##### 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
    29, 2009ORo

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-T o o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
  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:




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PART I
  Cautionary
    Notice Regarding Forward-Looking Statements
        ITEM 1.
    Business  Description
    of Business
       2




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Products
    Sales and
    Marketing
      International
    Sales
    Seasonality
    and Inventory Management
    Product
    Design and Styling
    Raw
    Materials
   3




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Product
    Sourcing
        Customers
    Fiscal Year2009


2008Wal-Mart Stores, Inc.


47
%


44
%Toys R Us


21
%


18
%Target Corporation


10
%


15
%   Order
    Backlog
    Competition
   4




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##### Table of Contents



Government
    Regulation and Environmental Control
    Employees
    Trademarks,
    Copyrights and Patents
  ® ® ®
  Licensed
    Products
  ®
      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.
   5




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The
    loss of one or more of the Companys licenses could result
    in a material loss of revenues.
    Economic
    conditions could adversely affect the Companys raw
    material prices.
    The
    Companys inability to anticipate and respond to
    consumers tastes and preferences could adversely affect
    the Companys revenues.
    The
    Companys success is dependent upon retaining key
    management personnel.
    The
    Companys business is impacted by general economic
    conditions and related uncertainties affecting markets in which
    the Company operates.
    Currency
    exchange rate fluctuations and other supplier-related risks
    could increase the Companys expenses.
   6




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Changes
    in international trade regulations and other risks associated
    with foreign trade could adversely affect the Companys
    sourcing.
    The
    Companys ability to comply with its financing agreement is
    subject to future performance and other factors.
    The
    Companys debt covenants may affect its liquidity or limit
    its ability to pursue acquisitions, incur debt, make
    investments, sell assets or complete other significant
    transactions.
    Increases
    in interest rates could cause the Companys expenses to
    increase.
    The
    strength of the Companys competitors may impact the
    Companys ability to maintain and grow its sales, which
    could decrease the Companys revenues.
    Recalls
    or product liability claims could increase costs or reduce
    sales.
   7




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Customer
    pricing pressures could result in lower selling prices, which
    could negatively affect the Companys operating
    results.
    ITEM 2.
    Properties      Approximate


Owned/Location

Use

Square Feet


LeasedGonzales, Louisiana

Administrative and sales office


17,761


LeasedBerea, Kentucky(*)

Vacant


53,056


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
    Business in Item 1).    ITEM 3.
    Legal
    Proceedings   8




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

High


LowFiscal Year 2009First Quarter

$
4.08


$
3.23Second Quarter


3.97



3.29Third Quarter


3.35



2.15Fourth Quarter


2.65



1.77Fiscal Year 2008First Quarter

$
4.81


$
3.65Second Quarter


4.65



3.71Third Quarter


4.11



3.33Fourth Quarter


3.90



3.12     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


516,000


$
3.51



275,000  9




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ITEM 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations    Results
    of Operations
    Fiscal Year2009


2008


Change


ChangeNet sales by categoryBedding, blankets and accessories

$
71,892


$
57,765


$
14,127



24.5
%Bibs and bath


15,506



17,122



(1,616
)


(9.4
)%Total net sales


87,398



74,887



12,511



16.7
%Cost of products sold


68,488



56,281



12,207



21.7
%Gross profit


18,910



18,606



304



1.6
%% of net sales


21.6
%


24.8
%Marketing and administrative expenses


10,954



10,698



256



2.4
%% of net sales


12.5
%


14.3
%Goodwill impairment charge


22,884







22,884



100.0
%Interest expense


1,089



775



314



40.5
%Other income (expense)


108



126



(18
)


(14.3
)%Income tax expense


1,133



2,828



(1,695
)


(59.9
)%(Loss) income from continuing operations after taxes


(17,042
)


4,431



(21,473
)


(484.6
)%Discontinued operations  net of taxes


(44
)


(78
)


34



(43.6
)%Net (loss) income


(17,086
)


4,353



(21,439
)


(492.5
)%% of net sales


(19.5
)%


5.8
%   Net Sales:
    Gross Profit:
  Marketing and Administrative
    Expenses:
 10




