Crown Crafts Inc (CRWS, Financial) filed Quarterly Report for the period ended 2010-06-27.
Crown Crafts Inc has a market cap of $41.4 million; its shares were traded at around $4.47 with a P/E ratio of 8.6 and P/S ratio of 0.5. The dividend yield of Crown Crafts Inc stocks is 1.8%.CRWS is in the portfolios of John Rogers of ARIEL CAPITAL MANAGEMENT LLC.
Sales of bib, bath and disposable products increased for the three-month period of fiscal year 2011 as compared to the same period in fiscal year 2010. Sales increased by $1.4 million due in the aggregate due to the Neat Solutions Acquisition and the Bibsters® Acquisition. Sales also increased by $1.0 million due to sales of new designs and promotions. Offsetting these increases were decreases of $959,000 related to programs that were discontinued and lower replenishment orders.
Marketing and Administrative Expenses: Marketing and administrative expenses for the three-month period of fiscal year 2011 increased as compared to the same period of fiscal year 2010. In the current year, the Company incurred costs of $81,000 associated with the Companys proxy contest that were not incurred in the prior year. The Company also incurred increased advertising costs of $48,000 in the current year and incurred amortization costs of $48,000 in the current year that were associated with the Neat Solutions Acquisition and the Bibsters® Acquisition. These increases were offset by decreased accounting costs of $56,000 in the current year as compared to the prior year.
Net cash provided by operating activities was $4.1 million for the three-month period ended June 27, 2010, compared to $4.7 million for the three-month period ended June 28, 2009. The decrease in cash provided by operating activities in the current year was due to a higher increase in inventory balances, a lower reduction of accounts receivable balances and changes in accrued liability balances, offset by a higher increase in accounts payable balances. Net cash used in investing activities was $1.6 million in the current year compared to $569,000 in the prior year. Cash used in investing activities in the current year amounted to $2.1 million associated with the Bibsters® Acquisition, offset by proceeds of $505,000 from the maturity of a certificate of deposit purchased in the prior year in connection with the issuance on behalf of the Company of a standby letter of credit to guarantee the payment of certain of the Companys royalty obligations. Net cash used in financing activities in the current year was $1.6 million compared to $4.5 million in the prior year. The decrease in net cash used in financing activities in the current year was primarily due to lower net repayments on the Companys revolving line of credit.
Total debt outstanding under the Companys credit facilities before the reduction for the original issue discount on the non-interest bearing notes decreased from $21.2 million at June 28, 2009 to $4.0 million at June 27, 2010. The decrease is due primarily to net repayments on the revolving line of credit, the largest portion of which came from a reduction of the Companys cash reserves in December 2009, which were $14.9 million at June 28, 2009. The Company had built up its cash reserves in the prior year by drawing upon its revolving line of credit in order to preserve the Companys ability to meet its working capital needs in the event that the Companys primary lender should suffer an adverse liquidity event that would jeopardize the Companys ability to draw upon its revolving line of credit. The Company on June 27, 2010 had $918,000 in cash, there was a $500,000 letter of credit outstanding and the Company had $20.9 million available under the revolving line of credit based on its eligible accounts receivable and inventory balances.
To reduce its exposure to credit losses and to enhance the predictability of its cash flow, the Company assigns the majority of its trade accounts receivable to CIT pursuant to factoring agreements. CIT approves customer accounts and credit lines and collects the Companys accounts receivable balances. Under the terms of the factoring agreements, which expire in July 2013, CIT remits payments to the Company on the average due date of each group of invoices assigned. If a customer fails to pay CIT on the due date, the Company is charged interest on the unpaid balance at prime less 1.0%, which was 2.25% at June 27, 2010, until payment is received. The Company incurred interest expense of $17,000 and $16,000 for the three-month periods ended June 27, 2010 and June 28, 2009, respectively, as a result of the failure of the Companys customers to pay CIT by the due date. CIT bears credit losses with respect to assigned accounts receivable from approved customers that are within approved credit limits. The Company bears the responsibility for adjustments 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 were to occur, the Company must either assume the credit risk for shipments after the date of such termination or cease shipments to such customer.
