(CROWN CRAFTS LOGO)
NOVEMBER 12, 2003
CROWN CRAFTS, INC. REPORTS SECOND QUARTER 2004 RESULTS;
PROFITABLE OPERATIONS ON SHIFTING SALES PATTERNS
Gonzales, Louisiana - Crown Crafts, Inc. (OTCBB: CRWS) (the "Company") today
reported net sales for the second quarter of fiscal 2004, which ended September
28, 2003, of $22.0 million compared to $28.4 million for the second quarter of
fiscal 2003. Net income for the quarter was $924,000, or $0.04 per diluted
share, compared to net income of $2.1 million, or $0.09 per diluted share, for
the second quarter of fiscal 2003.
For the first six months of fiscal 2004, the Company had net sales of $40.5
million, down from $46.3 million in the first six months of fiscal 2003. Net
income for the first six months of the current year was $810,000, or $0.04 per
diluted share, compared to net income of $1.4 million, or $0.06 per diluted
share, in the prior year.
The Company attributed the decline in sales to several factors relating
primarily to changes in business practices by both customers and licensors and
the seasonality of one of the Company's products.
Buying patterns of several of the Company's customers were altered during the
second quarter due to the continuing sluggish economy and the shifting of
business strategies, which caused some of the Company's major customers to
reduce their on-hand inventory levels. In addition, during the second quarter of
fiscal 2003, the Company shipped several new product placements to key
customers, which were not repeated in the current fiscal year. These initial
shipments to stock the stores and circular advertising created higher sales for
these new placements in fiscal 2003.
The Company's Pillow Buddies(R) business, which was very strong in fiscal 2003,
has been comparatively weaker this year because seasonal retail dollars have not
been allocated to the product for shipment in the second quarter. This business
continues to be seasonal, and increased competition for character licenses has
driven royalty commitments higher than management is comfortable guaranteeing.
With the higher guarantees, the Company has declined or chosen not to renew
several licenses which could have subjected the Company to royalty guarantee
shortfalls in the future.
Also affecting sales for the second quarter was a marketing decision by Disney
Consumer Products to take one of its brands direct to retail beginning in early
2004. In anticipation of this decision, retailers currently offering this brand
began to reduce their purchase volumes in the second quarter. The Company is
pleased that it has been selected as the future supplier of this direct to
retail program. In addition, we have secured our position with the retailers
affected by this change in marketing direction.
"While we are not satisfied with the lower net sales for the fiscal second
quarter, we are pleased to report a net income of 4.2% of net sales. Our SG&A
expense only increased from 12.2% of net sales last year to 12.8% of net sales
for the second quarter this year, on 22.5% less sales," said E. Randall
Chestnut, Chairman, President and Chief Executive Officer of the Company.
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"The direct to retail decision made by Disney Consumer Products has affected our
immediate marketing direction, but with quick action by our management team, we
feel we have secured our position for the future," Mr. Chestnut continued. "With
the successful and beneficial reincorporation of the Company announced earlier
and this challenging quarter behind us, management remains focused on the future
success of the Company."
The Company will host a teleconference today at 1:00 p.m. Central Standard Time
to discuss the Company's results and answer appropriate questions from
shareholders. Interested investors may join the teleconference by dialing (888)
273-9887. Please refer to confirmation number 703657. The conference call can
also be accessed in listen-only mode by visiting the Company's website at
www.crowncrafts.com. The financial information to be discussed during the
conference call may be found prior to the call on the investor relations portion
of the Company's website.
A telephone replay of the conference call will be available from 3:30 p.m.
Central Standard Time on November 12, 2003 through 11:59 p.m. Central Daylight
Time on November 19, 2003. To access the replay, dial (800) 475-6701 in the
United States or (320) 365-3844 from international locations. The access code
for the replay is 703657.
Crown Crafts, Inc. designs, markets and distributes infant and juvenile consumer
products, including bedding, blankets, bibs, bath and accessories and luxury
hand-woven home decor. Its subsidiaries include Hamco, Inc. in Louisiana, Crown
Crafts Infant Products, Inc. in California and Churchill Weavers, Inc. in
Kentucky. Crown Crafts is America's largest producer of infant bedding and
infant bibs and bath items. The Company's products include licensed and branded
collections as well as exclusive private label programs for certain of its
customers.
Statements contained in this release that are not statements of historical fact
are "forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. The words "believe," "expect," "anticipate,"
"intend," "will" and similar expressions are examples of words that identify
forward-looking statements. Forward-looking statements involve unknown risks and
uncertainties that may cause future results to differ materially from those
suggested by the forward-looking statements. These risks include, among others,
general economic conditions, changing competition, the level and pricing of
future orders from the Company's customers, the Company's dependence on
third-party suppliers, including some located in foreign countries with unstable
political situations, the Company's ability to successfully implement new
information technologies and the Company's dependence on licenses from third
parties.
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CONSOLIDATED STATEMENTS OF OPERATIONS
SELECTED FINANCIAL DATA
In thousands, except per share data
<Table>
<Caption>
Three Months Ended Six Months Ended
September 28, September 29, September 28, September 29,
2003 2002 2003 2002
------------- ------------- ------------- -------------
Net sales $ 22,001 $ 28,399 $ 40,466 $ 46,326
Net income 924 2,079 810 1,386
Basic income per share 0.10 0.22 0.09 0.15
Diluted income per share 0.04 0.09 0.04 0.06
Weighted Average Shares Outstanding:
Basic 9,505 9,421 9,466 9,421
Diluted 22,872 22,715 22,562 22,007
</Table>
CONSOLIDATED BALANCE SHEETS
SELECTED FINANCIAL DATA
In thousands
<Table>
<Caption>
September 28, March 30,
2003 2003
--------------- ---------------
Total current assets $ 32,600 $ 32,632
Total assets 57,490 57,926
Current maturities of long-term debt 3,015 3,014
Total current liabilities 10,481 11,766
Long-term debt 30,867 30,895
Total non-current liabilities 30,867 30,895
Shareholders' equity 16,142 15,265
Total liabilities and shareholders' equity 57,490 57,926
</Table>
Contact: Investor Relations Department
(225) 647-9146
or
Halliburton Investor Relations
(972) 458-8000
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