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Goodwill Impairment Charge:
  Interest Expense:
    Financial
    Position, Liquidity and Capital Resources
     11




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March 29,


March 30,2009


2008Revolving line of credit

$
20,062


$
17,383Term loan


1,667



4,167Non-interest bearing notes


4,000



4,000Original issue discount


(494
)


(739
)Capital leases






425,235



24,815Less current maturities


1,667



2,504$
23,568


$
22,311     Revolving Line of Credit
    Term Loan
  Subordinated Notes
    FiscalYear

Revolver


Term Loan


Sub Notes


Total2010

$



$
1,667


$



$
1,6672011


20,062







2,000



22,0622012










2,000



2,000Total

$
20,062


$
1,667


$
4,000


$
25,729    12




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Critical
    Accounting Policies and Estimates
    Use of Estimates:
    Revenue Recognition:
  Allowances Against Accounts Receivable:
  No. 01-9 ,
    Accounting for Consideration Given by a Vendor to a Customer
    (Including a Reseller of the Vendors Products) (EITF 01-9),
   13




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Royalty Payments:
  Inventory Valuation: first-in,
      Provisions for Income Taxes:
    Accounting for
    Uncertainty in Income Taxes  an interpretation of
    FASB Statement of Financial Accounting Standards
 14




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No. 109
  Valuation of Long-Lived Assets, Identifiable Intangibles and
    Goodwill:
      Recently-Issued
    Accounting Standards
  Recently Issued Accounting Standards: Fair
    Value Measurements , No. 157-2,
 15




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The
    Fair Value Option for Financial Assets and Financial Liabilities
  Business Combinations
  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)
   16




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Changes
    in Internal Control Over Financial Reporting
  Rule 13a-15(d)
  PART III
  ITEM 10.
    Directors,
    Executive Officers and Corporate Governance  Regulation S-K 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   17




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PART IV
  ITEM 15.
    Exhibits
    and Financial Statement Schedules  (a)(1).
    Financial Statements
        -
    Consolidated Statements of Income for the Fiscal Years Ended
    March 29, 2009 and March 30, 2008-
    Consolidated Statements of Changes in Shareholders Equity
    for the Fiscal Years Ended March 29, 2009 and
    March 30, 2008-
    Consolidated Statements of Cash Flows for the Fiscal Years Ended
    March 29, 2009 and March 30, 2008-
    Notes to Consolidated Financial Statements  (a)(2).
    Financial Statement Schedule
    Schedule II  Valuation and Qualifying Accounts


Page 19    18




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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 March 30, 2008Allowance for doubtful accounts

$
20


$
28


$
12


$
4Allowance for customer deductions

$
969


$
4,387


$
4,682


$
1,264Year Ended March 29, 2009Allowance for doubtful accounts

$
4


$
(5
)

$
1


$
0Allowance for customer deductions

$
1,264


$
5,002


$
4,685


$
1,581Inventory Valuation Accounts:Year Ended March 30, 2008Allowance for discontinued and irregulars

$
344


$
(19
)

$



$
325Year Ended March 29, 2009Allowance for discontinued and irregulars

$
325


$
86


$



$
411     (1)
    
    Deductions from the allowance for doubtful accounts represent
    the amount of accounts written off reduced by any subsequent
    recoveries. 19




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##### 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)4
.12



Amendment No. 3 to Amended and Restated Rights Agreement dated
    as of April 14, 2009 between the Company and Computershare Trust
    Company, N.A.(13)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) 20




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##### Table of Contents



ExhibitNumber



Description of Exhibits10
.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)10
.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)10
.19



Governance and Standstill Agreement dated July 1, 2008 by and
    among Crown Crafts, Inc., Wynnefield Partners Small Cap Value,
    L.P., Wynnefield Partners Small Cap Value, L.P. I,
    Wynnefield Partners Small Cap Value Offshore Fund, Ltd., Channel
    Partnership II, L.P., Wynnefield Capital Management, LLC,
    Wynnefield Capital, Inc., Nelson Obus and Joshua Landes.(10)10
.20



