Delaware |
58-0678148
|
|
(State or other jurisdiction of
|
(I.R.S. Employer Identification No.) | |
incorporation or organization)
|
CROWN CRAFTS, INC. AND SUBSIDIARIES
|
||||||||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
|
||||||||
July 3, 2011 and April 3, 2011
|
||||||||
July 3, 2011
|
||||||||
(Unaudited)
|
April 3, 2011
|
|||||||
(amounts in thousands, except
|
||||||||
share and per share amounts)
|
||||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 11 | $ | 205 | ||||
Accounts receivable (net of allowances of $1,250 at July 3, 2011 and $1,395 at April 3, 2011):
|
||||||||
Due from factor
|
12,663 | 17,819 | ||||||
Other
|
681 | 834 | ||||||
Inventories
|
18,383 | 13,560 | ||||||
Prepaid expenses
|
1,841 | 2,360 | ||||||
Assets held for sale
|
275 | 275 | ||||||
Deferred income taxes
|
192 | 230 | ||||||
Total current assets
|
34,046 | 35,283 | ||||||
Property, plant and equipment - at cost:
|
||||||||
Vehicles
|
75 | 58 | ||||||
Leasehold improvements
|
216 | 215 | ||||||
Machinery and equipment
|
2,452 | 2,622 | ||||||
Furniture and fixtures
|
730 | 730 | ||||||
Property, plant and equipment - gross
|
3,473 | 3,625 | ||||||
Less accumulated depreciation
|
2,988 | 3,153 | ||||||
Property, plant and equipment - net
|
485 | 472 | ||||||
Finite-lived intangible assets - at cost:
|
||||||||
Customer relationships
|
5,411 | 5,411 | ||||||
Other finite-lived intangible assets
|
6,674 | 6,674 | ||||||
Finite-lived intangible assets - gross
|
12,085 | 12,085 | ||||||
Less accumulated amortization
|
5,598 | 5,290 | ||||||
Finite-lived intangible assets - net
|
6,487 | 6,795 | ||||||
Goodwill
|
1,126 | 1,126 | ||||||
Deferred income taxes
|
1,809 | 1,904 | ||||||
Other
|
108 | 122 | ||||||
Total Assets
|
$ | 44,061 | $ | 45,702 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$ | 7,782 | $ | 5,050 | ||||
Accrued wages and benefits
|
504 | 1,167 | ||||||
Accrued royalties
|
1,331 | 1,181 | ||||||
Income taxes currently payable
|
183 | 409 | ||||||
Other accrued liabilities
|
196 | 212 | ||||||
Current maturities of long-term debt
|
1,988 | 1,952 | ||||||
Total current liabilities
|
11,984 | 9,971 | ||||||
Non-current liabilities:
|
||||||||
Long-term debt
|
427 | 4,336 | ||||||
Commitments and contingencies
|
- | - | ||||||
Shareholders' equity:
|
||||||||
Preferred stock - $0.01 par value per share; Authorized 1,000,000 shares; No shares issued at July 3, 2011 and April 3, 2011
|
- | - | ||||||
Common stock - $0.01 par value per share; Authorized 74,000,000 shares; Issued 11,024,272 shares at July 3, 2011 and 10,830,772 shares at April 3, 2011
|
110 | 108 | ||||||
Additional paid-in capital
|
42,974 | 42,227 | ||||||
Treasury stock - at cost - 1,396,205 shares at July 3, 2011 and 1,248,162 shares at April 3, 2011
|
(5,093 | ) | (4,358 | ) | ||||
Accumulated deficit
|
(6,341 | ) | (6,582 | ) | ||||
Total shareholders' equity
|
31,650 | 31,395 | ||||||
Total Liabilities and Shareholders' Equity
|
$ | 44,061 | $ | 45,702 |
CROWN CRAFTS, INC. AND SUBSIDIARIES
|
||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
|
||||||||
For the Three-Month Periods Ended July 3, 2011 and June 27, 2010
|
||||||||
Three-Month Periods Ended
|
||||||||
July 3, 2011
|
June 27, 2010
|
|||||||
(amounts in thousands,
|
||||||||
except per share amounts)
|
||||||||
Net sales
|
$ | 17,499 | $ | 17,167 | ||||
Cost of products sold
|
13,716 | 12,876 | ||||||
Gross profit
|
3,783 | 4,291 | ||||||
Marketing and administrative expenses
|
2,850 | 3,015 | ||||||
