Crown Crafts Inc Annual Report 2015

← All annual reports

FY2015 Annual Report · Crown Crafts Inc

Loading PDF…

Crown Crafts Inc.

916 South Burnside Avenue

Gonzales, Louisiana 70737

(800) 444-9560 (225) 647-9100

www.crowncrafts.com

2 0 1 5 A N N U A L R E P O R T

TO O U R FE L LO W S TO C K H O L D E R S

Over the years, we have enjoyed the opportunity to speak with many of you, and in these conversations

we have noticed a recurring theme. When we ask our stockholders what they like most about

Crown Crafts, they regularly mention the same word – “consistency.” Because of our consistent

performance, our stockholders consider us good stewards of their investment, and many of them have

expressed their intention to stay with us for the long term.

Nothing could make us prouder than to be recognized

Fiscal 2015 was another strong year for Crown Crafts as our

for consistently delivering strong financial performance

adjusted EBITDA* reached a milestone of 12.9% of net sales

and stockholder value year after year. Our Company has

for the year, up from 12.8% in fiscal 2014. Adjusted diluted

been profitable* every year since 2002, through many

earnings per share* was $0.62, exceeding our previous

up-and-down cycles and macroeconomic challenges

record since reorganizing in 2002 of $0.59 diluted earnings

in the marketplace. Our adjusted EBITDA as a percent

per share for fiscal year 2014.

of net sales* has been double-digit for a decade. Our

strong product portfolio places us as the clear leader in

the U.S. markets for infant bedding, toddler bedding,

bibs and disposables, and among the leaders in infant

blankets and soft bath products. We have been debt-free

since 2011 and have paid dividends for 21 consecutive

quarters. Our current annual dividend rate of $0.32 per

share represented a yield of 4.2% based on our stock

price as of March 27, 2015

We are also proud of the consistency, dedication and

loyalty that our talented employees provide. Our

employees have an average tenure of 11.6 years with

the Company – 73% of them have more than five years

We are very pleased with our fiscal 2015 performance,

which was driven by our leading position in the

marketplace, the ongoing popularity of our products,

our strong balance sheet and our operating efficiency.

Expanded business placements during the year solidified

our position as a market leader. Once again, we finished

the year with no debt, and our cash balance increased to

$1.8 million from $560,000 at the end of fiscal 2014.

As we move forward, we will continue our disciplined

approach to profitable growth and our commitment

to consistently deliver strong results and

stockholder value.

of service with us, and 44% have been with us for more

It is a pleasure to know that we are serving our

than 10 years. Like our stockholders, our employees are

stockholders well, and we thank you for your ongoing

also in this for the long term, and they are truly aligned

support of our Company. We remain excited about our

with our stockholders’ interests.

business and our future.

As a disciplined and conservative company, we believe in

Sincerely,

doing business the old-fashioned way – we like to make

a profit. This means we’re not afraid to make difficult

decisions, and we’ve exited some unprofitable businesses

over the years. Our approach has made Crown Crafts

E. Randall Chestnut

stronger, as reflected in our financial results.

Chairman, President and Chief Executive Officer

* See Appendix A.

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

(Mark One)
☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Form 10-K

For the fiscal year ended March 29, 2015

☐ 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
(State of Incorporation)

916 S. Burnside Ave.
Gonzales, Louisiana
(Address of principal executive offices)

58-0678148
(I.R.S. Employer Identification No.)

70737
(Zip Code)

Registrant's Telephone Number, including area code: (225) 647-9100

Securities registered pursuant to Section 12(b) of the Act:

Title of class
Common Stock, $0.01 par value

Name of exchange on which registered
The NASDAQ Capital Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☑

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act. Yes ☐ No ☑

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Website, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such files). Yes ☑ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting
company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act. (Check one)

Large accelerated filer ☐

Accelerated filer ☐

Non-Accelerated filer ☐
(Do not check if a smaller reporting company)

Smaller Reporting Company ☑

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

The approximate aggregate market value of the voting stock held by non-affiliates of the Registrant as of September 26, 2014 (the last
business day of the Company’s most recently completed second fiscal quarter) was $53.9 million.

As of June 1, 2015, 10,077,906 shares of the Company’s common stock were outstanding.

Documents Incorporated by Reference:
Portions of the registrant’s Proxy Statement for its 2015 Annual Meeting of Stockholders are incorporated into Part III hereof by reference.

TABLE OF CONTENTS

PART I

Item 1. Business. ...........................................................................................................................................................................................
Item 1A. Risk Factors. ....................................................................................................................................................................................
Properties. .......................................................................................................................................................................................
Item 2.
Legal Proceedings. .......................................................................................................................................................................
Item 3.

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity

Securities. .........................................................................................................................................................................................
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. ..............................
Item 8.
Financial Statements and Supplementary Data.................................................................................................................
Item 9A. Controls and Procedures. ...........................................................................................................................................................

PART II

Item 10. Directors, Executive Officers and Corporate Governance...............................................................................................
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 Accountant Fees and Services................................................................................................................................

PART III

Page

1
4
8
8

9
10
14
15

16
16
16
16
16

Item 15. Exhibits and Financial Statement Schedules.......................................................................................................................

PART IV

This page intentionally left blank

Cautionary Notice Regarding Forward-Looking Statements

Certain of the statements made herein under the caption “Management’s Discussion and Analysis of Financial
Condition and Results of Operations,” and elsewhere, including information incorporated herein by reference to other
documents, are “forward-looking statements” within the meaning of, and subject to the protections of, Section 27A of the
Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”). Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals,
expectations, anticipations, assumptions, estimates, intentions and future performance and involve known and unknown
risks, uncertainties and other factors, many of which may be beyond our control and which may cause the actual results,
performance or achievements of Crown Crafts, Inc. to be materially different from future results, performance or
achievements expressed or implied by such forward-looking statements.

All statements other than statements of historical fact are statements that could be forward-looking statements.
You can identify these forward-looking statements through our use of words such as “may,” “anticipate,” “assume,” “should,”
“indicate,” “would,” “believe,” “contemplate,” “expect,” “estimate,” “continue,” “plan,” “point to,” “project,” “predict,” “could,”
“intend,” “target,” “potential” and other similar words and expressions of the future. These forward-looking statements may
not be realized due to a variety of factors, including, without limitation, those described in Part I, Item 1A. “Risk Factors,” and
elsewhere in this report and those described from time to time in our future reports filed with the Securities and Exchange
Commission (the “SEC”) under the Exchange Act.

All written or oral forward-looking statements that are made by or are attributable to us are expressly qualified in
their entirety by this cautionary notice. Our forward-looking statements apply only as of the date of this report or the
respective date of the document from which they are incorporated herein by reference. We have no obligation and do not
undertake to update, revise or correct any of the forward-looking statements after the date of this report, or after the
respective dates on which such statements otherwise are made, whether as a result of new information, future events or
otherwise.

PART I

ITEM 1. Business

Description of Business

Crown Crafts, Inc. (the “Company”) operates indirectly through its wholly-owned subsidiaries, Crown Crafts Infant
Products, Inc. (“CCIP”) and Hamco, Inc. (“Hamco”), in the infant and toddler products segment within the consumer products
industry. The infant and toddler segment consists of infant and toddler bedding and blankets, bibs, soft bath products,
disposable products and accessories. Sales of the Company’s products are generally made directly to retailers, which are
primarily mass merchants, mid-tier retailers, juvenile specialty stores, value channel stores, grocery and drug stores,
restaurants, internet accounts and wholesale clubs. The Company’s products are manufactured primarily in Asia and
marketed under a variety of Company-owned trademarks, under trademarks licensed from others and as private label goods.

The Company's fiscal year ends on the Sunday nearest to or on March 31. References herein to “fiscal year 2015” or
“2015” and “fiscal year 2014” or “2014” represent the 52-week periods ended March 29, 2015 and March 30, 2014,
respectively.

Products

The Company's primary focus is on infant, toddler and juvenile products, including the following:

crib and toddler bedding

●
● blankets
● nursery and toddler accessories
●
●
● burp cloths
● hooded bath towels and washcloths

room décor
reusable and disposable bibs

● disposable placemats, cup labels, toilet seat covers and changing mats
●
● other infant, toddler and juvenile soft goods

reusable and disposable floor mats

Government Regulation and Environmental Control

The Company is subject to various federal, state and local environmental laws and regulations, which regulate,
among other things, product safety and the discharge, storage, handling and disposal of a variety of substances and wastes,
and to laws and regulations relating to employee safety and health, principally the Occupational Safety and Health
Administration Act and regulations thereunder. The Company believes that it currently complies in all material respects with
applicable environmental, health and safety laws and regulations and that future compliance with such existing laws or
regulations will not have a material adverse effect on its capital expenditures, earnings or competitive position. However,
there is no assurance that such requirements will not become more stringent in the future or that the Company will not have
to incur significant costs to comply with such requirements.

Sales and Marketing

The Company’s products are marketed through a national sales force consisting of salaried sales executives and
employees located in Compton, California; Gonzales, Louisiana; and Bentonville, Arkansas. Products are also marketed by
independent commissioned sales representatives located throughout the United States. Sales outside the United States are
made primarily through distributors. Substantially all products are sold to retailers for resale to consumers. The Company's
subsidiaries introduce new products throughout the year and participate at the ABC Kids Expo.

Product Sourcing

The Company's products are produced by foreign and domestic manufacturers, with the largest concentration
being in China. The Company makes sourcing decisions on the basis of quality, timeliness of delivery and price, including
the impact of ocean freight and duties. Although the Company maintains relationships with a limited number of suppliers,
the Company believes that its products may be readily manufactured by several alternative sources in quantities sufficient
to meet the Company's requirements. The Company’s management and quality assurance personnel visit the third-party
facilities regularly to monitor and audit product quality and to ensure compliance with labor requirements and social and
environmental standards. In addition, the Company closely monitors the currency exchange rate. The impact of future
fluctuations in the exchange rate or changes in safeguards cannot be predicted with certainty at this time.

The Company maintains a foreign representative office located in Shanghai, China, which is responsible for the
coordination of production, purchases and shipments, seeking out new vendors and overseeing inspections for social
compliance and quality.

The Company’s products are warehoused and distributed from a facility located in Compton, California. The
Company also utilizes third-party warehouses as needed to supplement the warehousing capacity at its Compton
distribution facility.

Product Design and Styling

The Company believes that its creative team is one of its key strengths. The Company’s product designs are primarily
created internally and are supplemented by numerous additional sources, including independent artists, decorative fabric
manufacturers and apparel designers. Ideas for product design creations are drawn from various sources and are reviewed
and modified by the design staff to ensure consistency within the Company’s existing product offerings and the themes and
images associated with such existing products. In order to respond effectively to changing consumer preferences, the
Company’s designers and stylists attempt to stay abreast of emerging lifestyle trends in color, fashion and design. When
designing products under the Company’s various licensed brands, the Company’s designers coordinate their efforts with the
licensors’ design teams to provide for a more fluid design approval process and to effectively incorporate the image of the
licensed brand into the product. The Company’s designs include traditional, contemporary, textured and whimsical patterns
across a broad spectrum of retail price points. Utilizing state of the art computer technology, the Company continually
develops new designs throughout the year for all of its product groups. This continual development cycle affords the
Company design flexibility, multiple opportunities to present new products to customers and the ability to provide timely

responses to customer demands and changing market trends. The Company also creates designs for exclusive sale by certain
of its customers under the Company’s brands, as well as the customers’ private label brands.

Employees

At June 1, 2015, the Company had 141 employees, none of whom is represented by a labor union or is otherwise a
party to a collective bargaining agreement. The Company attracts and maintains qualified personnel by paying competitive
salaries and benefits and offering opportunities for advancement. The Company considers its relationship with its employees
to be good.

Competition

The infant and toddler consumer products industry is highly competitive. The Company competes with a variety of
distributors and manufacturers (both branded and private label), including large infant and juvenile product companies and
specialty infant and juvenile product manufacturers, on the basis of quality, design, price, brand name recognition, service
and packaging. The Company’s ability to compete depends principally on styling, price, service to the retailer and continued
high regard for the Company’s products and trade names.

Customers

The Company's customers consist principally of mass merchants, mid-tier retailers, juvenile specialty stores, value
channel stores, grocery and drug stores, restaurants, internet accounts and wholesale clubs. The Company does not enter
into long-term or other purchase agreements with its customers. The table below sets forth those customers that
represented at least 10% of the Company’s gross sales in fiscal years 2015 and 2014.

Fiscal Year

2015

2014

Wal-Mart Stores, Inc. .............................................................................................................
Toys R Us ...................................................................................................................................

36%
25%

41%
19%

Seasonality and Inventory Management

There are no significant variations in the seasonal demand for the Company’s products from year to year. Sales are
generally higher in periods when customers take initial shipments of new products, as these orders typically include enough
products for initial sets for each store and additional quantities for the customer’s distribution centers. The timing of these
initial shipments varies by customer and depends on when the customer finalizes store layouts for the upcoming year and
whether the customer has any mid-year introductions of products. Sales may also be higher or lower, as the case may be, in
periods when customers are restricting internal inventory levels. Consistent with the expected introduction of specific
product offerings, the Company carries necessary levels of inventory to meet the anticipated delivery requirements of its
customers. Customer returns of merchandise shipped are historically less than 1% of gross sales.

Trademarks, Copyrights and Patents

The Company considers its intellectual property to be of material importance to its business. Sales of products
marketed under the Company’s trademarks, primarily NoJo® and Neat Solutions®, accounted for 26% of the Company’s total
gross sales during each of fiscal years 2015 and 2014. Protection for these trademarks is obtained through domestic and
foreign registrations. The Company also markets designs which are subject to copyrights and design patents owned by the
Company.

International Sales

Sales to customers in countries other than the United States represented 3% of the Company’s total gross sales
during each of fiscal years 2015 and 2014. International sales are based upon the location that predominately represents the
final destination of the products delivered to the Company’s customers.

Licensed Products

Certain products are manufactured and sold pursuant to licensing agreements for trademarks. Also, many of the
designs used by the Company are copyrighted by other parties, including trademark licensors, and are available to the
Company through copyright license agreements. The licensing agreements are generally for an initial term of one to three
years and may or may not be subject to renewal or extension. Sales of licensed products represented 63% of the Company’s
gross sales in fiscal year 2015, which included 44% of sales under the Company's license agreements with affiliated
companies of The Walt Disney Company (“Disney”). The table below sets forth the Company’s license agreements with
Disney as of June 1, 2015.

License Agreement
Infant Bedding and Décor ..................................................................................................................................................... December 31, 2017
Toddler Bedding ....................................................................................................................................................................... December 31, 2015
Disposable Products ................................................................................................................................................................ December 31, 2015

Expiration

ITEM 1A. Risk Factors

The following risk factors as well as the other information contained in this report and other filings made by the Company
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 Company’s top two customers represented approximately 61% of gross sales in fiscal year 2015. Although the
Company does not enter into contracts with its key customers, it expects them to continue to be a significant portion of its
gross sales in the future. The loss of one or more of these customers could result in a material decrease in the Company’s
revenue and operating income.

The Company’s business is impacted by general economic conditions and related uncertainties affecting markets in
which the Company operates.