Employment Agreement dated November 6, 2008 by and between the
    Company and Olivia W. Elliott(11)10
.21



First Amendment to Employment Agreement dated November 6, 2008
    by and between the Company and E. Randall Chestnut.(12)10
.22



First Amendment to Amended and Restated Severance Protection
    Agreement dated November 6, 2008 by and between the Company and
    E. Randall Chestnut.(12)10
.23



First Amendment to Amended and Restated Employment Agreement
    dated November 6, 2008 by and between the Company and Amy
    Vidrine Samson.(12)10
.24



First Amendment to Amended and Restated Employment Agreement
    dated November 6, 2008 by and between the Company and Nanci
    Freeman.(12)14
.1



Code of Ethics.(4)21
.1



Subsidiaries of the Company.(14)23
.1



Consent of KPMG LLP.(14)23
.2



Consent of Deloitte & Touche LLP.(14)31
.1



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



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



Section 1350 Certification by the Companys Chief Executive
    Officer.(14)32
.2



Section 1350 Certification by the Companys Chief Financial
    Officer.(14)     (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. 21




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##### Table of Contents



(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)
    
    Incorporated herein by reference to Registrants Current
    Report on
    Form 8-K
    dated July 1, 2008.(11)
    
    Incorporated herein by reference to Registrants Current
    Report on
    Form 8-K/A
    dated November 7, 2008.(12)
    
    Incorporated herein by reference to Registrants Current
    Report on
    Form 8-K
    dated November 7, 2008.(13)
    
    Incorporated herein by reference to Registrants Current
    Report on
    Form 8-K
    dated April 16, 2009.(14)
    
    Filed herewith. 22




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##### Table of Contents



SIGNATURES
    CROWN CRAFTS, INC.
  By:
    /s/  E.
    Randall Chestnut   Chairman of the Board, President and Chief
 Executive Officer
    Signatures

Title

Date/s/  E.
    Randall ChestnutE.
    Randall Chestnut

Chairman of the Board, 
    President and Chief Executive Officer
    (Principal Executive Officer)

June 23, 2009/s/  William
    T. Deyo, Jr.William
    T. Deyo, Jr.

Director

June 23, 2009/s/  Sidney
    KirschnerSidney
    Kirschner

Director

June 23, 2009/s/  Zenon
    S. NieZenon
    S. Nie

Director

June 23, 2009/s/  Donald
    RatajczakDonald
    Ratajczak

Director

June 23, 2009/s/  Joseph
    KlingJoseph
    Kling

Director

June 23, 2009/s/  Frederick
    G. WassermanFrederick
    G. Wasserman

Director

June 23, 2009/s/  Olivia
    W. ElliottOlivia
    W. Elliott

Vice President and Chief Financial Officer
    (Principal Financial Officer and 
    Principal Accounting Officer)

June 23, 2009  23




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##### 



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


F-1Consolidated Balance Sheets as of March 29,
    2009 and March 30, 2008


F-3Consolidated Statements of Income for the Fiscal
    Years Ended March 29, 2009 and March 30, 2008


F-4Consolidated Statements of Changes in
    Shareholders Equity for the Fiscal Years Ended
    March 29, 2009 and March 30, 2008


F-5Consolidated Statements of Cash Flows for the
    Fiscal Years Ended March 29, 2009 and March 30,
    2008


F-6Notes to Consolidated Financial Statements


F-7EX-21.1EX-23.1EX-23.2EX-31.1EX-31.2EX-32.1EX-32.2   24




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  
        KPMG
    LLP
   F-1




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  
        DELOITTE &
    TOUCHE LLP
   F-2




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##### Table of Contents



CROWN
    CRAFTS, INC. AND SUBSIDIARIES
 CONSOLIDATED
    BALANCE SHEETS
    March 29, 2009 and March 30, 2008  March 29, 2009


March 30, 2008(Amounts in thousands, exceptshare and per share amounts)ASSETSCurrent assets:Cash and cash equivalents

