Inc. and Crown Crafts Infant
    Products, Inc.(8)10
.15



Transition Services Agreement dated as of November 5, 2007
    by and between Springs Global US, Inc. and Crown Crafts Infant
    Products, Inc.(8)10
.16



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.(8)10
.17



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.(8)10
.18



Letter Agreement dated as of January 29, 2008 between the
    Company and Wellington Management Company, LLP(9)14
.1



Code of Ethics(4)21




Subsidiaries of the Company(10)23




Consent of Deloitte & Touche LLP(10)31
.1



Rule 13a-14(a)/15d-14(a)
    Certification by the Companys Chief Executive Officer(10)31
.2



Rule 13a-14(a)/15d-14(a)
    Certification by the Companys Chief Financial Officer(10)32
.1



Section 1350 Certification by the Companys Chief
    Executive Officer(10)32
.2



Section 1350 Certification by the Companys Chief
    Financial Officer(10)     (1)
    
    Incorporated herein by reference to Registrants Current
    Report on
    Form 8-K
    dated July 23, 2001.(2)
    
    Incorporated herein by reference to Registrants
    Registration Statement on
    Form 8-A/A
    dated August 13, 2003.(3)
    
    Incorporated herein by reference to Registrants Quarterly
    Report on
    Form 10-Q
    for the quarter ended December 28, 2003.(4)
    
    Incorporated herein by reference to Registrants Annual
    Report on
    Form 10-K
    for the fiscal year ended March 28, 2004.(5)
    
    Incorporated herein by reference to Registrants Current
    Report on
    Form 8-K
    dated July 17, 2006.(6)
    
    Incorporated herein by reference to Registrants
    Registration Statement on
    Form S-8
    dated August 24, 2006.(7)
    
    Incorporated herein by reference to Registrants Current
    Report on Form
    8-K dated
    August 30, 2006.(8)
    
    Incorporated herein by reference to Registrants Current
    Report on Form
    8-K dated
    November 9, 2007.(9)
    
    Incorporated herein by reference to Registrants Current
    Report on Form
    8-K dated
    January 29, 2008.(10)
    
    Filed herewith. 20




---



##### Table of Contents



SIGNATURES
    CROWN CRAFTS, INC.
  By:
    /s/  E.
    Randall Chestnut   Chief Executive Officer
    Signatures

Title

Date/s/  E.
    Randall ChestnutE.
    Randall Chestnut

Chief Executive Officer, 
    Director

June 10, 2008/s/  William
    T. Deyo, Jr.William
    T. Deyo, Jr.

Director

June 10, 2008/s/  Sidney
    KirschnerSidney
    Kirschner

Director

June 10, 2008/s/  Zenon
    S. NieZenon
    S. Nie

Director

June 10, 2008/s/  Donald
    RatajczakDonald
    Ratajczak

Director

June 10, 2008/s/  James
    A. VerbruggeJames
    A. Verbrugge

Director

June 10, 2008/s/  Frederick
    G. WassermanFrederick
    G. Wasserman

Director

June 10, 2008/s/  Amy
    Vidrine SamsonAmy
    Vidrine Samson

Chief Financial Officer, 
    Chief Accounting Officer

June 10, 2008  21




---



##### Table of Contents



ITEM 8.
    Financial
    Statements and Supplementary Data  INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
  PageAudited Financial Statements:Report of Independent Registered Public
    Accounting Firm


F-1Consolidated Balance Sheets as of March 30,
    2008 and April 1, 2007


F-2Consolidated Statements of Income for the Fiscal
    Years Ended March 30, 2008 and April 1, 2007


F-3Consolidated Statements of Changes in
    Shareholders Equity for the Fiscal Years Ended
    March 30, 2008 and April 1, 2007


F-4Consolidated Statements of Cash Flows for the
    Fiscal Years Ended March 30, 2008 and April 1, 2007


F-5Notes to Consolidated Financial Statements


F-6  22




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM               F-1




---



##### Table of Contents



CROWN
    CRAFTS, INC. AND SUBSIDIARIES
  CONSOLIDATED BALANCE SHEETS
 March 30, 2008 and April 1, 2007
  March 30, 2008


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

$
7,930


$
33Accounts receivable (net of allowances of $1,268 at
    March 30, 2008 and $989 at April 1, 2007):Due from factor