Income from operations
|
933 | 1,276 | ||||||
Other income (expense):
|
||||||||
Interest and amortization of debt discount and expense
|
(78 | ) | (97 | ) | ||||
Other - net
|
8 | 7 | ||||||
Income before income tax expense
|
863 | 1,186 | ||||||
Income tax expense
|
330 | 455 | ||||||
Income from continuing operations
|
533 | 731 | ||||||
Loss from discontinued operations - net of income taxes
|
(3 | ) | (5 | ) | ||||
Net income
|
$ | 530 | $ | 726 | ||||
Weighted average shares outstanding - basic
|
9,619 | 9,246 | ||||||
Weighted average shares outstanding - diluted
|
9,756 | 9,349 | ||||||
Basic earnings per share:
|
||||||||
Income from continuing operations
|
$ | 0.06 | $ | 0.08 | ||||
Loss from discontinued operations - net of income taxes
|
- | - | ||||||
Total basic earnings per share
|
$ | 0.06 | $ | 0.08 | ||||
Diluted earnings per share:
|
||||||||
Income from continuing operations
|
$ | 0.05 | $ | 0.08 | ||||
Loss from discontinued operations - net of income taxes
|
- | - | ||||||
Total diluted earnings per share
|
$ | 0.05 | $ | 0.08 | ||||
Cash dividends declared per share
|
$ | 0.03 | $ | 0.02 |
Three-Month Periods Ended
|
||||||||
July 3, 2011
|
June 27, 2010
|
|||||||
(amounts in thousands)
|
||||||||
Operating activities:
|
||||||||
Net income
|
$ | 530 | $ | 726 | ||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation of property, plant and equipment
|
67 | 64 | ||||||
Amortization of intangibles
|
308 | 289 | ||||||
Deferred income taxes
|
133 | (100 | ) | |||||
Gain on sale of property, plant and equipment
|
(5 | ) | (2 | ) | ||||
Accretion of interest expense to original issue discount
|
36 | 69 | ||||||
Stock-based compensation
|
137 | 163 | ||||||
Tax shortfall from stock-based compensation
|
(27 | ) | - | |||||
Changes in assets and liabilities:
|
||||||||
Accounts receivable
|
5,309 | 4,879 | ||||||
Inventories
|
(4,823 | ) | (5,992 | ) | ||||
Prepaid expenses
|
519 | 186 | ||||||
Other assets
|
14 | (9 | ) | |||||
Accounts payable
|
2,730 | 3,962 | ||||||
Accrued liabilities
|
(755 | ) | (169 | ) | ||||
Net cash provided by operating activities
|
4,173 | 4,066 | ||||||
Investing activities:
|
||||||||
Capital expenditures
|
(80 | ) | (54 | ) | ||||
Maturity of temporary investment - restricted
|
- | 505 | ||||||
Proceeds from disposition of assets
|
5 | 2 | ||||||
Payment to acquire the Bibsters product line
|
- | (2,072 | ) | |||||
Net cash used in investing activities
|
(75 | ) | (1,619 | ) | ||||
Financing activities:
|
||||||||
Repayments under revolving line of credit, net
|
(3,909 | ) | (1,422 | ) | ||||
Purchase of treasury stock
|
(735 | ) | (167 | ) | ||||
Issuance of common stock
|
628 | 65 | ||||||
Excess tax benefit from stock-based compensation
|
11 | 104 | ||||||
Dividends paid
|
(287 | ) | (184 | ) | ||||
Net cash used in financing activities
|
(4,292 | ) | (1,604 | ) | ||||
Net (decrease) increase in cash and cash equivalents
|
(194 | ) | 843 | |||||
Cash and cash equivalents at beginning of period
|
205 | 75 | ||||||
Cash and cash equivalents at end of period
|
$ | 11 | $ | 918 | ||||
Supplemental cash flow information:
|
||||||||
Income taxes paid
|
$ | 440 | $ | 1,065 | ||||
Interest paid, net of interest received
|
38 | 33 | ||||||
Noncash financing activity:
|
||||||||
Dividends declared but unpaid
|
(289 | ) | (185 | ) |
|
·
|
Cash and cash equivalents, accounts receivable and accounts payable – For those short-term instruments, the carrying value is a reasonable estimate of fair value.