Economic conditions, including the availability of credit and the possibility of a global recession, could adversely
impact the Company’s business. These conditions could result in reduced demand for some of the Company’s products,
increased order cancellations and returns, an increased risk of excess and obsolete inventories and increased pressure on
the prices of the Company’s products. Also, although the Company’s use of a commercial factor significantly reduces the
risk associated with collecting accounts receivable, the factor may at any time terminate or limit its approval of shipments to
a particular customer, and the likelihood of the factor doing so may increase due to a change in economic conditions. Such
an action by the factor could result in the loss of future sales to the affected customer.

The loss of one or more of the Company’s licenses could result in a material loss of revenues.

Sales of licensed products represented 63% of the Company’s gross sales in fiscal year 2015, which included 44% of
sales associated with the Company’s license agreements with Disney. The Company could experience a material loss of
revenues if it is unable to renew its major license agreements or obtain new licenses.

The Company’s inability to anticipate and respond to consumers’ tastes and preferences could adversely affect the
Company’s revenues.

Sales are driven by consumer demand for the Company’s products. There can be no assurance that the demand for
the Company’s products will not decline or that the Company will be able to anticipate and respond to changes in demand.
The Company’s failure to adapt to these changes could lead to lower sales and excess inventory, which could have a material
adverse effect on the Company’s financial condition and operating results.

The Company’s ability to comply with its credit facility is subject to future performance and other factors.

The Company’s ability to make required payments of principal and interest on its debts, to refinance its maturing
indebtedness, to fund capital expenditures or to comply with its debt covenants will depend upon future performance. The
Company’s future performance is, to a certain extent, subject to general economic, financial, competitive, legislative,
regulatory and other factors beyond its control. The breach of any of these covenants could result in a default under the
Company’s credit facility. Upon the occurrence of an event of default, the Company’s lender could make an immediate
demand of the amount outstanding under the credit facility. If a default was to occur and such a demand was to be made,
there can be no assurance that the Company’s assets would be sufficient to repay the indebtedness in full.

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.

The Company’s credit facility contains usual and customary covenants regarding significant transactions, including
restrictions on other indebtedness, liens, transfers of assets, investments and acquisitions, merger or consolidation
transactions, transactions with affiliates and changes in or amendments to the organizational documents for the Company
and its subsidiaries. Unless waived by the Company’s lender, these covenants could limit the Company’s ability to pursue
opportunities to expand its business operations, respond to changes in business and economic conditions and obtain
additional financing, or otherwise engage in transactions that the Company considers beneficial.

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.

The infant and toddler consumer products industry is highly competitive. The Company competes with a variety of
distributors and manufacturers, both branded and private label. The Company’s ability to compete successfully depends
principally on styling, price, service to the retailer and continued high regard for the Company’s products and trade names.
Several of these competitors are larger than the Company and have greater financial resources than the Company, and some
have experienced financial challenges from time to time, including servicing significant levels of debt. Those facing financial
pressures could choose to make particularly aggressive pricing decisions in an attempt to increase revenue. The effects of
increased competition could result in a material decrease in the Company’s revenues.

Customer pricing pressures could result in lower selling prices, which could negatively affect the Company’s
operating results.

The Company’s customers could place pressure on the Company to reduce the prices of its products. The Company
continuously strives to stay ahead of its competition in sourcing, which allows the Company to obtain lower cost products
while maintaining high standards for quality. There can be no assurance that the Company could respond to a decrease in
sales prices by proportionately reducing its costs, which could adversely affect the Company’s operating results.

Changes in international trade regulations and other risks associated with foreign trade could adversely affect the
Company’s sourcing.

The Company sources its products primarily from foreign contract manufacturers, with the largest concentration
being in China. Difficulties encountered by these suppliers, such as the instability inherent in operating within an
authoritarian political structure, could halt or disrupt production of the Company’s products. The Chinese government could
make allegations against the Company of corruption or antitrust violations, or could adopt regulations related to the
importation of products, including quotas, duties, taxes and other charges or restrictions on imported goods, any of which
could result in an increase in the cost of the Company’s products. Also, an arbitrary strengthening of the Chinese currency
versus the U.S. dollar could increase the prices at which the Company purchases finished goods. Any event causing a
disruption of the flow of products manufactured on behalf of the Company, whether within the Chinese interior or at the
point of embarkation, could result in delays in the receipt of the Company’s inventory and an increase in the cost of the
Company’s products. In addition, changes in U.S. customs procedures or delays in the clearance of goods through customs
could result in the Company being unable to deliver goods to customers in a timely manner or the potential loss of sales
altogether. The occurrence of any of these events could adversely affect the Company’s profitability.

A significant disruption to the Company’s distribution network or to the timely receipt of inventory could adversely
impact sales or increase transportation costs, which would decrease the Company’s profits.

Nearly all of the Company’s products are imported from China into the Port of Long Beach in southern California.
There are many links in the distribution chain, including the availability of ocean freight, cranes, dockworkers, containers,
tractors, chassis and drivers. The timely receipt of the Company’s products is also dependent upon efficient operations at the
Port of Long Beach. Any shortages in the availability of any of these links or disruptions in port operations, including strikes,
lockouts or other work stoppages or slowdowns, could cause bottlenecks and other congestion in the distribution network,
which could adversely impact the Company’s ability to obtain adequate inventory on a timely basis and result in lost sales,
increased transportation costs and an overall decrease of the Company’s profits.

The Company’s sourcing and marketing operations in foreign countries are subject to anti-corruption laws.

The Company’s foreign operations are subject to laws prohibiting improper payments and bribery, including the
U.S. Foreign Corrupt Practices Act and similar laws and regulations in foreign jurisdictions, which apply to the Company’s
directors, officers, employees and agents acting on behalf of the Company. Failure to comply with these laws could result in
damage to the Company’s reputation, a diversion of management’s attention from its business, increased legal and
investigative costs, and civil and criminal penalties, any or all of which could adversely affect the Company’s operating
results.

The Company’s success is dependent upon retaining key management personnel.

The Company’s ability to retain qualified executive management and other key personnel is vital to the Company’s
success. If the Company were unable to retain or attract qualified individuals, the Company’s growth and operating results
could be materially impacted.

The Company may need to write down or write off inventory.

If product programs end before the inventory is completely sold, then the remaining inventory may have to be sold
at less than carrying value. The market value of certain inventory items could drop to below carrying value after a decline in
sales, at the end of programs, or when management makes the decision to exit a product group. Such inventory would then
need to be written down to the lower of carrying or market value, or possibly completely written off, which would adversely
affect the Company’s operating results.

Recalls or product liability claims could increase costs or reduce sales.

The Company must comply with the Consumer Product Safety Improvement Act, which imposes strict standards to
protect children from potentially harmful products and which requires that the Company’s products be tested to ensure that
they are within acceptable levels for lead and phthalates. The Company must also comply with related regulations developed
by the Consumer Product Safety Commission and similar state regulatory authorities. The Company’s products could be
subject to involuntary recalls and other actions by these authorities, and concerns about product safety may lead the
Company to voluntarily recall, accept returns or discontinue the sale of select products. Product liability claims could exceed
or fall outside the scope of the Company’s insurance coverage. Recalls or product liability claims could result in decreased
consumer demand for the Company’s products, damage to the Company’s reputation, a diversion of management’s
attention from its business and increased customer service and support costs, any or all of which could adversely affect the
Company’s operating results.

The Company could experience adjustments to its effective tax rate or its prior tax obligations, either of which could
adversely affect its results of operations.

The Company is subject to income taxes in the many jurisdictions in which it operates, including the U.S., several
U.S. states and China. At any particular point in time, several tax years are subject to general examination or other adjustment
by these various jurisdictions. Although management believes that the calculations and positions taken on its original and
amended filed returns are reasonable and justifiable, negotiations or litigation leading to the final outcome of any
examination or claim for refund could result in an adjustment to the position that the Company has taken. Such adjustment
could result in further adjustment to one or more income tax returns for other jurisdictions, or to income tax returns for prior
6

or subsequent tax years, or both. The overall effect of such adjustments could have an adverse impact on the Company’s
results of operations.

The Company’s provision for income taxes is based on its effective tax rate, which in any given financial statement
period could fluctuate based on changes in tax laws or regulations, changes in the mix and level of earnings by taxing
jurisdiction, changes in the amount of certain expenses within the consolidated statements of income that will never be
deductible on the Company’s income tax returns and certain charges deducted on the Company’s income tax returns that
are not included within the consolidated statements of income. These changes could cause fluctuations in the Company’s
effective tax rate either on an absolute basis, or in relation to varying levels of the Company’s pre-tax income. Such
fluctuations in the Company’s effective tax rate could adversely affect its results of operations.

The Company could experience losses associated with its intellectual property.

The Company relies upon the fair interpretation and enforcement of patent, copyright, trademark and trade secret
laws in the U.S., similar laws in other countries, and agreements with employees, customers, suppliers, licensors and other
parties. Such reliance serves to establish and maintain the intellectual property rights associated with the products that the
Company develops and sells. However, the laws and courts of certain countries at times do not protect intellectual property
rights or respect contractual agreements to the same extent as the laws of the U.S. Therefore, in certain jurisdictions the
Company may not be able to protect its intellectual property rights against counterfeiting or enforce its contractual
agreements with other parties. In addition, another party could claim that the Company is infringing upon such party’s
intellectual property rights, and claims of this type could lead to a civil complaint.

An unfavorable outcome in litigation involving intellectual property could result in any or all of the following: (i) civil
judgments against the Company, which could require the payment of royalties on both past and future sales of certain
products, as well as plaintiff’s attorneys’ fees and other litigation costs; (ii) impairment charges of up to the carrying value of
the Company’s intellectual property rights; (iii) restrictions on the ability of the Company to sell certain of its products; (iv)
legal and other costs associated with investigations and litigation; and (v) the Company’s competitive position could be
adversely affected.

Economic conditions could result in an increase in the amounts paid for the Company’s products.

Significant increases in the price of raw materials that are components of the Company’s products, including cotton,
oil and labor, could adversely affect the amounts that the Company must pay its suppliers for its finished goods. If the
Company is unable to pass these cost increases along to its customers, its profitability could be adversely affected.

A stockholder could lose all or a portion of his or her investment in the Company.

The Company’s common stock has historically experienced a degree of price variability, and the price could be
subject to rapid and substantial fluctuations. The Company’s common stock has also historically been thinly traded, a
circumstance that exists when there is a relatively small volume of buy and sell orders for the Company’s common stock at
any given point in time. In such situations, a stockholder may be unable to liquidate his or her position in the Company’s
common stock at the desired price. Also, as an equity investment, a stockholder’s investment in the Company is subordinate
to the interests of the Company’s creditors, and a stockholder could lose all or a substantial portion of his or her investment
in the Company in the event of a voluntary or involuntary bankruptcy filing or liquidation.

ITEM 2. Properties

The Company's headquarters are located in Gonzales, Louisiana. The Company rents 17,761 square feet at this
location under a lease that expires January 31, 2021. Management believes that its properties are suitable for the purposes
for which they are used, are in generally good condition and provide adequate capacity for current and anticipated future
operations. The Company's business is somewhat seasonal so that during certain times of the year these facilities are fully
utilized, while at other times of the year the Company has excess capacity in these facilities. The table below sets forth certain
information regarding the Company's principal real property as of June 1, 2015.

Location

Use

Gonzales, Louisiana ........................................... Administrative and sales office...............................
Compton, California .......................................... Offices, warehouse and distribution center .......
Bentonville, Arkansas ....................................... Sales office .....................................................................
Shanghai, People’s Republic of China ........ Office................................................................................

Approximate
Square Feet
17,761
157,400
1,376
1,912

Owned/
Leased
Leased
Leased
Leased
Leased

ITEM 3. Legal Proceedings

BreathableBaby, LLC (“BreathableBaby”) filed a complaint against the Company and CCIP on January 11, 2012 in the
United States District Court for the District of Minnesota, which alleged that CCIP’s mesh crib liner infringed upon
BreathableBaby’s patent rights relating to its air permeable infant bedding technology. On December 5, 2014, the Company
reached a final settlement with BreathableBaby to resolve this matter under the terms of which the Company will be
permitted to manufacture and sell a redesigned mesh crib liner product. In connection with the settlement, the Company
made a one-time payment of $850,000 to BreathableBaby on December 11, 2014, which has been classified as legal expense
in the consolidated statements of income.

PART II

ITEM 5. Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Description of Securities

The Company is authorized to issue up to 40,000,000 shares of capital stock, all of which are classified as common
stock with a par value of $0.01 per share. On June 1, 2015, there were 12,088,834 shares of the Company’s common stock
issued, 10,077,906 of which were outstanding.

Market Information and Price

The Company's common stock is traded on the NASDAQ Capital Market under the symbol “CRWS”. On June 1, 2015,
the closing price of the Company’s common stock was $8.02 per share. The table below sets forth the high and low closing
price per share of the Company's common stock and the cash dividends per share declared on the Company’s common stock
during each quarter of fiscal years 2015 and 2014.

Quarter

Fiscal Year 2015
First Quarter ............................................................................... $
Second Quarter ........................................................................
Third Quarter .............................................................................
Fourth Quarter ..........................................................................

Fiscal Year 2014
First Quarter ............................................................................... $
Second Quarter ........................................................................
Third Quarter .............................................................................
Fourth Quarter ..........................................................................

Holders of Common Stock

Closing Price

Cash Dividends

High

Low

Declared

8.72 $
8.03
7.74
8.62

6.17 $
7.53
8.05
9.30

7.86 $
7.18
7.10
7.60

5.75 $
6.06
7.22
7.63

0.08
0.08
0.08
0.08

As of June 1, 2015, there were approximately 180 registered holders of the Company’s common stock.

Dividends

The Company’s credit facility permits the Company to pay cash dividends on its common stock without limitation,

provided there is no default under the credit facility before or as a result of the payment of such dividends.

ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion is a summary of certain factors that management considers important in reviewing the
Company’s results of operations, financial position, liquidity and capital resources. This discussion should be read in
conjunction with the consolidated financial statements and related notes included elsewhere in this report.

Results of Operations

The following table contains results of operations for fiscal years 2015 and 2014 and the dollar and percentage

changes for those periods (in thousands, except percentages).

2015

2014

Change

Net sales by category

Bedding, blankets and accessories............ $
Bibs, bath and disposable products ..........
Total net sales .......................................................
Cost of products sold .........................................
Gross profit ............................................................
% of net sales ..........................................................
Marketing and administrative expenses .....
% of net sales ..........................................................
Interest expense ...................................................
Other income (expense) ....................................
Income tax expense ...........................................
Net income ............................................................
% of net sales ..........................................................

64,038 $
21,940
85,978
62,428
23,550
27.4%
14,330
16.7%
37
(23)
3,442
5,718
6.7%

58,332 $
22,962
81,294
58,760
22,534
27.7%
13,156
16.2%
49
17
3,575
5,771
7.1%

5,706
(1,022 )
4,684
3,668
1,016

1,174

(12 )
(40 )
(133 )
(53 )

9.8%
-4.5%
5.8%
6.2%
4.5%

8.9%

-24.5%
-235.3%
-3.7%
-0.9%

Net Sales: Sales of $86.0 million for 2015 were higher than 2014, having increased 5.8%, or $4.7 million. The majority
of the sales increase was due to initial placements of new programs which had previously been placed with a competitor
that is no longer in business, as well as the strength of a licensed toddler property.