$
15,249


$
7,930Accounts receivable (net of allowances of $1,581 at
    March 29, 2009 and $1,268 at March 30, 2008):Due from factor


17,341



16,081Other


1,613



2,197Inventories, net


11,751



13,777Prepaid expenses


1,070



1,064Assets held for sale


550



663Deferred income taxes


921



885Total current assets


48,495



42,597Property, plant and equipment  at cost:Vehicle


44



Land, buildings and improvements


205



203Machinery and equipment


2,476



2,241Furniture and fixtures


765



7423,490



3,186Less accumulated depreciation


2,816



2,597Property, plant and equipment  net


674



589Other assets:Goodwill, net






22,884Intangible assets, net


5,515



7,276Deferred income taxes


1,655



Other


188



131Total other assets


7,358



30,291Total Assets

$
56,527


$
73,477LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
6,118


$
5,614Accrued wages and benefits


894



1,179Accrued royalties


1,056



1,023Other accrued liabilities


813



711Current maturities of long-term debt


1,667



2,504Total current liabilities


10,548



11,031Non-current liabilities:Long-term debt


23,568



22,311Deferred income taxes






402Total non-current liabilities


23,568



22,713Commitments and contingencies






Shareholders equity:Preferred stock  $0.01 par value per share;
    Authorized 1,000,000 shares; No shares issued at
    March 29, 2009 and March 30, 2008






Common stock  $0.01 par value per share;
    Authorized 74,000,000 shares; Issued 10,098,441 shares
    at March 29, 2009 and 10,039,942 shares at
    March 30, 2008


101



100Additional paid-in capital


39,995



39,247Treasury stock  at cost 
    889,051 shares at March 29, 2009 and
    562,647 shares at March 30, 2008


(3,056
)


(2,071
)Retained earnings (accumulated deficit)


(14,629
)


2,457Total shareholders equity


22,411



39,733Total Liabilities and Shareholders Equity

$
56,527


$
73,477    F-3




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##### Table of Contents



CROWN
    CRAFTS, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF INCOME
 Fiscal
    years ended March 29, 2009 and March 30,
    2008
  2009


2008(Amounts in thousands, except per share amounts)Net sales

$
87,398


$
74,887Cost of products sold


68,488



56,281Gross profit


18,910



18,606Marketing and administrative expenses


10,954



10,698Goodwill impairment charge


22,884



(Loss) income from operations


(14,928
)


7,908Other income (expense):Interest expense


(1,089
)


(775
)Other  net


108



126(Loss) income before income taxes


(15,909
)


7,259Income tax expense


1,133



2,828(Loss) income from continuing operations after income taxes


(17,042
)


4,431Loss from discontinued operations  net of income taxes


(44
)


(78
)Net (loss) income

$
(17,086
)

$
4,353Weighted average shares outstanding  basic


9,317



9,888Weighted average shares outstanding  diluted


9,317



10,165Basic (loss) earnings per share:(Loss) income from continuing operations

$
(1.83
)

$
0.45Loss from discontinued operations






(0.01
)Total basic (loss) earnings per share

$
(1.83
)

$
0.44Diluted (loss) earnings per share:(Loss) income from continuing operations

$
(1.83
)

$
0.44Loss from discontinued operations






(0.01
)Total diluted (loss) earnings per share

$
(1.83
)

$
0.43    F-4




---



##### Table of Contents



CROWN
    CRAFTS, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
 Fiscal
    years ended March 29, 2009 and March 30,
    2008
  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 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



39,733Issuance of shares


58,499



1











19







20Stock-based compensation


















707







707Tax effect of stock-based compensation


















22







22Purchase of treasury stock










(326,404
)


(985
)










(985
)Net loss






















(17,086
)


(17,086
)Balances  March 29, 2009


10,098,441


$
101



(889,051
)

$
(3,056
)

$
39,995


$
(14,629
)

$
22,411    F-5




---



##### Table of Contents



CROWN
    CRAFTS, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
 Fiscal
    years ended March 29, 2009 and March 30,
    2008
  2009


2008(Amounts in thousands)Operating activities:Net (loss) income

$
(17,086
)