|
|
·
|
Long-term debt – The carrying value of the Company’s long-term debt approximates fair value because interest rates under the Company’s borrowings are variable, based on prevailing market rates.
|
Three-Month Periods Ended
|
||||||||
July 3, 2011
|
June 27, 2010
|
|||||||
(amounts in thousands,
|
||||||||
except per share amounts)
|
||||||||
Income from continuing operations
|
$ | 533 | $ | 731 | ||||
Loss from discontinued operations, net of taxes
|
(3 | ) | (5 | ) | ||||
Net income
|
$ | 530 | $ | 726 | ||||
Weighted average number of common shares outstanding:
|
||||||||
Basic
|
9,619 | 9,246 | ||||||
Effect of dilutive securities
|
137 | 103 | ||||||
Diluted
|
9,756 | 9,349 | ||||||
Basic earnings per common share:
|
||||||||
Continuing operations
|
$ | 0.06 | $ | 0.08 | ||||
Discontinued operations
|
- | - | ||||||
Total
|
$ | 0.06 | $ | 0.08 | ||||
Diluted earnings per common share:
|
||||||||
Continuing operations
|
$ | 0.05 | $ | 0.08 | ||||
Discontinued operations
|
- | - | ||||||
Total
|
$ | 0.05 | $ | 0.08 |
Amortizable intangible assets:
|
Amount
|
|||
Trademarks
|
$ | 629 | ||
Patents
|
553 | |||
Customer relationships
|
328 | |||
Total amortizable intangible assets
|
1,510 | |||
Goodwill
|
290 | |||
Total intangible assets
|
1,800 | |||
Tangible assets - inventory
|
272 | |||
Total acquisition cost
|
$ | 2,072 |
July 3, 2011
|
April 3, 2011
|
|||||||
Raw Materials
|
$ | 33 | $ | 32 | ||||
Finished Goods
|
18,350 | 13,528 | ||||||
Total inventory
|
$ | 18,383 | $ | 13,560 |
Three-Month Period Ended July 3, 2011
|
Three-Month Period Ended June 27, 2010
|
|||||||||||||||
Weighted-Average
|
Number of Options
|
Weighted-Average
|
Number of Options
|
|||||||||||||
Exercise Price
|
Outstanding
|
Exercise Price
|
Outstanding
|
|||||||||||||
Outstanding at Beginning of Period
|
$ | 3.31 | 747,000 | $ | 2.94 | 825,832 | ||||||||||
Granted
|
4.81 | 100,000 | 4.23 | 110,000 | ||||||||||||
Exercised
|
(3.24 | ) | (193,500 | ) | (0.77 | ) | (85,332 | ) | ||||||||
Outstanding at End of Period
|
3.56 | 653,500 | 3.32 | 850,500 | ||||||||||||
Exercisable at End of Period
|
3.28 | 423,500 | 3.24 | 570,500 |
Three-Month Periods Ended
|
||||||||
July 3, 2011
|
June 27, 2010
|
|||||||
Options issued
|
100,000 | 110,000 | ||||||
Grant Date
|
June 10, 2011
|
June 23, 2010
|
||||||
Dividend yield
|
2.49 | % | 1.89 | % | ||||
Expected volatility
|
60.00 | % | 55.00 | % | ||||
Risk free interest rate
|
1.84 | % | 2.17 | % | ||||
Expected life in years
|
5.75 | 5.75 | ||||||
Forfeiture rate
|
5.00 | % | 5.00 | % | ||||
Exercise price (grant-date closing price)
|
$ | 4.81 | $ | 4.23 | ||||
Fair value
|
$ | 2.16 | $ | 1.88 |
Three-month Period Ended July 3, 2011
|
Three-month Period Ended June 27, 2010
|
|||||||||||||||||||||||
Cost of
|
Marketing &
|
Cost of
|
Marketing &
|
|||||||||||||||||||||
Products
|
Administrative
|
Total
|
Products
|
Administrative
|
Total
|
|||||||||||||||||||
Options Granted in Fiscal Year
|
Sold
|
Expenses
|
Expense
|
Sold
|
Expenses
|
Expense
|
||||||||||||||||||
2009
|
$ | - | $ | - | $ | - | $ | 13 | $ | 38 | $ | 51 | ||||||||||||
2010
|
9 | 19 | 28 | 8 | 21 | 29 | ||||||||||||||||||
2011
|
14 | 15 | 29 | - | 1 | 1 | ||||||||||||||||||