Gross Profit: Gross profit increased in amount by $1.0 million and decreased as a percentage of net sales from 27.7%
to 27.4%. The increase in amount was associated with the increase in net sales while the decrease as a percentage of net
sales can be attributed to the assumption of new business from a former competitor with lower pre-set prices.

Legal Expenses: Legal expense for fiscal year 2015 increased in amount by $501,000 as compared with fiscal year
2014 primarily due to a one-time payment of $850,000 that the Company paid to BreathableBaby in settlement of litigation.
This charge was offset by lower overall legal fees in the current year as this litigation wound down. For further information,
refer to “Legal Proceedings” in Item 3. of Part I. of this annual report on Form 10-K.

Other Marketing and Administrative Expenses: Other marketing and administrative expenses for fiscal year 2015

increased by $673,000 as compared with fiscal year 2014 primarily due to higher advertising costs and factoring fees.

Income Tax Expense: The effective tax rate used in the Company’s provision for income taxes decreased to 37.6%

during fiscal year 2015 from 38.3% in fiscal year 2014.

Inflation: The Company has endeavored to increase its prices to offset inflationary increases in its raw materials and
other costs, but there can be no assurance that the Company will be successful in maintaining such price increases or in
effecting such price increases in a manner that will provide a timely match to the cost increases in the future.

Known Trends and Uncertainties

The Company’s financial results are closely tied to sales to the Company’s top two customers, which represented
approximately 61% of the Company’s gross sales in fiscal year 2015. A significant downturn experienced by either or both of
these customers could lead to pressure on the Company’s revenues. At times, the Company has also faced higher raw
10

material costs, primarily related to cotton, as well as increases in labor, transportation and currency costs associated with the
Company’s sourcing activities in China. Increases in these costs could adversely affect the profitability of the Company if it
cannot pass the cost increases along to its customers in the form of price increases or if the timing of price increases does
not closely match the cost increases. For additional discussion of trends, uncertainties and other factors that could impact
the Company’s operating results, see “Risk Factors” in Item 1A. of Part I. of this annual report on Form 10-K.

Financial Position, Liquidity and Capital Resources

Net cash provided by operating activities increased from $3.6 million for the fiscal year ended March 30, 2014 to
$4.8 million for the fiscal year ended March 29, 2015. In the current year, the Company experienced a lower decrease in
accounts payable and a lower increase in inventory balances, which was offset by a greater increase in prepaid expenses.
The increase in inventory in the current year is primarily related to the new programs gained during the year, while the
decrease in accounts payable in the current year was primarily the result of the payment of accrued legal fees upon the
resolution of the BreathableBaby litigation.

Net cash used in investing activities was $256,000 in fiscal year 2015 compared with $161,000 in the prior year. The
increase in cash used in investing activities in the current year was primarily associated with higher capitalized costs of the
Company’s expenditures for property, plant and equipment, which consisted mostly of computer equipment in both fiscal
years 2015 and 2014.

Net cash used in financing activities was unchanged at $3.3 million in both the current year and the prior year, and

was primarily associated with the payment of dividends in both periods.

From March 31, 2014 to March 29, 2015, the Company used $3.2 million of the $4.8 million in net cash provided by

operating activities for the payment of dividends.

The Company’s future performance is, to a certain extent, subject to general economic, financial, competitive,
legislative, regulatory and other factors beyond its control. Based upon the current level of operations, the Company believes
that its cash flow from operations and availability on its revolving line of credit will be adequate to meet its liquidity needs.

The Company’s credit facility at March 29, 2015 consisted of a revolving line of credit under a financing agreement
with The CIT Group/Commercial Services, Inc. (“CIT”), a subsidiary of CIT Group Inc., of up to $26.0 million, which includes a
$1.5 million sub-limit for letters of credit, bearing interest at the rate of prime minus 0.50% or LIBOR plus 2.00%. The financing
agreement matures on July 11, 2016 and is secured by a first lien on all assets of the Company. At March 29, 2015, the
Company had elected to pay interest on balances owed under the revolving line of credit, if any, under the LIBOR option.
The financing agreement also provides for the payment by CIT to the Company of interest at the rate of prime minus 2.00%,
which was 1.25% at March 29, 2015, on daily negative balances held at CIT.

Under the financing agreement, a monthly fee is assessed based on 0.125% of the average unused portion of the
$26.0 million revolving line of credit, less any outstanding letters of credit (the “Commitment Fee”). The Commitment Fee
amounted to $33,000 and $41,000 during fiscal years 2015 and 2014, respectively. At March 29, 2015, there was no balance
owed on the revolving line of credit, there was no letter of credit outstanding and full amount of the credit facility of $26.0
million was available under the revolving line of credit based on the Company’s eligible accounts receivable and inventory
balances.

The financing agreement contains usual and customary covenants for agreements of that type, including limitations
on other indebtedness, liens, transfers of assets, investments and acquisitions, merger or consolidation transactions,
transactions with affiliates, and changes in or amendments to the organizational documents for the Company and its
subsidiaries. The Company believes it was in compliance with these covenants as of June 1, 2015.

To reduce its exposure to credit losses, the Company assigns the majority of its trade accounts receivable to CIT
pursuant to factoring agreements, which have expiration dates that are coterminous with that of the financing agreement
described above. Under the terms of the factoring agreements, CIT remits customer payments to the Company as such
payments are received by CIT.

CIT bears credit losses with respect to assigned accounts receivable from approved shipments, while the Company
bears the responsibility for adjustments from customers related to returns, allowances, claims and discounts. CIT may at any
time terminate or limit its approval of shipments to a particular customer. If such a termination or limitation were to occur,
the Company would either assume the credit risk for shipments to the customer after the date of such termination or
limitation or cease shipments to the customer. Factoring fees, which are included in marketing and administrative expenses
in the accompanying consolidated statements of income, were $673,000 and $461,000 during fiscal years 2015 and 2014,
respectively. There were no advances on the factoring agreements at either March 29, 2015 or March 30, 2014.

Critical Accounting Policies and Estimates

The Company prepares its financial statements in conformity with accounting principles generally accepted in the
United States of America (“GAAP”) as promulgated by the Financial Accounting Standards Board (“FASB”), the Securities Act,
the Exchange Act and the regulations thereunder as administered by the SEC. References herein to GAAP are to topics within
the FASB Accounting Standards Codification (the “FASB ASC”), which the FASB periodically revises through the issuance of
an Accounting Standards Update (“ASU”) and which has been established by the FASB as the authoritative source for GAAP
recognized by the FASB to be applied by nongovernmental entities.

Use of Estimates: The preparation of financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the consolidated balance sheets and the reported amounts of revenues and expenses during the
reporting period. The listing below, while not inclusive of all of the Company's accounting policies, sets forth those
accounting policies which the Company's management believes embody the most significant judgments due to the
uncertainties affecting their application and the likelihood that materially different amounts would be reported under
different conditions or using different assumptions.

Royalty Payments: The Company has entered into agreements that provide for royalty payments based on a
percentage of sales with certain minimum guaranteed amounts. These royalty amounts are accrued based upon historical
sales rates adjusted for current sales trends by customers. Royalty expense is included in cost of products sold and amounted
to $8.7 million and $7.5 million for fiscal years 2015 and 2014, respectively.

Revenue Recognition: Sales are recorded when goods are shipped to customers and are reported net of allowances
for estimated returns and allowances in the consolidated statements of income. Allowances for returns are estimated based
on historical rates. Allowances for returns, advertising allowances, warehouse allowances, placement fees and volume
rebates are recorded commensurate with sales activity or using the straight-line method, as appropriate, and the cost of
such allowances is netted against sales in reporting the results of operations. Shipping and handling costs, net of amounts
reimbursed by customers, are not material and are included in net sales.

Allowances Against Accounts Receivable: The Company’s allowances against accounts receivable are primarily
contractually agreed-upon deductions for items such as cooperative advertising and warehouse allowances, placement fees
and volume rebates. These deductions are recorded throughout the year commensurate with sales activity or using the
straight-line method, as appropriate. Funding of the majority of the Company’s allowances occurs on a per-invoice basis.
The allowances for customer deductions, which are netted against accounts receivable in the consolidated balance sheets,
consist of agreed-upon cooperative advertising support, placement fees, markdowns and warehouse and other allowances.
All such allowances are recorded as direct offsets to sales, and such costs are accrued commensurate with sales activities or
as a straight-line amortization charge of an agreed-upon fixed amount, as appropriate to the circumstances for each
arrangement. When a customer requests deductions, the allowances are reduced to reflect such payments or credits issued
against the customer’s account balance. The Company analyzes the components of the allowances for customer deductions
monthly and adjusts the allowances to the appropriate levels. The timing of the customer-initiated funding requests for
advertising support can cause the net balance in the allowance account to fluctuate from period to period. The timing of
such funding requests has a minimal impact on the consolidated statements of income since such costs are accrued
commensurate with sales activity or using the straight-line method, as appropriate.

To reduce its exposure to credit losses, the Company assigns the majority of its receivables under factoring
agreements with CIT. In the event a factored receivable becomes uncollectible due to creditworthiness, CIT bears the risk of
loss. The Company’s management must make estimates of the uncollectiblity of its non-factored accounts receivable when
evaluating the adequacy of its allowance for doubtful accounts, which it accomplishes by specifically analyzing accounts

receivable, historical bad debts, customer concentrations, customer creditworthiness, current economic trends and changes
in its customers’ payment terms.

Inventory Valuation: The preparation of the Company's financial statements requires careful determination of the
appropriate dollar amount of the Company's inventory balances. Such amount is presented as a current asset in the
Company's consolidated balance sheets and is a direct determinant of cost of products sold in the consolidated statements
of income and, therefore, has a significant impact on the amount of net income reported in the accounting periods. The basis
of accounting for inventories is cost, which includes the direct supplier acquisition cost, duties, taxes and freight, and the
indirect costs to design, develop, source and store the product until it is sold. Once cost has been determined, the Company’s
inventory is then stated at the lower of cost or market, with cost determined using the first-in, first-out ("FIFO") method,
which assumes that inventory quantities are sold in the order in which they are acquired.

The determination of the indirect charges and their allocation to the Company's finished goods inventories is
complex and requires significant management judgment and estimates. If management made different judgments or
utilized different estimates, then differences would result in the valuation of the Company's inventories and in the amount
and timing of the Company's cost of products sold and resulting net income for the reporting period.

On a periodic basis, management reviews its inventory quantities on hand for obsolescence, physical deterioration,
changes in price levels and the existence of quantities on hand which may not reasonably be expected to be sold within the
Company’s normal operating cycle. To the extent that any of these conditions is believed to exist or the market value of the
inventory expected to be realized in the ordinary course of business is otherwise no longer as great as its carrying value, an
allowance against the inventory value is established. To the extent that this allowance is established or increased during an
accounting period, an expense is recorded in cost of products sold in the Company's consolidated statements of income.
Only when inventory for which an allowance has been established is later sold or is otherwise disposed is the allowance
reduced accordingly. Significant management judgment is required in determining the amount and adequacy of this
allowance. In the event that actual results differ from management's estimates or these estimates and judgments are revised
in future periods, the Company may not fully realize the carrying value of its inventory or may need to establish additional
allowances, either of which could materially impact the Company's financial position and results of operations.

Depreciation and Amortization: The Company’s consolidated balance sheets reflect property, plant and equipment,
and certain intangible assets at cost less accumulated depreciation or amortization. The Company capitalizes additions and
improvements and expenses maintenance and repairs as incurred. Depreciation and amortization are computed using the
straight-line method over the estimated useful lives of the assets, which are three to eight years for property, plant and
equipment, and one to twenty years for intangible assets other than goodwill. The Company amortizes improvements to its
leased facilities over the term of the lease or the estimated useful life of the asset, whichever is shorter.

Valuation of Long-Lived Assets, Identifiable Intangible Assets and Goodwill: In addition to the depreciation and
amortization procedures set forth above, the Company reviews for impairment long-lived assets and certain identifiable
intangible assets whenever events or changes in circumstances indicate that the carrying amount of any asset may not be
recoverable. In the event of impairment, the asset is written down to its fair market value. Assets to be disposed of, if any, are
recorded at the lower of net book value or fair market value, less estimated costs to sell at the date management commits
to a plan of disposal, and are classified as assets held for sale on the consolidated balance sheets.

The Company tests the carrying value of its goodwill annually on the first day of the Company’s fiscal year. An
additional impairment test is performed during the year whenever an event or change in circumstances suggest that the fair
value of the goodwill of either of the reporting units of the Company has more likely than not fallen below its carrying value.
The Company considers its wholly-owned subsidiaries, CCIP and Hamco, to each be a reporting unit of the Company for
goodwill impairment testing purposes.

Patent Costs: The Company incurs certain legal and related costs in connection with patent applications. The
Company capitalizes such costs to be amortized over the expected life of the patent to the extent that an economic benefit
is anticipated from the resulting patent or alternative future use is available to the Company. The Company also capitalizes
legal costs incurred in the defense of the Company’s patents when it is believed that the future economic benefit of the
patent will be maintained or increased and a successful defense is probable. Capitalized patent defense costs are amortized
over the remaining expected life of the related patent. The Company’s assessment of future economic benefit of its patents

involves considerable management judgment, and a different conclusion could result in a material impairment charge up
to the carrying value of these assets.

Provision for Income Taxes: The Company’s provision for income taxes includes all currently payable federal, state,
local and foreign taxes that are based on the Company's taxable income and the change during the fiscal year in net deferred
income tax assets and liabilities. The Company provides for deferred income taxes based on the difference between the
financial statement and tax bases of assets and liabilities using enacted tax rates that will be in effect when the differences
are expected to reverse. The Company’s policy is to recognize the effect that a change in enacted tax rates would have on
net deferred income tax assets and liabilities in the period that the tax rates are changed.

Management evaluates items of income, deductions and credits reported on the Company’s various federal and
state income tax returns filed and recognizes the effect of positions taken on those income tax returns only if those positions
are more likely than not to be sustained. Recognized income tax positions are measured at the largest amount that has a
greater than 50% likelihood of being realized. Changes in recognition or measurement are reflected in the period in which
the change in judgment occurs. Based on its recent evaluation, the Company has concluded that there are no significant
uncertain tax positions requiring recognition in the Company’s consolidated financial statements. The Company’s policy is
to accrue interest expense and penalties as appropriate on any estimated unrecognized tax benefits as a charge to interest
expense in the Company’s consolidated statements of income.