$
4,353Adjustments to reconcile net income to net cash provided by
    operating activities:Depreciation of property, plant and equipment


285



349Amortization of intangibles


1,745



784Impairment charge  goodwill


22,884



Impairment charge  assets held for sale


94



Deferred income taxes


(2,072
)


1,227(Gain) loss on sale of property, plant and equipment


(65
)


9Discount accretion


244



227Stock-based compensation


707



588Changes in assets and liabilities:Accounts receivable


(618
)


(5,539
)Inventories, net


2,026



(2,551
)Prepaid expenses


(6
)


249Other assets


(99
)


51Accounts payable


504



2,062Accrued liabilities


(150
)


869Net cash provided by operating activities


8,393



2,678Investing activities:Capital expenditures


(372
)


(188
)Acquisition costs to purchase Baby Products Line from Springs
    Global






(356
)Proceeds from disposition of assets


86



19Net cash used in investing activities


(286
)


(525
)Financing activities:Payments on long-term debt


(2,503
)


(852
)Proceeds under revolving line of credit, net


2,680



8,627Purchase of treasury stock


(985
)


(2,071
)Issuance of common stock


20



40Net cash (used in) provided by financing activities


(788
)


5,744Net increase (decrease) in cash and cash equivalents


7,319



7,897Cash and cash equivalents at beginning of period


7,930



33Cash and cash equivalents at end of period

$
15,249


$
7,930Supplemental cash flow information:Income taxes paid

$
2,854


$
1,177Interest paid


746



475Noncash investing activities:Debt issued to purchase Baby Products Line from Springs Global:Funded through revolving line of credit

$



$
6,014Funded through long-term debt






5,000Total debt issued to purchase Baby Products Line from Springs
    Global

$



$
11,014Adjustment to purchase price of Springs Baby Productsfrom resolution of pre-acquisition contingency

$
(58
)

$
    F-6




---



##### Table of Contents



Crown
    Crafts, Inc. and Subsidiaries
  Notes
    to Consolidated Financial Statements
 Fiscal Years Ended March 29, 2009 and March 30,
    2008
  Note 1 
    Description
    of Business    Note 2 
    Summary
    of Significant Accounting Policies  Basis of Presentation:
    Use of Estimates:
    Cash and Cash Equivalents:
  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  The carrying value of the
    Companys long term debt approximates fair value because
    interest rates under the Companys borrowings are variable,
    based on prevailing market rates.  Depreciation and Amortization:
  Revenue Recognition:
 F-7




---



##### Table of Contents



Crown
    Crafts, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Allowances Against Accounts Receivable:
  No. 01-9 ,
    Accounting for Consideration Given by a Vendor to a Customer
    (Including a Reseller of the Vendors Products) (EITF 01-9),
      Inventory Valuation: first-in,
  Valuation of Long-Lived Assets, Identifiable Intangibles and
    Goodwill:
   F-8




---



##### Table of Contents



Crown
    Crafts, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Provisions for Income Taxes:
  Accounting for
    Uncertainty in Income Taxes  an interpretation of
    FASB Statement of Financial Accounting Standards No. 109
  Segments and Related Information:
  Royalty Payments:
  (Loss) Earnings Per Share: Earnings per Share
 F-9




---



##### Table of Contents



Crown
    Crafts, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    2009


2008(Amounts in thousands, except per share data)(Loss) income from continuing operations

$
(17,042
)

$
4,431(Loss) from discontinued operations


(44
)


(78
)Net (loss) income, basic and diluted

$
(17,086
)

$
4,353Weighted average number of shares outstandingBasic


9,317



9,888Effect of dilutive securities






277Diluted


9,317



10,165(Loss) earnings per common shareBasicContinuing operations

$
(1.83
)

$
0.45Discontinued operations






(0.01
)Total

$
(1.83
)

$
0.44(Loss) earnings per common shareDilutedContinuing operations

$
(1.83
)

$
0.44Discontinued operations






(0.01
)Total

$
(1.83
)

$
0.43   Recently-Issued Accounting Standards: Fair
    Value Measurements No. 157-2,
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities
  Business Combinations
 F-10