2012
|
3 | 3 | 6 | - | - | - | ||||||||||||||||||
Total stock option compensation
|
$ | 26 | $ | 37 | $ | 63 | $ | 21 | $ | 60 | $ | 81 |
Three-month Period Ended July 3, 2011
|
Three-month Period Ended June 27, 2010
|
|||||||||||||||||||||||
Non-employee
|
Total
|
Non-employee
|
Total
|
|||||||||||||||||||||
Stock Granted in Fiscal Year
|
Employees
|
Directors
|
Expense
|
Employees
|
Directors
|
Expense
|
||||||||||||||||||
2007
|
$ | - | $ | - | $ | - | $ | 42 | $ | - | $ | 42 | ||||||||||||
2009
|
- | - | - | - | 15 | 15 | ||||||||||||||||||
2010
|
- | 6 | 6 | - | 25 | 25 | ||||||||||||||||||
2011
|
52 | 16 | 68 | - | - | - | ||||||||||||||||||
Total stock grant compensation
|
$ | 52 | $ | 22 | $ | 74 | $ | 42 | $ | 40 | $ | 82 |
July 3, 2011
|
April 3, 2011
|
|||||||
Revolving line of credit
|
$ | 427 | $ | 4,336 | ||||
Non-interest bearing notes
|
2,000 | 2,000 | ||||||
Original issue discount
|
(12 | ) | (48 | ) | ||||
2,415 | 6,288 | |||||||
Less current maturities
|
1,988 | 1,952 | ||||||
$ | 427 | $ | 4,336 |
Fiscal Year
|
Revolver
|
Sub Notes
|
Total
|
|||||||||
2012
|
$ | - | $ | 2,000 | $ | 2,000 | ||||||
2013
|
- | - | - | |||||||||
2014
|
427 | - | 427 | |||||||||
Total
|
$ | 427 | $ | 2,000 | $ | 2,427 |
Estimated
|
Amortization Expense
|
|||||||||||||||||
Carrying
|
Useful
|
Accumulated
|
Three-Month Periods Ended
|
|||||||||||||||
Amount
|
Life
|
Amortization
|
July 3, 2011
|
June 27, 2010
|
||||||||||||||
Kimberly Grant Acquisition on December 29, 2006:
|
||||||||||||||||||
Tradename
|
$ | 466 |
15 years
|
$ | 140 | $ | 8 | $ | 8 | |||||||||
Existing designs
|
36 |
1 year
|
36 | - | - | |||||||||||||
Non-compete covenant
|
98 |
15 years
|
30 | 2 | 2 | |||||||||||||
Total Kimberly Grant Acquisition
|
600 |
14 years *
|
206 | 10 | 10 | |||||||||||||
Springs Baby Products Acquisition on November 5, 2007:
|
||||||||||||||||||
Licenses & existing designs
|
1,655 |
2 years
|
1,655 | - | - | |||||||||||||
Licenses & future designs
|
1,847 |
4 years
|
1,693 | 115 | 115 | |||||||||||||
Non-compete covenant
|
115 |
4 years
|
105 | 7 | 7 | |||||||||||||
Customer relationships
|
3,781 |
10 years
|
1,387 | 95 | 95 | |||||||||||||
Total Springs Baby Acquisition
|
7,398 |
7 years *
|
4,840 | 217 | 217 | |||||||||||||
Neat Solutions Acquisition on July 2, 2009:
|
||||||||||||||||||
Trademarks
|
892 |
15 years
|
119 | 15 | 15 | |||||||||||||
Designs
|
33 |
4 years
|
16 | 2 | 2 | |||||||||||||
Non-compete covenant
|
241 |
5 years
|
96 | 12 | 12 | |||||||||||||
Customer relationships
|
1,302 |
16 years
|
162 | 20 | 20 | |||||||||||||
Total Neat Solutions Acquisition
|
2,468 |
14 years *
|
393 | 49 | 49 | |||||||||||||
Bibsters® Acquistion on May 27, 2010:
|
||||||||||||||||||
Trademarks
|
629 |
15 years
|
45 | 10 | 4 | |||||||||||||
Patents
|
553 |
10 years
|
60 | 14 | 5 | |||||||||||||
Customer relationships
|
328 |
14 years
|
26 | 6 | 2 | |||||||||||||
Total Bibsters® Acquistion
|
1,510 |
13 years *
|
131 | 30 | 11 | |||||||||||||
Internally developed intangible assets
|
109 |
10 years
|
28 | 2 | 2 | |||||||||||||
Total other intangible assets
|
$ | 12,085 | $ | 5,598 | $ | 308 | $ | 289 | ||||||||||
*
|
Weighted-Average
|