Recently-Issued Accounting Standards

On April 7, 2015, the FASB issued ASU No. 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the
Presentation of Debt Issuance Costs, which will require that debt issuance costs related to a recognized debt liability be
presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, and which will lead to a
presentation consistent with the long-standing presentation of debt discounts. The ASU will become effective for the first
interim period of the fiscal year beginning after December 15, 2015. Early adoption is permitted for financial statements that
have not been previously issued, with a retrospective presentation within each balance sheet. When the Company’s
financing agreement with CIT was amended on May 21, 2013 to extend its maturity date to July 11, 2016, CIT did not charge
the Company any debt issuance costs, and the Company’s legal and other costs incurred in connection with the extension
of the financing agreement were not material. There was no balance owed on the Company’s revolving line of credit or any
other structured debt as of March 29, 2015 and March 30, 2014. If the Company again extends its financing agreement with
CIT to beyond July 11, 2016, or otherwise enters into any new structured debt arrangements, and if there are debt issuance
costs associated with such an extension or such new structured debt arrangements, the Company does not anticipate that
the adoption by the Company of ASU No. 2015-03 on April 4, 2016 will have a material impact on the Company’s consolidated
financial statements.

On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which will replace most
existing revenue guidance in GAAP when it becomes effective for the first annual fiscal period beginning after December 15,
2016. Early adoption is not permitted. The Company is currently evaluating the effect that ASU 2014-09 will have on its
financial position, results of operations and related disclosures.

The Company has determined that all other ASU’s issued which had become effective as of June 1, 2015, or which
will become effective at some future date, are not expected to have a material impact on the Company’s consolidated
financial statements.

ITEM 8. Financial Statements and Supplementary Data

See pages 18 and F-1 through F-18 hereof.

ITEM 9A. Controls and Procedures

Disclosure Controls and Procedures

Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports
filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time period specified
in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed in the reports filed under the Exchange Act is accumulated and
communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow
timely decisions regarding required disclosure. As of the end of the period covered by this report, the Company carried out
an evaluation, under the supervision and with the participation of the Company’s management, including the Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure
controls and procedures. Based upon and as of the date of that evaluation, the Chief Executive Officer and Chief Financial
Officer concluded that the Company’s disclosure controls and procedures are effective.

Management’s Annual Report on Internal Control Over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over
financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) for the Company. With
the participation of the Chief Executive Officer and the Chief Financial Officer, management conducted an evaluation of the
effectiveness of internal control over financial reporting based on the framework and the criteria established in Internal
Control — Integrated Framework, issued in 2013 by the Committee of Sponsoring Organizations of the Treadway
Commission. Based on this evaluation, management has concluded that internal control over financial reporting was
effective as of March 29, 2015.

The Company’s internal control system was designed to provide reasonable assurance to the Company’s
management and Board of Directors regarding the reliability of financial reporting and the preparation and fair presentation
of financial statements in accordance with GAAP. All internal control systems, no matter how well designed, have inherent
limitations. Therefore, even those systems determined to be effective can provide only a reasonable, rather than absolute,
assurance that the Company’s financial statements are free of any material misstatement, whether caused by error or fraud.

Changes in Internal Control Over Financial Reporting

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial
Officer, conducted an evaluation of the Company’s internal control over financial reporting as required by Rule 13a-15(d)
under the Exchange Act and, in connection with such evaluation, determined that no changes occurred during the
Company’s fourth fiscal quarter ended March 29, 2015 that have materially affected, or are reasonably likely to materially
affect, the Company’s internal control over financial reporting.

ITEM 10. Directors, Executive Officers and Corporate Governance

PART III

The information with respect to the Company's directors and executive officers will be set forth in the Company's
Proxy Statement for the Annual Meeting of Stockholders to be held in 2015 (the "Proxy Statement") under the captions
"Proposal 1 – Election of Directors" and “Executive Officers” and is incorporated herein by reference. The information with
respect to Item 405 of Regulation S-K will be set forth in the Proxy Statement under the caption "Section 16(a) Beneficial
Ownership Reporting Compliance" and is incorporated herein by reference. The information with respect to Item 406 of
Regulation S-K will be set forth in the Proxy Statement under the caption “Code of Business Conduct and Ethics” and is
incorporated herein by reference. The information with respect to Item 407 of Regulation S-K will be set forth in the Proxy
Statement under the captions “Board Committees and Meetings” and “Report of the Audit Committee” and is incorporated
herein by reference.

ITEM 11. Executive Compensation

The information set forth under the caption "Executive Compensation" in the Proxy Statement is incorporated

herein by reference.

ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information set forth under the caption "Security Ownership of Certain Beneficial Owners and Management" in

the Proxy Statement is incorporated herein by reference.

Securities Authorized for Issuance under Equity Compensation Plans

The table below sets forth information regarding shares of the Company’s common stock that may be issued upon
the exercise of options, warrants and other rights granted to employees, consultants or directors under all of the Company’s
existing equity compensation plans as of March 29, 2015.

Number of
securities to be
issued upon
exercise of
outstanding
options, warrants
and rights

Weighted-average
exercise price of
outstanding
options, warrants
and rights

Number of
securities
remaining
available for future
issuance under
equity
compensation
plans

Plan Category
Equity compensation plans approved by security
holders:

2006 Omnibus Incentive Plan ..............................................

330,000 $

6.83

2014 Omnibus Equity Compensation Plan .....................

1,200,000

ITEM 13. Certain Relationships and Related Transactions, and Director Independence

The information set forth under the captions “Director Independence” and "Certain Relationships and Related

Transactions" in the Proxy Statement is incorporated herein by reference.

ITEM 14. Principal Accountant Fees and Services

The information set forth under the caption “Proposal 2 – Ratification of Appointment of Independent Auditor” in

the Proxy Statement is incorporated herein by reference.

ITEM 15. Exhibits and Financial Statement Schedules

(a)(1). Financial Statements

PART IV

The following consolidated financial statements of the Company are filed with this report and included in Part II,

Item 8:

- Report of Independent Registered Public Accounting Firm
- Consolidated Balance Sheets as of March 29, 2015 and March 30, 2014
- Consolidated Statements of Income for the Fiscal Years Ended March 29, 2015 and March 30, 2014
- Consolidated Statements of Changes in Shareholders' Equity for the Fiscal Years Ended March 29, 2015 and March 30,

2014

- Consolidated Statements of Cash Flows for the Fiscal Years Ended March 29, 2015 and March 30, 2014
- Notes to Consolidated Financial Statements

(a)(2). Financial Statement Schedule

The following financial statement schedule of the Company is filed with this report:

Schedule II — Valuation and Qualifying Accounts .......................................................................................................................

Page 18

All other schedules not listed above have been omitted because they are not applicable or the required information

is included in the financial statements or notes thereto.

Column A

CROWN CRAFTS, INC. AND SUBSIDIARIES

ANNUAL REPORT ON FORM 10-K

SCHEDULE II

Column B
Balance at
Beginning
of Period

Valuation and Qualifying Accounts

Column C

Column D

Charged to
Expenses

Deductions

(in thousands)

Column E
Balance at
End of
Period

Accounts Receivable Valuation Accounts:

Year Ended March 30, 2014
Allowance for doubtful accounts ....................................... $
Allowance for customer deductions ................................. $

Year Ended March 29, 2015
Allowance for doubtful accounts ....................................... $
Allowance for customer deductions ................................. $

0 $
349 $

73 $
3,584 $

0 $
3,288 $

73 $
645 $

9 $
4,543 $

82 $
4,188 $

73
645

0
1,000

(a)(3). Exhibits

Exhibits required to be filed by Item 601 of SEC Regulation S-K are included as Exhibits to this report as follows:

Exhibit
Number
3.1
3.2
3.3
4.1

Description of Exhibits
— Amended and Restated Certificate of Incorporation of the Company. (2)
— Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Company. (12)
— Amended and Restated Bylaws of the Company. (11)
— Instruments defining the rights of security holders are contained in the Amended and Restated Certificate

of Incorporation of the Company. (2)

4.2

— Instruments defining the rights of security holders are contained in the Amended and Restated Bylaws of

the Company. (11)

4.3*
4.4*
4.5*
4.6*
10.1*
10.2*

— Crown Crafts, Inc. 2014 Omnibus Equity Compensation Plan. (17)
— Form of Incentive Stock Option Grant Agreement. (18)
— Form of Non-Qualified Stock Option Grant Agreement. (18)
— Form of Restricted Stock Grant Agreement. (18)
— Employment Agreement dated July 23, 2001 by and between the Company and E. Randall Chestnut. (1)
— Amended and Restated Severance Protection Agreement dated April 20, 2004 by and between the

Company and E. Randall Chestnut. (3)

10.3*

— Amended and Restated Employment Agreement dated April 20, 2004 by and between the Company and

Nanci Freeman. (3)

10.4

— 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. (4)

10.5

— Stock Pledge Agreement dated as of July 11, 2006 by and among the Company, Churchill Weavers, Inc.,

10.6

Hamco, Inc., Crown Crafts Infant Products, Inc. and The CIT Group/Commercial Services, Inc. (4)
First Amendment to Financing Agreement dated as of November 5, 2007 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*
10.8*

— Employment Agreement dated November 6, 2008 by and between the Company and Olivia W. Elliott (6)
— First Amendment to Employment Agreement dated November 6, 2008 by and between the Company and

E. Randall Chestnut. (7)

10.9*

— First Amendment to Amended and Restated Severance Protection Agreement dated November 6, 2008 by

and between the Company and E. Randall Chestnut. (7)

10.10* — First Amendment to Amended and Restated Employment Agreement dated November 6, 2008 by and

10.11

10.12

10.13

10.14

between the Company and Nanci Freeman. (7)
Third Amendment to Financing Agreement dated as of July 2, 2009 by and among the Company, Churchill
Weavers, Inc., Hamco, Inc., Crown Crafts Infant Products, Inc. and The CIT Group/Commercial Services, Inc.
(8)
Sixth Amendment to Financing Agreement dated as of March 5, 2010 by and among the Company,
Churchill Weavers, Inc., Hamco, Inc., Crown Crafts Infant Products, Inc. and The CIT Group/Commercial
Services, Inc. (9)
Seventh Amendment to Financing Agreement dated as of May 27, 2010 by and among the Company,
Churchill Weavers, Inc., Hamco, Inc., Crown Crafts Infant Products, Inc. and The CIT Group/Commercial
Services, Inc. (10)
Eighth Amendment to Financing Agreement dated as of March 26, 2012 by and among the Company,
Churchill Weavers, Inc., Hamco, Inc., Crown Crafts Infant Products, Inc. and The CIT Group/Commercial
Services, Inc. (13)

—

10.15* — Second Amendment to Amended and Restated Employment Agreement dated March 26, 2012 by and

between the Company and Nanci Freeman. (14)

10.16 — Ninth Amendment to Financing Agreement dated May 21, 2013 by and among the Company, Hamco, Inc.,

Crown Crafts Infant Products, Inc. and The CIT Group/Commercial Services, Inc. (16)
10.17 — Settlement Agreement dated December 5, 2014 by and between the Company, Crown Crafts Infant

14.1
21.1
23.1
31.1
31.2
32.1
32.2

101

Products, Inc. and BreathableBaby, LLC (19)

— Code of Ethics. (3)
— Subsidiaries of the Company. (20)
— Consent of KPMG LLP. (20)
— Rule 13a-14(a)/15d-14(a) Certification by the Company’s Chief Executive Officer. (20)
— Rule 13a-14(a)/15d-14(a) Certification by the Company’s Chief Financial Officer. (20)
— Section 1350 Certification by the Company’s Chief Executive Officer. (20)
— Section 1350 Certification by the Company’s Chief Financial Officer. (20)

— The following information from the Registrant’s Annual Report on Form 10-K for the fiscal year ended
March 29, 2015, formatted as interactive data files in XBRL (eXtensible Business Reporting Language):

(i)Consolidated Statements of Income;
(ii)Consolidated Balance Sheets;
(iii)Consolidated Statements of Changes in Shareholders’ Equity;
(iv)Consolidated Statements of Cash Flows; and
(v)Notes to Consolidated Financial Statements.

* Management contract or a compensatory plan or arrangement.

(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 Quarterly Report on Form 10-Q for the quarter ended December

28, 2003.

(3) Incorporated herein by reference to Registrant’s Annual Report on Form 10-K for the fiscal year ended March 28,

2004.

(4) Incorporated herein by reference to Registrant’s Current Report on Form 8-K dated July 17, 2006.
(5) Incorporated herein by reference to Registrant’s Current Report on Form 8-K dated November 9, 2007.
(6) Incorporated herein by reference to Registrant’s Current Report on Form 8-K/A dated November 7, 2008.
(7) Incorporated herein by reference to Registrant’s Current Report on Form 8-K dated November 7, 2008.
(8) Incorporated herein by reference to Registrant’s Current Report on Form 8-K dated July 6, 2009.
(9) Incorporated herein by reference to Registrant’s Current Report on Form 8-K dated March 8, 2010.
(10) Incorporated herein by reference to Registrant’s Current Report on Form 8-K dated May 27, 2010.
(11) Incorporated herein by reference to Registrant’s Current Report on Form 8-K dated April 4, 2011.
(12) Incorporated herein by reference to Registrant’s Current Report on Form 8-K dated August 9, 2011.
(13) Incorporated herein by reference to Registrant’s Current Report on Form 8-K dated March 27, 2012.
(14) Incorporated herein by reference to Registrant’s Current Report on Form 8-K dated March 30, 2012.
(15) Incorporated herein by reference to Registrant’s Registration Statement on Form S-8 dated August 14, 2012.
(16) Incorporated herein by reference to Registrant’s Current Report on Form 8-K dated May 21, 2013.
(17) Incorporated herein by reference to Appendix A to the Registrant’s Definitive Proxy Statement on Schedule 14A

filed on June 27, 2014.

(18) Incorporated herein by reference to Registrant’s Registration Statement on Form S-8 dated November 10, 2014.
(19) Incorporated herein by reference to Registrant’s Current Report on Form 8-K dated December 9, 2014.
(20) Filed herewith.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly

caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SIGNATURES

CROWN CRAFTS, INC.

By: /s/ E. Randall Chestnut
E. Randall Chestnut
Chairman of the Board, President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the

following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signatures

Title

/s/ E. Randall Chestnut
E. Randall Chestnut

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

Date

June 11, 2015

Director

/s/ Sidney Kirschner
Sidney Kirschner

/s/ Zenon S. Nie
Zenon S. Nie

/s/ Donald Ratajczak
Donald Ratajczak

/s/ Patricia Stensrud
Patricia Stensrud

/s/ Olivia W. Elliott
Olivia W. Elliott

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

June 11, 2015

ITEM 8. Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Audited Financial Statements:

Report of Independent Registered Public Accounting Firm ................................................................................................................ F-1
Consolidated Balance Sheets as of March 29, 2015 and March 30, 2014 ......................................................................................... F-2
Consolidated Statements of Income for the Fiscal Years Ended March 29, 2015 and March 30, 2014 .................................. F-3
Consolidated Statements of Changes in Shareholders' Equity for the Fiscal Years Ended March 29, 2015 and March

30, 2014 .............................................................................................................................................................................................................. F-4
Consolidated Statements of Cash Flows for the Fiscal Years Ended March 29, 2015 and March 30, 2014 ........................... F-5
Notes to Consolidated Financial Statements ............................................................................................................................................. F-6

Page

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders
Crown Crafts, Inc.:

We have audited the accompanying consolidated balance sheets of Crown Crafts, Inc. and subsidiaries as of March 29, 2015
and March 30, 2014, and the related consolidated statements of income, changes in shareholders’ equity, and cash flows for
the years then ended. In connection with our audits of the consolidated financial statements, we also have audited financial
statement Schedule II included in Item 15. These consolidated financial statements and financial statement schedule are the
responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial
statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of Crown Crafts, Inc. and subsidiaries as of March 29, 2015 and March 30, 2014, and the results of their operations
and their cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles. Also, in our
opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements
taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/ KPMG LLP

Baton Rouge, Louisiana
June 11, 2015

F-1

CROWN CRAFTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 29, 2015 AND MARCH 30, 2014

March 29, 2015 March 30, 2014
(amounts in thousands, except
share and per share amounts)

Current assets:
Cash and cash equivalents ....................................................................................................................................................... $
Accounts receivable (net of allowances of $1,000 at March 29, 2015 and $718 at

1,807 $

560

ASSETS

March 30, 2014):

Due from factor ..................................................................................................................................................................
Other ......................................................................................................................................................................................
Inventories ......................................................................................................................................................................................
Prepaid expenses .........................................................................................................................................................................
Deferred income taxes ...............................................................................................................................................................