---



##### Table of Contents



Crown
    Crafts, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Note 3 
    Acquisition    AmountInitial purchase price

$
12,393Refund upon inventory valuation


(1,379
)Resolution of pre-acquisition contingency


(58
)Capitalized direct acquisition costs


356Total

$
11,312     AmountInventory

$
4,082Intangible assets


7,376Goodwill


Total assets acquired


11,458Customer allowances


146Total liabilities assumed


146Net assets acquired

$
11,312   and/or
 F-11




---



##### Table of Contents



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

$
88,908Total operating expenses


82,023Income from continuing operations

$
3,656Income from continuing operations per shareBasic

$
0.37Diluted

$
0.36   Note 4 
    Discontinued
    Operations   F-12




---



##### Table of Contents



Crown
    Crafts, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    2009


2008(Amounts in thousands)Loss from discontinued operations

$
(48
)

$
(155
)Gain (loss) from sale of property


67



(5
)Impairment charge


(94
)


$
(75
)

$
(160
)Income tax benefit


(31
)


(82
)Net loss from discontinued operations

$
(44
)

$
(78
)   Note 5 
    Goodwill
    and Other Intangible Assets  Goodwill:
   F-13




---



##### Table of Contents



Crown
    Crafts, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Other Intangible Assets:
  AccumulatedGross


Estimated


Amortization at


AmortizationCarrying


Useful


March 29,


ExpenseAmount


Life


2009


FY 2009


FY 2008Springs acquisition:Licenses & existing designs

$
1,655



2 years


$
1,172


$
827


$
345Licenses & future designs


1,847



4 years



654



462



192Non-compete


115



4 years



41



29



12Customer relationships


3,759



10 years



538



378



159Total Springs acquisition


7,376







2,405



1,696



708Other acquired intangible assets


600



15 years



120



38



74Other intangible assets


81



10 years



17



11



2Total other intangible assets

$
8,057






$
2,542


$
1,745


$
784     2010


2011


2012


2013


2014Springs acquisition:Licenses & existing designs

$
483


$



$



$



$
Licenses & future designs


461



461



269







Non-compete


29



29



17







Customer relationships


375



375



375



375



375Total Springs acquisition


1,348



865



661



375



375Other acquired intangible assets


38



38



38



38



38Other intangible assets


5



5



5



5



5Total estimated amortization expense

$
1,391


$
908


$
704


$
418


$
418   Note 6 
    Inventories    March 29, 2009


March 30, 2008Raw Materials

$
30


$
40Finished Goods


11,721



13,737Total inventory

$
11,751


$
13,777     Note 7 
    Financing
    Arrangements  Factoring Agreement:
 F-14




---



##### Table of Contents



Crown
    Crafts, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Notes Payable and Other Credit Facilities:
  March 29, 2009


March 30, 2008Revolving line of credit

$
20,062


$
17,383Term loan


1,667



4,167Non-interest bearing notes


4,000



4,000Original issue discount


(494
)


(739
)Capital leases






425,235



24,815Less current maturities


1,667



2,504$
23,568


$
22,311     Revolving Line of Credit sub-limit sub-limit
    Term Loan
  Subordinated Notes
 F-15




---



##### Table of Contents



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

Revolver


Term Loan


Sub Notes


Total2010

$



$
1,667


$



$
1,6672011


20,062







2,000



22,0622012










2,000



2,000Total

$
20,062


$
1,667


$
4,000


$
25,729   Note 8 
    Related
    Party Transactions    Note 9 
    Income
    Taxes    Fiscal Year Ended March 29, 2009Current


Deferred


TotalFederal

$
2,667


$
(1,769
)

$
898State


507



(279
)


228Other, including foreign


7







7Income tax expense (benefit) on continuing operations


3,181



(2,048
)


1,133Income tax expense (benefit) on discontinued operations


15



(46
)


(31
)Income tax reported in stockholders equity related tostock-based compensation






22



22Total income tax

$
3,196


$
(2,072
)