Authorized
|
||||
Shares
|
||||
Common stock, $0.01 par value per share:
|
||||
Series A
|
73,500,000 | |||
Series B
|
327,940 | |||
Series C
|
172,060 | |||
Total common stock
|
74,000,000 | |||
Preferred stock, $0.01 par value per share
|
1,000,000 | |||
Total authorized capital stock
|
75,000,000 |
Three-Month Periods Ended
|
|||||||||||||||||
July 3, 2011
|
June 27, 2010
|
Change
|
Change
|
||||||||||||||
Net sales by category
|
|||||||||||||||||
Bedding, blankets and accessories
|
$ | 12,960 | $ | 12,547 | $ | 413 | 3.3 | % | |||||||||
Bibs, bath and disposable products
|
4,539 | 4,620 | (81 | ) | -1.8 | % | |||||||||||
Total net sales
|
17,499 | 17,167 | 332 | 1.9 | % | ||||||||||||
Cost of products sold
|
13,716 | 12,876 | 840 | 6.5 | % | ||||||||||||
Gross profit
|
3,783 | 4,291 | (508 | ) | -11.8 | % | |||||||||||
% of net sales
|
21.6 | % | 25.0 | % | |||||||||||||
Marketing and administrative expenses
|
2,850 | 3,015 | (165 | ) | -5.5 | % | |||||||||||
% of net sales
|
16.3 | % | 17.6 | % | |||||||||||||
Interest expense
|
78 | 97 | (19 | ) | -19.6 | % | |||||||||||
Other income
|
8 | 7 | 1 | 14.3 | % | ||||||||||||
Income tax expense
|
330 | 455 | (125 | ) | -27.5 | % | |||||||||||
Income from continuing operations
|
533 | 731 | (198 | ) | -27.1 | % | |||||||||||
Discontinued operations - net of taxes
|
(3 | ) | (5 | ) | 2 | -40.0 | % | ||||||||||
Net income
|
530 | 726 | (196 | ) | -27.0 | % | |||||||||||
% of net sales
|
3.0 | % | 4.2 | % |
Period
|
Total Number
of Shares |
Average Price
Paid Per Share |
Total Number of
Shares Purchased as |
Approximate Dollar
Value of Shares That |
||||||||||||
April 4, 2011 through May 8, 2011
|
120,940 | $ | 5.00 | 0 | $ | 0 | ||||||||||
May 9, 2011 through June 5, 2011
|
25,347 | $ | 4.81 | 0 | $ | 0 | ||||||||||
June 6, 2011 through July 3, 2011
|
1,756 | $ | 4.86 | 0 | $ | 0 | ||||||||||
Total
|
148,043 | $ | 4.96 | 0 | $ | 0 | ||||||||||
(1) The shares purchased from April 4, 2011 through July 3, 2011 consist of shares of common stock surrendered to the Company in payment of the exercise price and income tax withholding obligations relating to the exercise of stock options. |
Exhibit Number
|
Description of Exhibit
|
||
3.1
|
Amended and Restated Certificate of Incorporation of the Company. (1)
|
||
3.2
|
Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Company. (2)
|
||
3.3
|
Amended and Restated Bylaws of the Company. (3)
|
||
31.1
|
Rule 13a-14(a)/15d-14(a) Certification by the Company’s Chief Executive Officer (4)
|
||
31.2
|
Rule 13a-14(a)/15d-14(a) Certification by the Company’s Chief Financial Officer (4)
|
||
32.1
|
Section 1350 Certification by the Company’s Chief Executive Officer (4)
|
||
32.2
|
Section 1350 Certification by the Company’s Chief Financial Officer (4)
|
||
101.INS
|
** |
XBRL Instance
|
|
101.SCH
|
** |
XBRL Taxonomy Extension Schema
|
|
101.CAL
|
** |
XBRL Taxonomy Extension Calculation
|
|
101.DEF
|
** |
XBRL Taxonomy Extension Definition
|
|
101.LAB
|
** |
XBRL Taxonomy Extension Labels
|
|
101.PRE
|
** |
XBRL Taxonomy Extension Presentation
|
(1)
|
Incorporated herein by reference to Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended December 28, 2003.