Total current assets...................................................................................................................................................

Property, plant and equipment - at cost:
Vehicles ............................................................................................................................................................................................
Leasehold improvements .........................................................................................................................................................
Machinery and equipment .......................................................................................................................................................
Furniture and fixtures .................................................................................................................................................................
Property, plant and equipment – gross .........................................................................................................................
Less accumulated depreciation .............................................................................................................................................

Property, plant and equipment – net ..............................................................................................................

Finite-lived intangible assets - at cost:
Customer relationships .............................................................................................................................................................
Other finite-lived intangible assets .......................................................................................................................................
Finite-lived intangible assets – gross ..............................................................................................................................
Less accumulated amortization .............................................................................................................................................

Finite-lived intangible assets – net ...................................................................................................................

Goodwill ..........................................................................................................................................................................................
Deferred income taxes ...............................................................................................................................................................
Other .................................................................................................................................................................................................

Total Assets ................................................................................................................................................................... $

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Accounts payable ........................................................................................................................................................................ $
Accrued wages and benefits ...................................................................................................................................................
Accrued royalties .........................................................................................................................................................................
Dividends payable .......................................................................................................................................................................
Income taxes currently payable .............................................................................................................................................
Other accrued liabilities.............................................................................................................................................................

Total current liabilities ............................................................................................................................................

Commitments and contingencies

Shareholders' equity:
Common stock - $0.01 par value per share; Authorized 40,000,000 shares at March 29, 2015 and

March 30, 2014; Issued 12,030,302 shares at March 29, 2015 and 11,794,070 shares at March 30, 2014

Additional paid-in capital .........................................................................................................................................................
Treasury stock - at cost - 1,964,886 shares at March 29, 2015 and 1,932,744 shares at March 30, 2014....
Accumulated deficit ....................................................................................................................................................................

Total shareholders' equity ....................................................................................................................................
Total Liabilities and Shareholders' Equity ......................................................................................................... $

See notes to consolidated financial statements.

F-2

21,563
807
15,468
1,906
968
42,519

235
230
2,836
755
4,056
3,528
528

5,411
7,613
13,024
8,517
4,507
1,126
1,133
133
49,946 $

4,472 $
2,265
1,581
805
1,021
230
10,374

120
48,561
(8,390)
(719)
39,572
49,946 $

20,800
912
13,607
1,391
799
38,069

193
213
2,671
738
3,815
3,229
586

5,411
7,613
13,024
7,776
5,248
1,126
1,109
77
46,215

5,066
2,426
1,139
789
787
91
10,298

118
47,162
(8,147)
(3,216)
35,917
46,215

CROWN CRAFTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FISCAL YEARS ENDED MARCH 29, 2015 AND MARCH 30, 2014
(amounts in thousands, except per share amounts)

2015

2014

Net sales ........................................................................................................................................................ $
Cost of products sold ................................................................................................................................
Gross profit...................................................................................................................................................
Legal expense .............................................................................................................................................
Other marketing and administrative expenses ...............................................................................
Income from operations ..........................................................................................................................
Other income (expense):

Interest expense ................................................................................................................................
Interest income ..................................................................................................................................
Foreign exchange loss .....................................................................................................................
Other – net ..........................................................................................................................................
Income before income tax expense ....................................................................................................
Income tax expense ..................................................................................................................................
Net income ................................................................................................................................................... $

Weighted average shares outstanding:

Basic ...........................................................................................................................................................
Effect of dilutive securities .................................................................................................................
Diluted .......................................................................................................................................................

85,978 $
62,428
23,550
1,368
12,962
9,220

(37)
19
(49)
7
9,160
3,442
5,718 $

10,047
33
10,080

Earnings per share:

Basic ........................................................................................................................................................... $

0.57 $

Diluted ....................................................................................................................................................... $

0.57 $

Cash dividends declared per share ...................................................................................................... $

0.32 $

See notes to consolidated financial statements.

81,294
58,760
22,534
867
12,289
9,378

(49)
21
(38)
34
9,346
3,575
5,771

9,848
10
9,858

0.59

0.32

F-3

CROWN CRAFTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FISCAL YEARS ENDED MARCH 29, 2015 AND MARCH 30, 2014

Common Shares

Treasury Shares

Balances - March 31, 2013 ................ 11,696,022 $

117 (1,868,003) $ (7,690) $

Number of
Shares

Amount

Number of
Shares

Additional
Paid-in
Capital
(Dollar amounts in thousands)
46,219 $

Amount

Accumulated
Deficit

Total
Shareholders'
Equity

Issuance of shares ...................................
Stock-based compensation .................
Net tax effect of stock-based
compensation ........................................
Acquisition of treasury stock...............
Net income ................................................
Dividends declared ................................

98,048

306
604

(64,741)

(457)

(5,834) $

32,812

307
604

33
(457)
5,771
(3,153)

5,771
(3,153)

Balances - March 30, 2014 ................ 11,794,070

118 (1,932,744)

(8,147)

47,162

(3,216)

35,917

236,232

(32,142)

(243)

468
862

470
862

69
(243)
5,718
(3,221)

5,718
(3,221)

Balances - March 29, 2015 ................ 12,030,302 $

120 (1,964,886) $ (8,390) $

48,561 $

(719) $

39,572

See notes to consolidated financial statements.

F-4

CROWN CRAFTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FISCAL YEARS ENDED MARCH 29, 2015 AND MARCH 30, 2014

Operating activities:
Net income ................................................................................................................................................... $
Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation of property, plant and equipment....................................................................
Amortization of intangibles ...........................................................................................................
Deferred income taxes ....................................................................................................................
Gain on sale of property, plant and equipment .....................................................................
Stock-based compensation ...........................................................................................................
Tax shortfall from stock-based compensation........................................................................
Changes in assets and liabilities:

Accounts receivable .....................................................................................................................
Inventories ......................................................................................................................................
Prepaid expenses ..........................................................................................................................
Other assets ....................................................................................................................................
Accounts payable .........................................................................................................................
Accrued liabilities ..........................................................................................................................

Net cash provided by operating activities ...................................................................................
Investing activities:
Capital expenditures for property, plant and equipment ...........................................................
Proceeds from disposition of assets ....................................................................................................
Capitalized costs of internally developed intangible assets .......................................................
Net cash used in investing activities ..............................................................................................
Financing activities:
Repayments under revolving line of credit.......................................................................................
Borrowings under revolving line of credit ........................................................................................
Purchase of treasury stock ......................................................................................................................
Issuance of common stock .....................................................................................................................
Excess tax benefit from stock-based compensation .....................................................................
Dividends paid ............................................................................................................................................
Net cash used in financing activities ..............................................................................................
Net increase in cash and cash equivalents ..................................................................................
Cash and cash equivalents at beginning of period........................................................................
Cash and cash equivalents at end of period ............................................................................... $

Supplemental cash flow information:
Income taxes paid, net of refunds received ...................................................................................... $
Interest paid, net of interest received .................................................................................................

Noncash financing activity:
Dividends declared but unpaid ............................................................................................................
Compensation paid as common stock ...............................................................................................

See notes to consolidated financial statements.

2015
2014
(amounts in thousands)

5,718 $

5,771

314
741
(193)
-
862
-

(658)
(1,861)
(515)
(56)
(594)
1,008
4,766

(256)
-
-
(256)

(7,839)
7,839
(243)
116
69
(3,205)
(3,263)
1,247
560
1,807 $

3,386 $
19

(805)
354

299
758
(743)
(2)
604
(9)

12
(2,677)
682
-
(2,310)
1,254
3,639

(147)
2
(16)
(161)

(10,322)
10,322
(457)
307
42
(3,150)
(3,258)
220
340
560

4,218
31

(789)
-

F-5

Crown Crafts, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Fiscal Years Ended March 29, 2015 and March 30, 2014

Note 1 – Description of Business

Crown Crafts, Inc. (the “Company”) operates indirectly through its wholly-owned subsidiaries, Hamco, Inc. (“Hamco”)
and Crown Crafts Infant Products, Inc. (“CCIP”), in the infant and toddler products segment within the consumer products
industry. The infant and toddler products segment consists of infant and toddler bedding, bibs, soft bath products,
disposable products and accessories. Sales of the Company’s products are generally made directly to retailers, which are
primarily mass merchants, mid-tier retailers, juvenile specialty stores, value channel stores, grocery and drug stores,
restaurants, internet accounts and wholesale clubs. The Company’s products are manufactured primarily in Asia and
marketed under a variety of Company-owned trademarks, under trademarks licensed from others and as private label goods.

Note 2 - Summary of Significant Accounting Policies

Basis of Presentation: The accompanying consolidated financial statements include the accounts of the Company
and have been prepared pursuant to accounting principles generally accepted in the United States (“GAAP”) as promulgated
by the Financial Accounting Standards Board (“FASB”), the Securities Act, the Exchange Act and the regulations of the
Securities and Exchange Commission (“SEC”). All significant intercompany balances and transactions have been eliminated
in consolidation. References herein to GAAP are to topics within the FASB Accounting Standards Codification (the “FASB
ASC”), which the FASB periodically revises through the issuance of an Accounting Standards Update (“ASU”) and which has
been established by the FASB as the authoritative source for GAAP recognized by the FASB to be applied by
nongovernmental entities.

Reclassifications: The Company has reclassified certain prior year information to conform to the amounts presented
in the current year. None of the changes impact the Company’s previously reported financial position or results of operations.

Fiscal Year: The Company's fiscal year ends on the Sunday nearest to or on March 31. References herein to “fiscal
year 2015” or “2015”, and “fiscal year 2014” or “2014” represent the 52-week periods ended March 29, 2015 and March 30,
2014, respectively.

Use of Estimates: The preparation of financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities as of the date of the consolidated balance sheets and the reported amounts of revenues and expenses during the
periods presented on the consolidated statements of income and cash flows. Significant estimates are made with respect to
the allowances related to accounts receivable for customer deductions for returns, allowances and disputes. The Company
also has a certain amount of discontinued finished goods which necessitates the establishment of inventory reserves that
are highly subjective. Actual results could differ materially from those estimates.

Cash and Cash Equivalents: The Company considers all highly-liquid investments purchased with original maturities
of three months or less to be cash equivalents. The Company’s credit facility consists of a revolving line of credit under a
financing agreement with The CIT Group/Commercial Services, Inc. (“CIT”), a subsidiary of CIT Group Inc. The Company
classifies a negative balance outstanding under this revolving line of credit as cash, as these amounts are legally owed to the
Company and are immediately available to be drawn upon by the Company.

Financial Instruments: For short-term instruments such as cash and cash equivalents, accounts receivable and

accounts payable, the Company uses carrying value as a reasonable estimate of fair value.

Royalty Payments: The Company has entered into agreements that provide for royalty payments based on a
percentage of sales with certain minimum guaranteed amounts. These royalties are accrued based upon historical sales rates
adjusted for current sales trends by customers. Royalty expense is included in cost of products sold and amounted to $8.7
million and $7.5 million for fiscal years 2015 and 2014, respectively.

Advertising Costs: The Company’s advertising costs are primarily associated with cooperative advertising
arrangements with certain of the Company’s customers and are recognized using the straight-line method based upon

F-6

aggregate annual estimated amounts for these customers, with periodic adjustments to the actual amounts of authorized
agreements. Advertising expense is included in other marketing and administrative expenses in the accompanying
consolidated statements of income and amounted to $1.1 million and $747,000 for fiscal years 2015 and 2014, respectively.

Depreciation and Amortization: The accompanying consolidated balance sheets reflect property, plant and
equipment, and certain intangible assets at cost less accumulated depreciation or amortization. The Company capitalizes
additions and improvements and expenses maintenance and repairs as incurred. Depreciation and amortization are
computed using the straight-line method over the estimated useful lives of the assets, which are three to eight years for
property, plant and equipment, and one to twenty years for intangible assets other than goodwill. The Company amortizes
improvements to its leased facilities over the term of the lease or the estimated useful life of the asset, whichever is shorter.

Valuation of Long-Lived Assets and Identifiable Intangible Assets: In addition to the depreciation and amortization
procedures set forth above, the Company reviews for impairment long-lived assets and certain identifiable intangible assets
whenever events or changes in circumstances indicate that the carrying amount of any asset may not be recoverable. In the
event of impairment, the asset is written down to its fair market value.

Patent Costs: The Company incurs certain legal and related costs in connection with patent applications. The
Company capitalizes such costs to be amortized over the expected life of the patent to the extent that an economic benefit
is anticipated from the resulting patent or an alternative future use is available to the Company. The Company also capitalizes
legal and other costs incurred in the protection or defense of the Company’s patents when it is believed that the future
economic benefit of the patent will be maintained or increased and a successful defense is probable. Capitalized patent
defense costs are amortized over the remaining expected life of the related patent. The Company’s assessment of future
economic benefit of its patents involves considerable management judgment, and a different conclusion could result in a
material impairment charge up to the carrying value of these assets.

Segments and Related Information: The Company operates primarily in one principal segment, infant and toddler
products. These products consist of infant and toddler bedding, bibs, soft bath products, disposable products and
accessories. Net sales of bedding, blankets and accessories and net sales of bibs, bath and disposable products for 2015 and
2014 are as follows (in thousands):

Bedding, blankets and accessories ................................................................................... $
Bibs, bath and disposable products .................................................................................

Total net sales ...................................................................................................................... $

2015

2014

64,038 $
21,940
85,978 $

58,332
22,962
81,294

Inventory Valuation: The preparation of the Company's financial statements requires careful determination of the
appropriate dollar amount of the Company's inventory balances. Such amount is presented as a current asset in the
accompanying consolidated balance sheets and is a direct determinant of cost of products sold in the accompanying
consolidated statements of income and, therefore, has a significant impact on the amount of net income in the reported
accounting periods. The basis of accounting for inventories is cost, which includes the direct supplier acquisition cost, duties,
taxes and freight, and the indirect costs to design, develop, source and store the product until it is sold. Once cost has been
determined, the Company’s inventory is then stated at the lower of cost or market, with cost determined using the first-in,
first-out ("FIFO") method, which assumes that inventory quantities are sold in the order in which they are acquired.