16,081



11,764Other


2,197



1,121Inventories, net


13,777



7,145Prepaid expenses


1,064



1,313Assets held for sale


663



Deferred income taxes


885



2,408Total current assets


42,597



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


203



1,322Machinery and equipment


2,241



2,502Furniture and fixtures


742



6543,186



4,478Less accumulated depreciation


2,597



3,037Property, plant and equipment  net


589



1,441Other assets:Goodwill, net


22,884



22,884Intangible assets, net


7,276



617Other


131



190Total other assets


30,291



23,691Total Assets

$
73,477


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

$
5,614


$
3,552Accrued wages and benefits


1,179



1,300Accrued royalties


1,023



671Other accrued liabilities


711



73Current maturities of long-term debt


2,504



19Total current liabilities


11,031



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


22,311



5,780Deferred income taxes


402



698Total non-current liabilities


22,713



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 March 30, 2008 and 10,003,692 shares at
    April 1, 2007


100



100Additional paid-in capital


39,247



38,619Treasury stock  at cost 
    562,647 shares at March 30, 2008


(2,071
)


Retained earnings (accumulated deficit)


2,457



(1,896
)Total shareholders equity


39,733



36,823Total Liabilities and Shareholders Equity

$
73,477


$
48,916    F-2




---



##### Table of Contents



CROWN
    CRAFTS, INC. AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF INCOME
 Fiscal years ended March 30, 2008 and April 1,
    2007
   2008


2007(Amounts in thousands, except per share amounts)Net sales

$
74,887


$
69,250Cost of products sold


56,281



51,170Gross profit


18,606



18,080Marketing and administrative expenses


10,698



9,193Income from operations


7,908



8,887Other income (expense):Interest expense


(775
)


(1,362
)Gain on debt refinancing






4,069Other  net


126



(5
)Income before income taxes


7,259



11,589Income tax expense


2,828



3,640Income from continuing operations after income taxes


4,431



7,949Loss from discontinued operations  net of income taxes


(78
)


(348
)Net income

$
4,353


$
7,601Weighted average shares outstanding  basic


9,888



9,782Weighted average shares outstanding  diluted


10,165



10,038Basic earnings per share:Income from continuing operations

$
0.45


$
0.81Loss from discontinued operations


(0.01
)


(0.03
)Total basic earnings per share

$
0.44


$
0.78Diluted earnings per share:Income from continuing operations

$
0.44


$
0.79Loss from discontinued operations


(0.01
)


(0.03
)Total diluted earnings per share

$
0.43


$
0.76    F-3




---



##### Table of Contents



CROWN
    CRAFTS, INC. AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF CHANGES IN
    SHAREHOLDERS EQUITY
 Fiscal years ended March 30, 2008 and April 1,
    2007
  RetainedCommon Shares


Treasury Shares


Additional


Earnings


TotalNumber of





Number of





Paid-in


(Accumulated


ShareholdersShares


Amount


Shares


Amount


Capital


Deficit)


Equity(Dollar amounts in thousands)Balances  April 2, 2006


9,505,937


$
95






$



$
38,244


$
(9,497
)

$
28,842Issuance of Shares


497,755



5











75







80Stock-based Compensation


















300







300Net income






















7,601



7,601Balances  April 1, 2007


10,003,692



100











38,619



(1,896
)


36,823Issuance of Shares


36,250















40







40Stock-based Compensation


















588







588Purchase of Treasury Stock










(562,647
)


(2,071
)










(2,071
)Net income






















4,353



4,353Balances  March 30, 2008


10,039,942


$
100



(562,647
)

$
(2,071
)

$
39,247


$
2,457


$
39,733    F-4




---



##### Table of Contents



CROWN
    CRAFTS, INC. AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF CASH FLOWS
 Fiscal years ended March 30, 2008 and April 1,
    2007
  2008


2007(Amounts in thousands)Operating activities:Net income

$
4,353


$
7,601Adjustments to reconcile net income to net cash provided by
    operating activities:Depreciation of property, plant and equipment


349



452Goodwill write-off






90Amortization of intangibles


784



17Deferred income taxes


1,227



2,677Loss (gain) on sale of property, plant and equipment


9



(136
)Discount accretion


227



349Gain on debt refinancing






(4,069
)Stock-based compensation


588



300Changes in assets and liabilities:Accounts receivable


(5,539
)


1,572Inventories, net


(2,551
)


2,597Prepaid expenses


249



(136
)Other assets


51



(110
)Accounts payable


2,062



41Accrued liabilities


869



176Net cash provided by operating activities


2,678



11,421Investing activities:Capital expenditures


(188
)


(381
)Acquisition costs to purchase Kimberly Grant brand






(600
)Acquisition costs to purchase baby products line from Springs
    Global


(356
)


Proceeds from disposition of assets


19



162Net cash used in investing activities


(525
)