|
(2) | Incorporated herein by reference to Registrant’s Current Report on Form 8-K dated August 9, 2011. |
(3) |
Incorporated herein by reference to Registrant’s Current Report on Form 8-K dated April 4, 2011.
|
(4) | Filed herewith. | |
** |
XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
|
|
CROWN CRAFTS, INC.
|
|||
Date: August 17, 2011
|
By:
|
/s/ Olivia W. Elliott | |
OLIVIA W. ELLIOTT | |||
Chief Financial Officer | |||
(Principal Financial Officer and Principal Accounting Officer) | |||
Exhibit Number
|
Description of Exhibit
|
||
3.1
|
Amended and Restated Certificate of Incorporation of the Company. (1)
|
||
3.2
|
Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Company. (2)
|
||
3.3
|
Amended and Restated Bylaws of the Company. (3)
|
||
31.1
|
Rule 13a-14(a)/15d-14(a) Certification by the Company’s Chief Executive Officer (4)
|
||
31.2
|
Rule 13a-14(a)/15d-14(a) Certification by the Company’s Chief Financial Officer (4)
|
||
32.1
|
Section 1350 Certification by the Company’s Chief Executive Officer (4)
|
||
32.2
|
Section 1350 Certification by the Company’s Chief Financial Officer (4)
|
||
101.INS
|
** |
XBRL Instance
|
|
101.SCH
|
** |
XBRL Taxonomy Extension Schema
|
|
101.CAL
|
** |
XBRL Taxonomy Extension Calculation
|
|
101.DEF
|
** |
XBRL Taxonomy Extension Definition
|
|
101.LAB
|
** |
XBRL Taxonomy Extension Labels
|
|
101.PRE
|
** |
XBRL Taxonomy Extension Presentation
|
(1)
|
Incorporated herein by reference to Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended December 28, 2003.
|
(2) | Incorporated herein by reference to Registrant’s Current Report on Form 8-K dated August 9, 2011. |
(3) |
Incorporated herein by reference to Registrant’s Current Report on Form 8-K dated April 4, 2011.
|
(4) | Filed herewith. | |
** |
XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Crown Crafts, Inc. for the period ended July 3, 2011;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: August 17, 2011
|
By:
|
/s/ E. Randall Chestnut | |
E. Randall Chestnut, Chairman of the Board, | |||
President & Chief Executive Officer | |||
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Crown Crafts, Inc. for the period ended July 3, 2011;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: August 17, 2011
|
By:
|
/s/ Olivia W. Elliott | |
Olivia W. Elliott | |||
Vice President & Chief Financial Officer | |||
1.
|
The Quarterly Report on Form 10-Q of the Company for the period ending July 3, 2011 (the “Periodic Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
2.
|
The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
1.
|
The Quarterly Report on Form 10-Q of the Company for the period ending July 3, 2011 (the “Periodic Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
2.