The determination of the indirect charges and their allocation to the Company's finished goods inventories is
complex and requires significant management judgment and estimates. If management made different judgments or
utilized different estimates, then differences would result in the valuation of the Company's inventories and in the amount
and timing of the Company's cost of goods sold and the resulting net income for the reporting period.

F-7

when inventory for which an allowance has been established is later sold or is otherwise disposed is the allowance reduced
accordingly. Significant management judgment is required in determining the amount and adequacy of this allowance. In
the event that actual results differ from management's estimates or these estimates and judgments are revised in future
periods, the Company may not fully realize the carrying value of its inventory or may need to establish additional allowances,
either of which could materially impact the Company's financial position and results of operations.

Revenue Recognition: Sales are recorded when goods are shipped to customers and are reported net of allowances
for estimated returns and allowances in the accompanying consolidated statements of income. Allowances for returns are
estimated based on historical rates. Allowances for returns, cooperative advertising allowances, warehouse allowances,
placement fees and volume rebates are recorded commensurate with sales activity or using the straight-line method, as
appropriate, and the cost of such allowances is netted against sales in reporting the results of operations. Shipping and
handling costs, net of amounts reimbursed by customers, are not material and are included in net sales.

Allowances Against Accounts Receivable: The Company’s allowances against accounts receivable are primarily
contractually agreed-upon deductions for items such as cooperative advertising and warehouse allowances, placement fees
and volume rebates. These deductions are recorded throughout the year commensurate with sales activity or using the
straight-line method, as appropriate. Funding of the majority of the Company’s allowances occurs on a per-invoice basis.
The allowances for customer deductions, which are netted against accounts receivable in the accompanying consolidated
balance sheets, consist of agreed-upon cooperative advertising support, placement fees, markdowns and warehouse and
other allowances. All such allowances are recorded as direct offsets to sales, and such costs are accrued commensurate with
sales activities or as a straight-line amortization charge of an agreed-upon fixed amount, as appropriate to the circumstances
for each arrangement. When a customer requests deductions, the allowances are reduced to reflect such payments or credits
issued against the customer’s account balance. The Company analyzes the components of the allowances for customer
deductions monthly and adjusts the allowances to the appropriate levels. The timing of the funding requests for advertising
support can cause the net balance in the allowance account to fluctuate from period to period. The timing of such funding
requests should have a minimal impact on the consolidated statements of income since such costs are accrued
commensurate with sales activity or using the straight-line method, as appropriate.

To reduce its exposure to credit losses, the Company assigns the majority of its trade accounts receivable under
factoring agreements with CIT. In the event a factored receivable becomes uncollectible due to creditworthiness, CIT bears
the risk of loss. The Company’s management must make estimates of the uncollectiblity of its non-factored accounts
receivable, which it accomplishes by specifically analyzing accounts receivable, historical bad debts, customer
concentrations, customer creditworthiness, current economic trends and changes in its customers’ payment terms. The
Company’s provision for doubtful accounts is included in other marketing and administrative expenses in the accompanying
consolidated statements of income and amounted to $9,000 and $73,000 for fiscal years 2015 and 2014, respectively.

The Company’s accounts receivable at March 29, 2015 amounted to $22.4 million, net of allowances of $1.0 million.
Of this amount, $21.6 million was due from CIT under the factoring agreements, and an additional $1.8 million was due from
CIT as a negative balance outstanding under the revolving line of credit. The combined amount of $23.4 million represents
the maximum loss that the Company could incur if CIT failed completely to perform its obligations under the factoring
agreements and the revolving line of credit.

Management evaluates items of income, deductions and credits reported on the Company’s various federal and
state income tax returns filed and recognizes the effect of positions taken on those income tax returns only if those positions
are more likely than not to be sustained. Recognized income tax positions are measured at the largest amount that has a
greater than 50% likelihood of being realized. Changes in recognition or measurement are reflected in the period in which
the change in judgment occurs. Based on its recent evaluation, the Company has concluded that there are no significant
uncertain tax positions requiring recognition in the accompanying consolidated financial statements. The Company’s policy

F-8

is to accrue interest expense and penalties as appropriate on any estimated unrecognized tax benefits as a charge to interest
expense in the Company’s consolidated statements of income.

The Company files income tax returns in the many jurisdictions in which it operates, including the U.S., several U.S.
states and the People’s Republic of China. The statute of limitations varies by jurisdiction; tax years open to federal or state
audit or other adjustment as of March 29, 2015 were the tax years ended April 1, 2012, March 31, 2013, March 30, 2014 and
March 29, 2015, as well as the tax year ended April 3, 2011 for several states.

Earnings Per Share: The Company calculates basic earnings per share by using a weighted average of the number of
shares outstanding during the reporting periods. Diluted shares outstanding are calculated in accordance with the treasury
stock method, which assumes that the proceeds from the exercise of all exercisable options would be used to repurchase
shares at market value. The net number of shares issued after the exercise proceeds are exhausted represents the potentially
dilutive effect of the exercisable options, which are added to basic shares to arrive at diluted shares.

Recently-Issued Accounting Standards: On April 7, 2015, the FASB issued ASU No. 2015-03, Interest – Imputation of
Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which will require that debt issuance costs
related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of
that debt liability, and which will lead to a presentation consistent with the long-standing presentation of debt discounts.
The ASU will become effective for the first interim period of the fiscal year beginning after December 15, 2015. Early adoption
is permitted for financial statements that have not been previously issued, with a retrospective presentation within each
balance sheet. When the Company’s financing agreement with CIT was amended on May 21, 2013 to extend its maturity
date to July 11, 2016, CIT did not charge the Company any debt issuance costs, and the Company’s legal and other costs
incurred in connection with the extension of the financing agreement were not material. As of March 29, 2015 and March
30, 2014, there was no balance owed on the Company’s revolving line of credit or any other structured debt. If the Company
again extends its financing agreement with CIT to beyond July 11, 2016, or otherwise enters into any new structured debt
arrangements, and if there are debt issuance costs associated with such an extension or such new structured debt
arrangements, the Company does not anticipate that the adoption by the Company of ASU No. 2015-03 on April 4, 2016 will
have a material impact on the Company’s consolidated financial statements.

On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which will replace most
existing revenue guidance in GAAP when it becomes effective on the first day of the fiscal year beginning after December
15, 2016. Early adoption is not permitted. The Company is currently evaluating the effect that the adoption of ASU 2014-09
will have on its financial position, results of operations and related disclosures.

The Company has determined that all other ASU’s issued which had become effective as of March 29, 2015, or which
will become effective at some future date, are not expected to have a material impact on the Company’s consolidated
financial statements.

Note 3 – Retirement Plan

The Company sponsors a defined contribution retirement savings plan with a cash or deferred arrangement (the
“401(k) Plan”), as provided by Section 401(k) of the Internal Revenue Code (“Code”). The 401(k) Plan covers substantially all
employees, who may elect to contribute a portion of their compensation to the 401(k) Plan, subject to maximum amounts
and percentages as prescribed in the Code. Each calendar year, the Company’s Board of Directors (the “Board”) determines
the portion, if any, of employee contributions that will be matched by the Company. For calendar years 2014 and 2013, the
employer matching contributions represented an amount equal to 100% of the first 2% of employee contributions and 50%
of the next 1% of employee contributions to the 401(k) Plan. If an employee separates from the Company prior to the full
vesting of the funds in their account that represent the matching employer portion of their account, then the unvested
portion of the matching employer portion of their account is forfeited when they take a distribution of their account. The
Company utilizes such forfeitures as an offset to the aggregate matching contributions. The Company's matching
contribution to the 401(k) Plan, net of the utilization of forfeitures, was $171,000 and $153,000 for fiscal years 2015 and 2014,
respectively.

F-9

Note 4 – Stock-based Compensation

The Company has two incentive stock plans, the 2006 Omnibus Incentive Plan (the “2006 Plan”) and the 2014
Omnibus Equity Compensation Plan (the “2014 Plan”). As a result of the approval of the 2014 Plan by the Company’s
stockholders at the Company’s 2014 annual meeting, grants may no longer be issued under the 2006 Plan.

The Company believes that awards of long-term, equity-based incentive compensation will attract and retain
directors, officers and employees of the Company and will encourage these individuals to contribute to the successful
performance of the Company, which will lead to the achievement of the Company’s overall goal of increasing stockholder
value. Awards granted under the 2014 Plan may be in the form of incentive stock options, non-qualified stock options, shares
of restricted or unrestricted stock, stock units, stock appreciation rights, or other stock-based awards. Awards may be granted
subject to the achievement of performance goals or other conditions, and certain awards may be payable in stock or cash,
or a combination of the two. The 2014 Plan is administered by the Compensation Committee of the Board, which selects
eligible employees, non-employee directors and other individuals to participate in the 2014 Plan and determines the type,
amount, duration and other terms of individual awards. At March 29, 2015, 1.2 million shares of the Company’s common
stock were available for future issuance under the 2014 Plan.

Stock-based compensation is calculated according to FASB ASC Topic 718, Compensation – Stock Compensation,
which requires stock-based compensation to be accounted for using a fair-value-based measurement. The Company
recorded $862,000 and $604,000 of stock-based compensation during fiscal years 2015 and 2014, respectively. The Company
records the compensation expense associated with stock-based awards granted to individuals in the same expense
classifications as the cash compensation paid to those same individuals. No stock-based compensation costs were
capitalized as part of the cost of an asset as of March 29, 2015.

Stock Options: The following table represents stock option activity for fiscal years 2015 and 2014:

Fiscal Year Ended
March 29, 2015

Weighted-
Average
Exercise
Price

Number of
Options
Outstanding

Fiscal Year Ended
March 30, 2014

Weighted-
Average
Exercise
Price

Number of
Options

Outstanding

Outstanding at Beginning of Period ...... $
Granted ............................................................
Exercised ..........................................................
Outstanding at End of Period ...................
Exercisable at End of Period ......................

5.76
7.90
5.78
6.83
5.59

185,000 $
165,000
(20,000)
330,000
115,000

5.23
6.14
5.12
5.76
5.16

145,000
100,000
(60,000)
185,000
35,000

The total intrinsic value of the stock options exercised during fiscal years 2015 and 2014 was $42,000 and $126,000,
respectively. As of March 29, 2015, the intrinsic value of the outstanding and exercisable stock options was $321,000 and
$243,000, respectively.

The Company received no cash from the exercise of stock options during either fiscal year 2015 or 2014. Upon the
exercise of stock options, participants may choose to surrender to the Company those shares from the option exercise
necessary to satisfy the exercise amount and their income tax withholding obligations that arise from the option exercise.
The effect on the cash flow of the Company from these “cashless” option exercises is that the Company remits cash on behalf
of the participant to satisfy his or her income tax withholding obligations. The Company used cash of $17,000 and $49,000
to remit the required income tax withholding amounts from “cashless” option exercises during fiscal years 2015 and 2014,
respectively.

F-10

To determine the estimated fair value of stock options granted, the Company uses the Black-Scholes-Merton
valuation formula, which is a closed-form model that uses an equation to estimate fair value. The following table sets forth
the assumptions used to determine that fair value, and the resulting grant-date fair value per option, of the non-qualified
stock options which were awarded to certain employees during fiscal years 2015 and 2014, which options vest over a two-
year period, assuming continued service.

Options issued ......................................................................................................................................
Grant date ..............................................................................................................................................
Dividend yield .......................................................................................................................................
Expected volatility ...............................................................................................................................
Risk free interest rate ..........................................................................................................................
Contractual term (years) ....................................................................................................................
Expected term (years).........................................................................................................................
Forfeiture rate .......................................................................................................................................
Exercise price (grant-date closing price) per option................................................................ $
Fair value per option ........................................................................................................................... $

2015

165,000
June 18, 2014
4.05%
30.00%
0.95%
10.00
3.00
5.00%
7.90 $
1.19 $

2014

100,000
June 14, 2013
5.21%
35.00%
0.49%
10.00
3.00
5.00%
6.14
0.98

For the fiscal year ended March 29, 2015, the Company recognized compensation expense associated with stock

options as follows (in thousands):

Options Granted in Fiscal Year

2013 ....................................................... $
2014 .......................................................
2015 .......................................................

Total stock option compensation .................................. $

Cost of
Products
Sold

Other Marketing
& Administrative
Expenses

Total
Expense

12 $
24
39

75 $

12 $
24
32

68 $

24
48
71

143

For the fiscal year ended March 30, 2014, the Company recognized compensation expense associated with stock

options as follows (in thousands):

Options Granted in Fiscal Year

2012 ....................................................... $
2013 .......................................................
2014 .......................................................

Total stock option compensation .................................. $

Cost of
Products
Sold

Other Marketing
& Administrative
Expenses

Total
Expense

13 $
46
18

77 $

11 $
46
18

75 $

24
92
36

152

A summary of stock options outstanding and exercisable at March 29, 2015 is as follows:

Exercise
Price

Number
of Options
Outstanding

Weighted-
Avg. Remaining
Contractual
Life in Years

$
$
$
$

4.81
5.42
6.14
7.90

15,000
60,000
90,000
165,000
330,000

6.20
7.21
8.21
9.22
8.44

$
$
$
$
$

F-11

Weighted-
Avg. Exercise
Price of
Options
Outstanding

Weighted-
Avg. Exercise

Price of
Options
Exercisable

Number
of Options
Exercisable

4.81
5.42
6.14
7.90
6.83

15,000 $
60,000 $
40,000 $
-
115,000 $

4.81
5.42
6.14
-
5.59

As of March 29, 2015, total unrecognized stock-option compensation costs amounted to $138,000, which will be
recognized as the underlying stock options vest over a weighted-average period of 7.2 months. The amount of future stock-
option compensation expense could be affected by any future stock option grants and by the separation from the Company
of any employee or director who has stock options that are unvested as of such individual’s separation date.

Non-vested Stock Granted to Non-Employee Directors: The Board granted the following shares of non-vested stock to

the Company’s non-employee directors:

Number
of Shares

Fair Value
per Share

28,000 $
28,000
42,000
30,000

7.97
6.67
5.62
4.44

Grant Date
August 11, 2014
August 14, 2013
August 15, 2012
August 10, 2011

These shares vest over a two-year period, assuming continued service. The fair value of non-vested stock granted
to the Company’s non-employee directors was based on the closing price of the Company’s common stock on the date of
each grant.

In August 2014 and 2013, 28,000 and 36,000 shares, respectively, that had been granted to the Company’s non-

employee directors vested, having an aggregate value of $223,000 and $244,000, respectively.

Non-vested Stock Granted to Employees: During the three-month period ended June 27, 2010, the Board awarded
345,000 shares of non-vested stock to certain employees in a series of grants, each of which will vest only if (i) the closing
price of the Company’s common stock is at or above certain target levels for any ten trading days out of any period of 30
consecutive trading days and (ii) the respective employees remain employed through July 29, 2015. The Company, with the
assistance of an independent third party, determined that the aggregate grant date fair value of the awards amounted to
$1.2 million.