(819
)Financing activities:Retirement of debt






(17,077
)Payments on long-term debt


(852
)


(36
)Proceeds under revolving line of credit, net


8,627



2,744Debt issuance costs






(70
)Purchase of treasury stock


(2,071
)


Issuance of common stock


40



80Net cash provided by (used in) financing activities


5,744



(14,359
)Net increase (decrease) in cash and cash equivalents


7,897



(3,757
)Cash and cash equivalents at beginning of period


33



3,790Cash and cash equivalents at end of period

$
7,930


$
33Supplemental cash flow information:Income taxes paid

$
1,177


$
738Interest paid


475



1,121Noncash 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


$
    F-5




---



##### Table of Contents



Crown
    Crafts, Inc. and Subsidiaries
  Notes
    to Consolidated Financial Statements
 Fiscal Years Ended March 30, 2008 and April 1,
    2007
  Note 1 
    Description
    of Business    Note 2 
    Summary
    of Significant Accounting Policies  Basis of Presentation:
    Cash and Cash Equivalents:
  Use of Estimates:
  Financial Instruments:
  
    Cash and cash equivalents, accounts receivable and accounts
    payable  For those short term instruments, the
    carrying value is a reasonable estimate of fair value.
    Long term debt  Rates estimated for debt with similar
    terms and remaining maturities to companies in a similar
    financial situation as the Company are used to estimate the fair
    value of existing debt. The carrying value is a reasonable
    estimate of fair value.  Revenue Recognition:
  Allowances Against Accounts Receivable:
  EITF 01-9,
 F-6




---



##### Table of Contents



Crown
    Crafts, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Inventory Valuation: first-in,
  Royalty Payments:
  Depreciation and Amortization:
  Impairment of Long-lived Assets, Identifiable Intangibles and
    Goodwill:
  Goodwill and Other
    Intangible Assets (SFAS No. 142)
  Provisions for Income Taxes:
  Segments and Related Information: Disclosures about Segments of
    an Enterprise and Related Information
 F-7




---



##### Table of Contents



Crown
    Crafts, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Earnings Per Share: Earnings per Share
  2008


2007(Amounts in thousands, except per share data)Income from continuing operations

$
4,431


$
7,949Loss from discontinued operations


(78
)


(348
)Net income, basic and diluted

$
4,353


$
7,601Weighted average number of shares outstandingBasic


9,888



9,782Effect of dilutive securities


277



256Diluted


10,165



10,038Earnings per common shareBasicContinuing operations

$
0.45


$
0.81Discontinued operations


(0.01
)


(0.03
)Total

$
0.44


$
0.78Earnings per common shareDilutedContinuing operations

$
0.44


$
0.79Discontinued operations


(0.01
)


(0.03
)Total

$
0.43


$
0.76   Recently Issued Accounting Standards: Accounting for Uncertainty in
    Income Taxes  an interpretation of FASB Statement
    No. 109
  Fair Value Measurements (SFAS No. 157),
 F-8




---



##### Table of Contents



Crown
    Crafts, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    The
    Fair Value Option for Financial Assets and Financial Liabilities
    (SFAS No. 159)
  Business Combinations
  Note 3 
    Acquisitions  Kimberly Grant:
    AggregateGross


Estimated





AmortizationCarrying


Useful


Accumulated


Expense inAmount


Life


Amortization


FY 2008Tradename

$
466,387



15 years


$
38,872


$
31,092Existing designs


35,924



1 year



35,924



35,924Non-compete


97,689



15 years



8,094



6,516Totals

$
600,000






$
82,890


$
73,532   Springs Global:
 F-9




---



##### Table of Contents



Crown
    Crafts, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    AggregateGross


Estimated





AmortizationCarrying


Useful


Accumulated


Expense inAmount


Life


Amortization


FY 2008Licenses & existing designs

$
1,655,188



2 years


$
344,834


$
344,834Licenses & future designs


1,846,822



4 years



192,397



192,397Non-compete


114,981



4 years



11,996



11,996Customer relationships


3,817,538



10 years



159,043



159,043Totals

$
7,434,529






$
708,270


$
708,270       2009


2010


2011


2012


2013Kimberly Grant tradename

$
31,092


$
31,092


$
31,092


$
31,092


$
31,092Kimberly Grant non-compete


6,513



6,513



6,513



6,513



6,513Springs Global licenses & existing designs


827,594



482,760











Springs Global licenses & future designs


461,706



461,706



461,706



269,307



Springs Global non-compete


28,745



28,745



28,745



16,750



Springs Global customer relationships


381,754



381,754



381,754



381,754



381,754Totals

$
1,737,404


$
1,392,570


$
909,810


$
705,416


$
419,359   and/or
   F-10




---



##### Table of Contents



Crown
    Crafts, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
      2008