$
1,124   Fiscal Year Ended March 30, 2008Current


Deferred


TotalFederal

$
1,182


$
1,260


$
2,442State


442



(56
)


386Other, including foreign










Income tax expense on continuing operations


1,624



1,204



2,828Income tax expense (benefit) on discontinued operations


(105
)


23



(82
)Total income tax expense

$
1,519


$
1,227


$
2,746  F-16




---



##### Table of Contents



Crown
    Crafts, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    March 29, 2009


March 30, 2008Deferred tax assets:Employee benefit accruals

$
342


$
440Accounts receivable and inventory reserves


579



445Goodwill


367



Other intangible assets


686



207State net operating loss carryforwards


1,104



855Stock-based compensation


626



341Total gross deferred tax assets


3,704



2,288Less valuation allowance


(1,104
)


(855
)Deferred tax assets after valuation allowance


2,600



1,433Deferred tax liabilities:Goodwill






(935
)Property, plant and equipment


(24
)


(15
)Total deferred tax liabilities


(24
)


(950
)Net deferred income tax assets

$
2,576


$
483     Accounting for
    Uncertainty in Income Taxes  an interpretation of
    FASB Statement of Financial Accounting Standards No. 109
 F-17




---



##### Table of Contents



Crown
    Crafts, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    2009


2008Tax expense (benefit) at statutory rate (34)%

$
(5,409
)

$
2,468State income taxes, net of Federal income tax benefit


195



292Tax credits


(152
)


(35
)Nondeductible expenses


12



11Goodwill impairment


6,533



Other


(46
)


92Income tax expense on continuing operations

$
1,133


$
2,828   Note 10 
    Retirement
    Plans    Note 11 
    Stock-based
    Compensation      Share-Based Payment
 F-18




---



##### Table of Contents



Crown
    Crafts, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Stock Options:
  Weighted-Average


Number ofExercise Price


OptionsOutstanding at March 30, 2008

$
2.15



651,330Granted


3.58



200,000Exercised


0.74



(28,499
)Forfeited


3.77



(3,000
)Outstanding at March 29, 2009

$
2.54



819,831Exercisable at March 29, 2009

$
2.02



564,831     Dividend Yield


Expected Volatility


55.00
%Risk free interest rate


3.54
%Expected life in years


5.75Forfeiture rate


5.00
%     Fiscal Year Ended March 29, 2009Cost of


Marketing &Products


Administrative


TotalOptions Granted in Fiscal Year

Sold


Expenses


Expense2007

$
23


$
71


$
942008


38



97



1352009


36



108



144Total stock option compensation

$
97


$
276


$
373   Fiscal Year Ended March 30, 2008Cost of


Marketing &Products


Administrative


TotalOptions Granted in Fiscal Year

Sold


Expenses


Expense2007

$
50


$
158


$
2082008


23



59



82Unvested options at April 3, 2006






3



3Total stock option compensation

$
73


$
220


$
293  F-19




---



##### Table of Contents



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





Weighted Avg.Number


Weighted Avg.


Exercise Price


Number of


Exercise Priceof Options


Remaining


of Options


Options


of OptionsRange of Exercise Prices

Outstanding


Contractual Life


Outstanding


Exercisable


Exercisable$0.18-$0.66


91,331



4.06


$
0.60



91,331


$
0.60$0.71


122,250



3.42


$
0.71



122,250


$
0.71$1.06-$2.31


90,250



1.22


$
1.40



90,250


$
1.40$3.15


206,000



7.27


$
3.15



206,000


$
3.15$3.58


200,000



9.21


$
3.58






$
$3.90-$4.08


110,000



7.93


$
4.08



55,000


$
4.08819,831











564,831     Non-vested Stock:
        Note 12 
    Treasury
    Stock   F-20




---



##### Table of Contents



Crown
    Crafts, Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Note 13 
    Major
    Customers    Fiscal Year2009


2008Wal-Mart Stores, Inc.


47
%


44
%Toys R Us


21
%


18
%Target Corporation


10
%


15
%   Note 14 
    Commitments
    and Contingencies        Note 15 
    Current
    Economic Conditions   F-21