As set forth below, the Board approved amendments to the grants that had been awarded to E. Randall Chestnut,
Chairman, Chief Executive Officer and President of the Company and Nanci Freeman, Chief Executive Officer and President
of CCIP. With the closing price conditions having been met for these awards, the original grants were amended to provide
for the immediate vesting of a portion of the shares originally granted. The vesting of these awards was accelerated in order
to preserve the deductibility of the associated compensation expense by the Company for income tax purposes. As a result
of the acceleration of the vesting of these grants, the Company recognized the remaining compensation expense associated
with the accelerated grants of $12,000 and $14,000 during the three-month periods ended December 28, 2014 and
December 29, 2013, respectively. These amounts would otherwise have been recognized by the Company ratably through
July 29, 2015. Mr. Chestnut and Ms. Freeman surrendered to the Company the shares necessary to satisfy the income tax
withholding obligations that arose from the vesting of the shares, and the Company paid $111,000 and $47,000 during the
three-month periods ended December 28, 2014 and December 29, 2013, respectively, to the appropriate taxing authorities
on their behalf.

Amendment Date

Grantee

Closing
Price

per Share
Condition
of Grant

November 24, 2014 E. Randall Chestnut $
November 24, 2014 Nanci Freeman
$
E. Randall Chestnut $
November 5, 2013

6.00
5.00
5.00

Shares
Awarded
in
Original
Grant

75,000
20,000
75,000

Aggregate
Value of
Shares
Vested

Shares
Vested

10,000 $
20,000 $
13,000 $

72,000
145,000
98,000

Shares
Surrendered
to Satisfy
Income Tax
Withholding
Obligations
4,795
10,516
6,234

Performance Bonus Plan: The Company maintains a performance bonus plan for certain executive officers that
provides for awards of cash or shares of common stock in the event that the aggregate average market value of the common
stock during the relevant fiscal year, plus the amount of cash dividends paid in respect of the common stock during such
period, increases. These individuals may instead be awarded cash, if and to the extent that an insufficient number of shares
F-12

of common stock are available for issuance from all shareholder-approved, equity-based plans or programs of the Company
in effect. The performance bonus plan also imposes individual limits on awards and provides that shares of common stock
that may be awarded will vest over a two-year period. Thus, compensation expense associated with performance bonus plan
awards are recognized over a three-year period – the fiscal year in which the award is earned, plus the two-year vesting
period.

In connection with the performance bonus plan, during fiscal year 2015, the Company, in respect of fiscal year 2014,
granted to certain executive officers 188,232 shares of common stock at a fair value of $5.65 per share. In connection with
these awards, the Company recognized compensation expense of $354,000 during each of fiscal years 2014 and 2015, and
will recognize $354,000 in compensation expense during fiscal year 2016.

In connection with the performance bonus plan, during fiscal year 2014, the Company, in respect of fiscal year 2013,
granted to certain executive officers 17,048 shares of common stock with a fair value of $5.47 per share and a cash award of
$258,000. Of the total compensation expense of $351,000, $196,000 and $155,000 were recognized during fiscal years 2014
and 2013, respectively. Although there are restrictions as to the subsequent transfer of the shares of stock awarded,
ownership in the stock was vested upon issuance. To satisfy the income tax withholding obligations that arose from the
issuance of the shares, the employees surrendered 8,549 shares to the Company and the Company paid $54,000 to the
appropriate taxing authorities on their behalf.

For the fiscal year ended March 29, 2015, the Company recognized compensation expense associated with non-
vested stock grants, which is included in other marketing and administrative expenses in the accompanying consolidated
statements of income, as follows (in thousands):

Stock Granted in Fiscal Year

Employees

Directors

Non-employee

2011 ....................................................... $
2013 .......................................................
2014 .......................................................
2015 .......................................................

Total stock grant compensation .................................... $

170 $
-
-
354

524 $

- $
26
94
75

195 $

Total
Expense

170
26
94
429

719

For the fiscal year ended March 30, 2014, the Company recognized compensation expense associated with non-
vested stock grants, which is included in other marketing and administrative expenses in the accompanying consolidated
statements of income, as follows (in thousands):

Stock Granted in Fiscal Year

Employees

Directors

Non-employee

2011 ....................................................... $
2012 .......................................................
2013 .......................................................
2014 .......................................................

Total stock grant compensation .................................... $

182 $
-
-
93

275 $

- $
22
92
63

177 $

Total
Expense

182
22
92
156

452

As of March 29, 2015, total unrecognized compensation expense related to the Company’s non-vested stock grants
was $583,000, which will be recognized over the remaining portion of the respective vesting periods associated with each
block of grants, such grants having a weighted average vesting term of 5.2 months. The amount of future compensation
expense related to non-vested stock grants could be affected by any future non-vested stock grants and by the separation
from the Company of any individual who has unvested grants as of such individual’s separation date.

F-13

Note 5 – Inventories

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

Raw Materials .......................................................................................................................... $
Finished Goods .......................................................................................................................

Total inventory ................................................................................................................... $

36 $
15,432
15,468 $

47
13,560
13,607

March 29, 2015

March 30, 2014

Note 6 – Goodwill, Customer Relationships and Other Intangible Assets

Goodwill: Goodwill represents the excess of the purchase price over the fair value of the net identifiable assets
acquired by the Company in business combinations. The Company considers CCIP and Hamco to each be a reporting unit of
the Company for the purpose of presenting and testing for the impairment of goodwill. The goodwill of the reporting units
of the Company at March 29, 2015 and March 30, 2014 amounted to $24.0 million and is reported in the accompanying
consolidated balance sheets net of accumulated impairment charges of $22.9 million, for a net reported balance of $1.1
million.

The Company tests the fair value of the goodwill, if any, within its reporting units annually as of the first day of the
Company’s fiscal year. An additional interim impairment test must be performed during the year whenever an event or
change in circumstances occurs that suggest that the fair value of the goodwill of either of the reporting units of the
Company has more likely than not (defined as having a likelihood of greater than 50%) fallen below its carrying value. The
annual or interim impairment test is performed by first assessing qualitative factors to determine whether it is more likely
than not that the fair value of a reporting unit is less than its carrying amount. If such qualitative factors so indicate, then the
impairment test is continued in a two-step approach. The first step is the estimation of the fair value of each reporting unit.
If step one indicates that the fair value of the reporting unit exceeds its carrying value, then a potential impairment exists,
and the second step is then performed to measure the amount of an impairment charge, if any. In the second step, these
estimated fair values are used as the hypothetical purchase price for the reporting units, and an allocation of such
hypothetical purchase price is made to the identifiable tangible and intangible assets and assigned liabilities of the reporting
units. The impairment charge is calculated as the amount, if any, by which the carrying value of the goodwill exceeds the
implied amount of goodwill that results from this hypothetical purchase price allocation. The annual impairment test of the
fair value of the goodwill of the reporting units of the Company was performed as of March 31, 2014 and the Company
concluded that the fair value of the goodwill of the Company’s reporting units substantially exceeded their carrying values
as of that date.

F-14

Other Intangible Assets: Other intangible assets as of March 29, 2015 consisted primarily of the capitalized costs of
acquired businesses, other than tangible assets, goodwill and assumed liabilities. The carrying amount and accumulated
amortization of the Company’s other intangible assets as of March 29, 2015 and March 30, 2014, the amortization expense
for the fiscal years then ended and the classification of such amortization expense within the accompanying consolidated
statements of income are as follows (in thousands):

Gross Amount

Accumulated
Amortization

Amortization Expense
Fiscal Year Ended

March 29,

2015

March 30,
2014

March 29,
2015

March 30, March 29,

2014

2015

March 30,
2014

Tradename and trademarks ............. $
Licenses and designs ..........................
Non-compete covenants ..................
Patents .....................................................
Customer relationships ......................
Total other intangible assets ... $

1,987 $
3,571
454
1,601
5,411
13,024 $

801 $

3,571
410
350
3,385
8,517 $

669 $
3,571
391
242
2,903
7,776 $

132 $
-
19
108
482
741 $

Classification within the

accompanying consolidated
statements of income:

Cost of products sold .................
Other marketing and

administrative expenses .......
Total amortization expense .....

19 $

722
741 $

133
2
55
85
483
758

701
758

The Company estimates that its amortization expense will be $729,000, $729,000, $572,000, 351,000 and $351,000

in fiscal years 2016, 2017, 2018, 2019 and 2020, respectively.

Note 7 - Financing Arrangements

Factoring Agreements: The Company assigns the majority of its trade accounts receivable to CIT pursuant to factoring
agreements, which have expiration dates that are coterminous with that of the financing agreement described below. Under
the terms of the factoring agreements, CIT remits customer payments to the Company as such payments are received by
CIT.

Credit Facility: The Company’s credit facility at March 29, 2015 consisted of a revolving line of credit under a financing
agreement with CIT of up to $26.0 million, which includes a $1.5 million sub-limit for letters of credit, bearing interest at the
rate of prime minus 0.50% or LIBOR plus 2.00%. The financing agreement matures on July 11, 2016 and is secured by a first
lien on all assets of the Company. At March 29, 2015, the Company had elected to pay interest on balances owed under the
revolving line of credit, if any, under the LIBOR option. The financing agreement also provides for the payment by CIT to the
Company of interest at the rate of prime minus 2.00%, which was 1.25% at March 29, 2015, on daily negative balances held
at CIT.

F-15

million was available under the revolving line of credit based on the Company’s eligible accounts receivable and inventory
balances.

Note 8 – Income Taxes

The Company’s income tax provision for fiscal years 2015 and 2014 is summarized below (in thousands):

Current

Fiscal year ended March 29, 2015
Deferred

Total

Federal ......................................................................................... $
State .............................................................................................
Other - net, including foreign ..............................................
Income tax expense (benefit) ..............................................

Income tax reported in stockholders' equity related
to stock-based compensation ...........................................
Total ............................................................................................. $

3,255 $
574
(194)
3,635

(69)
3,566 $

(280) $
(48)
135
(193)

-
(193) $

Current

Fiscal year ended March 30, 2014
Deferred

Total

3,571 $
750
(3)
4,318

(33)
4,285 $

(628) $
(115)
-
(743)

-
(743) $

2,975
526
(59)
3,442

(69)
3,373

2,943
635
(3)
3,575

(33)
3,542

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred

tax liabilities as of March 29, 2015 and March 30, 2014 are as follows (in thousands):

Deferred tax assets:

Employee wage and benefit accruals ......................................................................... $
Accounts receivable and inventory reserves ............................................................
Deferred rent .......................................................................................................................
Intangible assets .................................................................................................................
State net operating loss carryforwards .......................................................................
Stock-based compensation ............................................................................................
Total gross deferred tax assets ..................................................................................
Less valuation allowance .............................................................................................
Deferred tax assets after valuation allowance .....................................................

Deferred tax liabilities:

Prepaid expenses ...............................................................................................................
Property, plant and equipment .....................................................................................
Total deferred tax liabilities ........................................................................................
Net deferred income tax assets ................................................................................. $

F-16

2015

2014

787 $
485
48
704
824
556
3,404
(824 )
2,580

(352 )
(127 )
(479 )
2,101 $

849
356
6
890
904
391
3,396
(904)
2,492

(412)
(172)
(584)
1,908

In assessing the probability that the Company’s deferred tax assets will be realized, management of the Company
has considered whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The
ultimate realization of deferred tax assets is dependent upon the generation of taxable income during the future periods in
which the temporary differences giving rise to the deferred tax assets will become deductible. The Company has also
considered the scheduled inclusion into taxable income in future periods of the temporary differences giving rise to the
Company’s deferred tax liabilities. The valuation allowance as of March 29, 2015 and March 30, 2014 was related to state net
operating loss carryforwards that the Company does not expect to be realized. Based upon the Company’s expectations of
the generation of sufficient taxable income during future periods, the Company believes that it is more likely than not that
the Company will realize its deferred tax assets, net of the valuation allowance and the deferred tax liabilities.

Management evaluates items of income, deductions and credits reported on the Company’s various federal and
state income tax returns filed, and recognizes the effect of positions taken on those income tax returns only if those positions
are more likely than not to be sustained. Recognized income tax positions are measured at the largest amount that has a
greater than 50% likelihood of being realized. Changes in recognition or measurement are reflected in the period in which
the change in judgment occurs. Based on its recent evaluation, the Company has concluded that there are no significant
uncertain tax positions requiring recognition in the Company’s consolidated financial statements. The Company’s policy is
to accrue interest expense and penalties as appropriate on any estimated unrecognized tax benefits as a charge to interest
expense in the Company’s consolidated statements of income.

The Company's provision for income taxes on continuing operations is based upon effective tax rates of 37.6% and
38.3% in fiscal years 2015 and 2014, respectively. These effective tax rates are the sum of the top U.S. statutory federal income
tax rate and a composite rate for state income taxes, net of federal tax benefit, in the various states in which the Company
operates.

The following table reconciles income tax expense on income from continuing operations at the U.S. federal income

tax statutory rate to the net income tax provision reported for fiscal years 2015 and 2014 (in thousands):

Tax expense at statutory rate (34%) ..................................................................................... $
State income taxes, net of Federal income tax benefit .................................................
Tax credits .....................................................................................................................................
Net tax effect of expenses deductible only for tax purposes ......................................
Other - net, including foreign .................................................................................................
Income tax expense ................................................................................................................... $

2015

2014

3,114 $
347
(24)
(6)
11
3,442 $

3,178
419
(12)
(7)
(3)
3,575

Note 9 – Stockholders’ Equity

Dividends: The holders of the Company’s common stock are entitled to receive dividends when and as declared by
the Board. Aggregate cash dividends of $0.32 per share, amounting to $3.2 million, were declared during each of fiscal years
2015 and 2014. The Company’s financing agreement with CIT permits the payment by the Company of cash dividends on its
common stock without limitation, provided there is no default before or as a result of the payment of such dividends.

Stock Repurchases: The Company acquired treasury shares by way of the surrender to the Company from several
employees shares of common stock to satisfy the exercise price and income tax withholding obligations relating to the
exercise of stock options and the vesting of stock. In this manner, the Company acquired 32,000 treasury shares during the
fiscal year ended March 29, 2015 at a weighted-average market value of $7.57 per share and acquired 65,000 treasury shares
during the fiscal year ended March 30, 2014 at a weighted-average market value of $7.07 per share.

F-17

Note 10 - Major Customers

The table below sets forth those customers that represented more than 10% of the Company’s gross sales during

fiscal years ended March 29, 2015 and March 30, 2014.

2015

2014

36%
25%

41%
19%

Note 11 – Legal Settlement

Note 12 – Commitments and Contingencies

Total rent expense was $1.4 million during each of fiscal years ended March 29, 2015 and March 30, 2014. The
Company’s commitment for minimum guaranteed rental payments under its lease agreements as of March 29, 2015 is $6.3
million, consisting of $1.2 million due in each of fiscal years 2016, 2017, 2018, 2019 and 2020, and $346,000 due in fiscal year
2021.

Total royalty expense was $8.7 million and $7.5 million for fiscal years 2015 and 2014, respectively. The Company’s
commitment for minimum guaranteed royalty payments under its license agreements as of March 29, 2015 is $7.7 million,
consisting of $3.1 million, $2.7 million and $1.9 million due in fiscal years 2016, 2017 and 2018, respectively.