2007(Unaudited)


(Unaudited)Net sales

$
92,914


$
106,257Total operating expenses

$
86,043


$
96,346Income from continuing operations

$
3,644


$
9,261Earnings per share:Basic

$
0.37


$
0.95Diluted

$
0.36


$
0.92   Note 4 
    Discontinued
    Operations      Note 5 
    Inventories    March 30, 2008


April 1, 2007Raw materials

$
40


$
15Work in process






12Finished goods


13,737



7,118Total inventory

$
13,777


$
7,145    F-11




---



##### Table of Contents



Crown
    Crafts, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Note 6 
    Financing
    Arrangements  Factoring Agreement:
  Notes Payable and Other Credit Facilities:
  March 30, 2008


April 1, 2007Revolving line of credit

$
17,383


$
2,742Term loan


4,167



Non-interest bearing notes


4,000



4,000Original issue discount


(739
)


(966
)Capital leases


4



2324,815



5,799Less current maturities


2,504



19$
22,311


$
5,780     Revolving Line of Credit
    Term Loan
  Subordinated Notes
 F-12




---



##### Table of Contents



Crown
    Crafts, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Fiscal

Revolver


Term Loan


Sub Notes


Other


Total2009





$
2,500






$
4


$
2,5042010






1,667











1,6672011

$
17,383






$
2,000







19,3832012










2,000







2,000Total

$
17,383


$
4,167


$
4,000


$
4


$
25,554     Note 7 
    Related
    Party Transactions    Note 8 
    Income
    Taxes    2008


2007(In thousands)Current:Federal

$
1,159


$
State and local


442



963Total current


1,601



963Deferred (primarily Federal)


1,227



2,677Total expense

$
2,828


$
3,640  F-13




---



##### Table of Contents



Crown
    Crafts, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    2008


2007(In thousands)Assets/(Liabilities)Deferred tax asset  current:Employee benefit accruals

$
440


$
491Accounts receivable and inventory reserves


445



355Net operating loss carry forward






1,220Other






342Net deferred tax asset


885



2,408Deferred tax asset (liability)  non-current:Goodwill


(728
)


(831
)Property, plant and equipment


(15
)


15Other


341



118Net deferred tax asset (liability)  non-current


(402
)


(698
)Net deferred income tax asset

$
483


$
1,710       2008


2007(In thousands)Tax expense at statutory rate (34)%

$
2,468


$
3,940State income taxes, net of Federal income tax benefit


292



636Nondeductible expenses


11



79Nontaxable income






(1,061
)Other


57



46Income tax expense (benefit)

$
2,828


$
3,640   Note 9 
    Retirement
    Plans    Note 10 
    Stock-based
    Compensation   F-14




---



##### Table of Contents



Crown
    Crafts, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Share-Based Payment Accounting for Stock-Based Compensation Accounting for Stock Issued to Employees
      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 March 30, 2008

$
2.15



651,330Exercisable at March 30, 2008

$
1.41



431,000  F-15




---



##### Table of Contents



Crown
    Crafts, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Options Issued


Options Issuedto Employees


to 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
%     Cost of


Marketing &Products


Administrative


TotalSold


Expenses


ExpenseOptions granted in fiscal year 2007

$
50


$
158


$
208Options granted in fiscal year 2008


23



59



82Unvested options at April 2, 2007






3



3Total stock option compensation

$
73


$
220


$
293     Weighted Avg.





Weighted Avg.Number


Weighted Avg.


Exercise Price


Number of


Exercise Priceof Options


Remaining


of Options


Shares


of SharesRange of Exercise Prices

Outstanding


Contractual Life


Outstanding


Exercisable


Exercisable$0.18-$0.66


107,830



4.96


$
0.60



104,500


$
0.60$0.71


133,250



4.41


$
0.71



133,250


$
0.71$1.06-$2.31


90,250



2.22


$
1.40



90,250


$
1.40$3.15


208,000



8.22


$
3.15



103,000


$
3.15$3.90-$4.08


112,000



8.85


$
4.08






$
651,330











431,000     Non-vested Stock:
   F-16




---



##### Table of Contents



Crown
    Crafts, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Note 11 
    Treasury
    Stock    Note 12 
    Major
    Customers    Fiscal Year2008


2007Wal-Mart Stores, Inc.


44
%


39
%Toys R Us


18
%


23
%Target Corporation


15
%


16
%   Note 13 
    Commitments
    and Contingencies     F-17