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Crown Crafts Inc has a market cap of $41.4 million; its shares were traded at around $4.47 with a P/E ratio of 8.6 and P/S ratio of 0.5. The dividend yield of Crown Crafts Inc stocks is 1.8%.CRWS is in the portfolios of John Rogers of ARIEL CAPITAL MANAGEMENT LLC.
Highlight of Business Operations:
Net Sales: Sales of bedding, blankets and accessories decreased for the three-month period of fiscal year 2011 as compared to the same period in fiscal year 2010. Sales decreased by $4.9 million due to discontinued programs and lower replenishment orders. These decreases were offset by $2.9 million in shipments of new bedding and blanket programs.Sales of bib, bath and disposable products increased for the three-month period of fiscal year 2011 as compared to the same period in fiscal year 2010. Sales increased by $1.4 million due in the aggregate due to the Neat Solutions Acquisition and the Bibsters® Acquisition. Sales also increased by $1.0 million due to sales of new designs and promotions. Offsetting these increases were decreases of $959,000 related to programs that were discontinued and lower replenishment orders.
Marketing and Administrative Expenses: Marketing and administrative expenses for the three-month period of fiscal year 2011 increased as compared to the same period of fiscal year 2010. In the current year, the Company incurred costs of $81,000 associated with the Companys proxy contest that were not incurred in the prior year. The Company also incurred increased advertising costs of $48,000 in the current year and incurred amortization costs of $48,000 in the current year that were associated with the Neat Solutions Acquisition and the Bibsters® Acquisition. These increases were offset by decreased accounting costs of $56,000 in the current year as compared to the prior year.
Net cash provided by operating activities was $4.1 million for the three-month period ended June 27, 2010, compared to $4.7 million for the three-month period ended June 28, 2009. The decrease in cash provided by operating activities in the current year was due to a higher increase in inventory balances, a lower reduction of accounts receivable balances and changes in accrued liability balances, offset by a higher increase in accounts payable balances. Net cash used in investing activities was $1.6 million in the current year compared to $569,000 in the prior year. Cash used in investing activities in the current year amounted to $2.1 million associated with the Bibsters® Acquisition, offset by proceeds of $505,000 from the maturity of a certificate of deposit purchased in the prior year in connection with the issuance on behalf of the Company of a standby letter of credit to guarantee the payment of certain of the Companys royalty obligations. Net cash used in financing activities in the current year was $1.6 million compared to $4.5 million in the prior year. The decrease in net cash used in financing activities in the current year was primarily due to lower net repayments on the Companys revolving line of credit.
Total debt outstanding under the Companys credit facilities before the reduction for the original issue discount on the non-interest bearing notes decreased from $21.2 million at June 28, 2009 to $4.0 million at June 27, 2010. The decrease is due primarily to net repayments on the revolving line of credit, the largest portion of which came from a reduction of the Companys cash reserves in December 2009, which were $14.9 million at June 28, 2009. The Company had built up its cash reserves in the prior year by drawing upon its revolving line of credit in order to preserve the Companys ability to meet its working capital needs in the event that the Companys primary lender should suffer an adverse liquidity event that would jeopardize the Companys ability to draw upon its revolving line of credit. The Company on June 27, 2010 had $918,000 in cash, there was a $500,000 letter of credit outstanding and the Company had $20.9 million available under the revolving line of credit based on its eligible accounts receivable and inventory balances.
To reduce its exposure to credit losses and to enhance the predictability of its cash flow, the Company assigns the majority of its trade accounts receivable to CIT pursuant to factoring agreements. CIT approves customer accounts and credit lines and collects the Companys accounts receivable balances. Under the terms of the factoring agreements, which expire in July 2013, CIT remits payments to the Company on the average due date of each group of invoices assigned. If a customer fails to pay CIT on the due date, the Company is charged interest on the unpaid balance at prime less 1.0%, which was 2.25% at June 27, 2010, until payment is received. The Company incurred interest expense of $17,000 and $16,000 for the three-month periods ended June 27, 2010 and June 28, 2009, respectively, as a result of the failure of the Companys customers to pay CIT by the due date. CIT bears credit losses with respect to assigned accounts receivable from approved customers that are within approved credit limits. The Company bears the responsibility for adjustments 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 were to occur, the Company must either assume the credit risk for shipments after the date of such termination or cease shipments to such customer.
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