The Company is, from time to time, involved in various legal proceedings relating to claims arising in the ordinary
course of its business. Neither the Company nor any of its subsidiaries is a party to any such legal proceeding the outcome
of which, individually or in the aggregate, is expected to have a material adverse effect on the Company’s financial position,
results of operations or cash flows.

Note 13 – Subsequent Events

The Company has evaluated events that have occurred between March 29, 2015 and the date that the
accompanying financial statements were issued, and has determined that there are no material subsequent events that
require disclosure.

F-18

A
x
i
d
n
e
p
p
A

s
e
i
r
a
i
d
i
s
b
u
S
d
n
a

.
c
n

,
s
t
f
a
r
C
n
w
o
r
C

s
n
o
i
t
a
i
l
i
c
n
o
c
e
R
P
A
A
G
-
n
o
N

5
1
0
2
h
g
u
o
r
h
t
2
0
0
2
s
r
a
e
Y

l
a
c
s
i
F

a
t
a
d
e
r
a
h
s
r
e
p
d
n
a
s
e
g
a
t
n
e
c
r
e
p
t
p
e
c
x
e

,
s
d
n
a
s
u
o
h
t
n

)
d
e
t
i
d
u
a
n
U

(

5
1
0
2

4
1
0
2

3
1
0
2

2
1
0
2

1
1
0
2

0
1
0
2

9
0
0
2

8
0
0
2

7
0
0
2

6
0
0
2

5
0
0
2

4
0
0
2

3
0
0
2

2
0
0
2

e
m
o
c
n

t
e
N
d
e
t
s
u
d
A
o
t
e
m
o
c
n

t
e
N

f
o
n
o
i
t
a
i
l
i
c
n
o
c
e
R
P
A
A
G
-
n
o
N

0
5
8

8
1
7
5

)
0
2
3
(

1
7
7
5

1
1
1
5

9
3
0
5

6
0
3
4

0
8
7
4

8
4
2
6

1
7
7
5

1
1
1
5

9
3
0
5

6
0
3
4

0
8
7
4

)
6
8
0
7
1
(

4
8
8
2
2

)
3
2
3
1
(

5
7
4
4

3
5
3
4

1
0
6
7

)
9
6
0
4
(

3
7
3

3
5
3
4

5
0
9
3

)
3
4
2
4
(

4
2
7
3

7
6
9
7

8
3
4
2

3
0
1
3

7
8
4
2

2
0
0
7
2

)
8
0
0
5
2
(

.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
)
s
s
o
l
(
e
m
o
c
n

t
e
N

.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.

)
1
(

s
t
n
e
m

t
s
u
d
A

f
o
t
c
a
p
m

i
x
a
t
e
m
o
c
n

.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
)
2
(

s
t
n
e
m

t
s
u
d
a

8
3
4
2

3
0
1
3

7
8
4
2

4
9
9
1

.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
e
m
o
c
n

t
e
n
d
e
t
s
u
d
A

e
r
a
h
S
r
e
p
s
g
n
n
r
a
E
d
e
t
s
u
d
A
o
t
e
r
a
h
S
r
e
p
s
g
n
n
r
a
E
f
o
n
o
i
t
a
i
l
i
c
n
o
c
e
R
P
A
A
G
-
n
o
N

7
4
0
0
1

0
8
0
0
1

8
4
8
9

8
5
8
9

6
8
7
9

5
4
6
9

7
4
7
9

7
9
4
9

0
7
6
9

3
9
1
9

5
9
2
9

7
1
3
9

8
8
8
9

5
6
1
0
1

2
8
7
9

8
3
0
0
1

6
0
5
9

8
2
7
1
2

5
0
5
9

5
4
9
1
2

5
8
4
9

3
9
3
2
2

1
2
4
9

1
7
4
1
2

7
6
1
9

9
5
7
9
1

7
5
0

9
5
0

2
5
0

5
4
0

2
5
0

)
3
8
1
(

4
4
0

3
4
0

8
7
0

6
7
0

4
8
0

7
3
0

6
2
0

1
1
0

3
3
0

4
1
0

6
2
0

2
1
0

5
9
2

7
3
1

7
4
0
0
1

0
8
0
0
1

8
4
8
9

8
5
8
9

6
8
7
9

5
4
6
9

7
4
7
9

7
9
4
9

0
7
6
9

3
9
1
9

5
9
2
9

7
1
3
9

1
3
5
9

8
8
8
9

5
6
1
0
1

2
8
7
9

8
3
0
0
1

6
0
5
9

8
2
7
1
2

5
0
5
9

5
4
9
1
2

5
8
4
9

3
9
3
2
2

1
2
4
9

1
7
4
1
2

7
6
1
9

9
5
7
9
1

2
6
0

9
5
0

2
5
0

7
3

)
9
1
(

2
4
4
3

4
1
3

1
4
7

9
4

)
1
2
(

5
7
5
3

9
9
2

8
5
7

1
8

)
1
6
(

7
0
9
2

2
3
2

6
6
7

8
1
7
5

1
7
7
5

1
1
1
5

0
5
8

3
3
2
0
1

1
3
4
0
1

6
3
0
9

3
8
0
1
1

1
3
4
0
1

6
3
0
9

9
2
2

9
3
0
5

)
6
(

6
8
8
2

7
6
2

7
5
0
1

2
7
4
9

0
6
4

6
0
3
4

)
2
(

2
7
7
2

)
6
4
(

7
5
2

4
2
2
1

1
7
9
8

)
7
1
(

2
9
6

3
0
1
3

)
9
6
(

6
8
2

4
4
5
1

9
8
0
1

)
9
3
1
(

3
3
1
1

)
1
3
(

5
8
2

5
4
7
1

)
2
1
(

5
7
7

8
2
8
2

)
2
8
(

9
4
3

4
8
7

4
8
8
2
2

9
1
3
0
1

)
4
0
0
3
1
(

5
9
9
8

9
1
3
0
1

0
8
8
9

5
9
9
8

0
8
7
4

)
6
8
0
7
1
(

3
5
3
4

1
0
6
7

2
6
3
1

)
8
0
1
(

0
4
6
3

)
2
2
3
(

2
5
4

7
0
1

)
9
6
0
4
(

2
3
7
2
1

3
5
4
7

3
6
6
8

3
5
4
7

9
3
0

7
1
0

7
6
9
7

6
4
0
3

)
1
7
(

)
8
6
9
3
(

9
7
4

6
2
0

1
1
0

)
9
(

5
0
1

7
5
4

8
3
4
2

3
9
7
3

4
8
7
6

2
2
2

2
3
5

4
6
2

4
2
7

3
0
1
3

5
5
0
4

7
8
4
2

8
4
5
4

3
4
9
6

2
0
0
7
2

)
0
8
8
1
(

1
7
9

4
5
0
1

.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
)
s
s
o
l
(
e
m
o
c
n

t
e
N

.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.

e
s
n
e
p
x
e
t
s
e
r
e
t
n

.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.

e
m
o
c
n

t
s
e
r
e
t
n

.
.
.
.
.
.
.
.
.
.
.
)
t
i
f
e
n
e
b

(
e
s
n
e
p
x
e
x
a
t
e
m
o
c
n

.
s
n
o
i
t
a
r
e
p
o
d
e
u
n
i
t
n
o
c
s
i
d
n
o
s
e
x
a
T

.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.

n
o
i
t
a
i
c
e
r
p
e
D

.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.

n
o
i
t
a
z
i
t
r
o
m
A

2
1
9
7

3
2
0
8

0
9
0
4
3

)
8
0
0
5
2
(

.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.

A
D
T
I
B
E

.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.

)
1
(

s
t
n
e
m

t
s
u
d
A

2
8
0
9

.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.

A
D
T
I
B
E
d
e
t
s
u
d
A

A
D
T
I
B
E
d
e
t
s
u
d
A
d
n
a
A
D
T
I
B
E
o
t
e
m
o
c
n

t
e
N

f
o
n
o
i
t
a
i
l
i
c
n
o
c
e
R
P
A
A
G
-
n
o
N

5
4
0

2
5
0

8
4
0

7
4
0

4
4
0

3
4
0

0
4
0

9
3
0

3
3
0

4
1
0

6
2
0

2
1
0

2
2
0

0
1
0

8
7
9
5
8

4
9
2
1
8

6
1
4
8
7

6
0
3
5
8

1
7
9
9
8

6
6
0
6
8

8
9
3
7
8

7
8
8
4
7

0
5
2
9
6

9
2
6
2
7

8
0
9
3
8

7
2
2
6
8

5
3
7
4
9

1
9
5
7
1
1

.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.

s
n
o
i
t
a
r
e
p
o

d
e
u
n
i
t
n
o
c
s
i
d
m
o
r
f

s
e
a
s

t
e
N

g
n
u
n
i
t
n
o
c
m
o
r
f

s
e
a
s

t
e
N

2
5

8
3
7
2

.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
s
n
o
i
t
a
r
e
p
o

8
7
9
5
8

4
9
2
1
8

6
1
4
8
7

6
0
3
5
8

1
7
9
9
8

6
6
0
6
8

8
9
3
7
8

9
3
9
4
7

8
8
9
1
7

9
2
6
2
7

8
0
9
3
8

7
2
2
6
8

5
3
7
4
9

1
9
5
7
1
1

.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
s
e
l
a
s
t
e
N

%
9
2
1

%
8
2
1

%
5
1
1

%
1
1
1

%
0
0
1

%
0
2
1

%
3
1
1

%
0
2
1

%
3
0
1

%
1
8

%
2
9

%
5
8

%
7
7

.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
s
e
l
a
S
t
e
N

f
o
e
g
a
t
n
e
c
r
e
P

a
s
a
A
D
T
I
B
E
d
e
t
s
u
d
A

1
-
A

.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.

c
i
s
a
B

d
e
t
r
o
p
e
R
s
a
g
n
d
n
a
t
s
t
u
O

s
e
r
a
h
S
e
g
a
r
e
v
A
d
e
t
h
g
e
W

.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.

d
e
t
u

l
i

.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.

c
i
s
a
B

d
e
t
r
o
p
e
R
s
a
e
r
a
h
S
r
e
p
s
g
n
n
r
a
E

.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.

d
e
t
u

l
i

.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.

c
i
s
a
B

g
n
d
n
a
t
s
t
u
O
s
e
r
a
h
S

e
g
a
r
e
v
A
d
e
t
h
g
e
W
d
e
t
s
u
d
A

.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.

d
e
t
u

l
i

.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.

c
i
s
a
B

e
r
a
h
S
r
e
p
s
g
n
n
r
a
E
d
e
t
s
u
d
A

.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.

d
e
t
u

l
i

Use of Non-GAAP Financial Information

In addition to the Company’s presentation of its financial position and results of operations in conformity with accounting
principles generally accepted in the United States of America (“GAAP”), the Company has also presented certain financial
measures which are not determined in accordance with GAAP. Specifically, the Company has presented the after-tax impact
of adjustments that were made to exclude certain charges and benefits which were recognized in the following fiscal years:

Nature of Charge or Benefit

Removal of deferred tax valuation allowance

Fiscal
Year
2002 Gain on debt refinancing
2006
2007 Gain on debt refinancing
2009
2015

Impairment of goodwill
Legal settlement

Amount of Charge or (Benefit) – in thousands
Income Tax
Impact (2)

Pre-tax (1)
$(25,008)

-0-
(4,069)
22,884
850

$ -0-
(4,243)
373
(1,323)
(320)

After-tax
$(25,008)

(4,243)
3,696
21,561
530

The Company has presented its earnings before interest, taxes, depreciation and amortization (“EBITDA”), as well as a
presentation of what its net income, earnings per share and EBITDA would have been if the charges and benefits reflected
above had not been recognized (to arrive at “adjusted net income”, “adjusted earnings per share” and “adjusted EBITDA”,
respectively). The Company believes that the presentation of these non-GAAP financial measures is useful as an important
indicator of the Company’s ability to generate cash sufficient to service its debt, declare and pay dividends, make strategic
investments, meet capital expenditures and working capital requirements and otherwise meet its obligations as they
become due in future reporting periods. The charges and benefits excluded above are significant components in an
understanding and assessment of the Company’s results of operations for the relevant fiscal years. The Company uses these
non-GAAP financial measures internally to monitor its operating results and to evaluate the performance of its businesses.
These non-GAAP financial measures are provided as supplemental information and should be considered in addition to, and
not as a substitute for, the Company’s GAAP measures, including its net income and cash flow provided by or used in
operating, investing or financing activities, and other measures of the Company’s financial position or results of operations
reported in accordance with GAAP. Because these non-GAAP financial measures are, by definition, not calculated in
accordance with GAAP, another company using the same GAAP financial information could possibly arrive at a different
calculation of these non-GAAP financial measures. Therefore, the non-GAAP financial measures as presented by the
Company may not be comparable to similarly-titled measures that may be presented by another company.

A-2

CO R P O R AT E I N F O R M AT I O N

Independent Registered
Public Accounting Firm
KPMG LLP
One American Place
301 Main Street
Suite 2150
Baton Rouge, Louisiana 70801

Annual Meeting
The Annual Meeting of
Stockholders will take place on
Tuesday, August 11, 2015,
at 10 a.m. CDT at the Company’s
Corporate Headquarters,
916 South Burnside Avenue,
Gonzales, Louisiana.

Stock Listing
The Company’s common stock
is listed on The NASDAQ
Capital Market under the
trading symbol “CRWS.”

Transfer Agent
and Registrar
Computershare Trust
Company, N.A.
P.O. Box 30170
College Station, TX 77842-3170
(800) 568-3476

Stockholder Information
& Form 10-K
A copy of the Company’s Annual
Report on Form 10-K as filed
with the Securities and Exchange
Commission may be obtained
without charge by contacting:

Crown Crafts, Inc.
Investor Relations Department
P.O. Box 1028
Gonzales, Louisiana 70707-1028
Phone: (225) 647-9146
e-mail: investor@crowncrafts.com

Investor Relations Counsel
Halliburton Investor Relations
14651 Dallas Parkway
Suite 800
Dallas, Texas 75254
Phone: (972) 458-8000
www.halliburtonir.com
Twitter: HIR_Group

Crown Crafts
on the Internet
Quarterly and annual financial
information and company
information may be accessed
at www.crowncrafts.com.

Board of Directors

E. Randall Chestnut
Chairman of the Board
President and
Chief Executive Officer
Crown Crafts, Inc.

Zenon S. Nie
Lead Independent Director
Chairman of the Board
and Chief Executive Officer
The C.E.O. Advisory Board

Sidney Kirschner
Chief Executive Officer of
Piedmont Physicians for
Piedmont Healthcare,
President and
Chief Executive Officer
Piedmont Heart Institute

Donald Ratajczak
Consulting Economist

Patricia Stensrud
President
A&H Worldwide

Executive Officers

E. Randall Chestnut
President and
Chief Executive Officer

Olivia W. Elliott
Vice President and
Chief Financial Officer

Nanci Freeman
President and
Chief Executive Officer
Crown Crafts Infant Products, Inc.

Cover Design by Teli Barrilleaux, Hamco, Inc.

Crown Crafts Inc.
916 South Burnside Avenue

Gonzales, Louisiana 70737

(800) 444-9560 (225) 647-9100

www.crowncrafts.com

2 0 1 5 A N N U A L R E P O R T