|
The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Unaudited Condensed Consolidated Balance Sheets (Parentheticals) (USD $)
In Thousands, except Share data |
Jul. 03, 2011
|
Apr. 03, 2011
|
---|---|---|
Allowances (in Dollars) | $ 1,250 | $ 1,395 |
Preferred stock, par value (in Dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value (in Dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 74,000,000 | 74,000,000 |
Common stock, shares Issued | 11,024,272 | 10,830,772 |
Treasury stock, shares | 1,396,205 | 1,248,162 |
Document And Entity Information
|
3 Months Ended | |
---|---|---|
Jul. 03, 2011
|
Aug. 10, 2011
|
|
Document and Entity Information [Abstract] | Â | Â |
Entity Registrant Name | CROWN CRAFTS INC | Â |
Document Type | 10-Q | Â |
Current Fiscal Year End Date | --04-01 | Â |
Entity Common Stock, Shares Outstanding | Â | 9,655,567 |
Amendment Flag | false | Â |
Entity Central Index Key | 0000025895 | Â |
Entity Current Reporting Status | Yes | Â |
Entity Voluntary Filers | No | Â |
Entity Filer Category | Smaller Reporting Company | Â |
Entity Well-known Seasoned Issuer | No | Â |
Document Period End Date | Jul. 03, 2011 | |
Document Fiscal Year Focus | 2012 | Â |
Document Fiscal Period Focus | Q1 | Â |
"+ text.join( "
\n" ) +"
" + text[p] + "
\n"; } } }else{ formatted = '' + raw + '
'; } html = ''+ "\n"+''+ "\n"+''+ "\n"+' formatted: '+ ( this.Default == 'raw' ? 'as Filed' : 'with Text Wrapped' ) +''+ "\n"+' | '+ "\n"+'
'+ "\n"+' | '+ "\n"+' '+ "\n"+'
'+ "\n"+' | '+ "\n"+' '+ "\n"+'
Note 7 - Goodwill, Customer Relationships and Other Intangible Assets
|
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 03, 2011
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Text Block] |
Note
7 – Goodwill, Customer Relationships and Other
Intangible Assets
Goodwill: The
Company reported goodwill of $1.1 million at April 3, 2011
and July 3, 2011. The Company tests the fair value
of the goodwill of its reporting units annually as of the
first day of the Company’s fiscal year. An
additional interim impairment test is performed during the
year whenever an event or change in circumstances occurs that
suggests 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 annual or
interim impairment test is performed in a two-step
approach. The first step is the estimation of the
fair value of each reporting unit to ensure that its fair
value exceeds its carrying value. If step one
indicates that a potential impairment exists, then the second
step is 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 has been performed as of
April 4, 2011, and the Company has concluded that the fair
value of the goodwill of the Company’s reporting units
exceeded their carrying values as of that date.
Other Intangible
Assets: Other intangible assets at July 3,
2011 consisted primarily of the capitalized costs of recent
acquisitions, other than tangible assets, goodwill and
assumed liabilities. The carrying amount and
accumulated amortization of the Company’s other
intangible assets as of July 3, 2011, their estimated useful
life and amortization expense for the three months ended July
3, 2011 and June 27, 2010 are as follows (dollar amounts in
thousands):
|
Note 3 - Inventories
|
3 Months Ended | ||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 03, 2011
|
|||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Text Block] |
Note
3 – Inventories
Major
classes of inventory were as follows (in thousands):
|
Note 8 - Subsequent Events
|
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 03, 2011
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Subsequent Events [Text Block] |
Note
8 – Subsequent Events
The
Company has determined that there are no subsequent events
that require disclosure pursuant to FASB ASC Topic 855, as
revised, except as set forth below.
On
August 9, 2011, at the Company’s 2011 annual meeting of
stockholders, a proposal was approved to amend the
Company’s amended and restated certificate of
incorporation to reduce the number of shares of the
Company’s authorized capital stock. Prior to
the approval of this proposal, the Company’s amended
and restated certificate of incorporation authorized the
issuance of up to 75,000,000 shares of capital stock,
subdivided as follows:
Subsequent
to the approval of the proposal, the Company’s
authorized capital stock has been reduced to 40,000,000
shares, all of which are Series A common stock with a par
value of $0.01 per share.
|
Note 1 - Summary of Significant Accounting Policies
|
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 03, 2011
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant Accounting Policies [Text Block] |
Note
1 – Summary of Significant Accounting Policies
Basis of
Presentation: The accompanying unaudited
consolidated financial statements include the accounts of
Crown Crafts, Inc. and its subsidiaries (collectively, the
“Company”) and have been prepared in accordance
with accounting principles generally accepted in the United
States of America (“GAAP”) applicable to interim
financial information as promulgated by the Financial
Accounting Standards Board (“FASB”) and the rules
and regulations of the Securities and Exchange Commission
(“SEC”). Accordingly, they do not
include all of the information and disclosures required by
GAAP for complete financial statements. 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. In the opinion of management, these interim
consolidated financial statements contain all adjustments
necessary to present fairly the financial position of the
Company as of July 3, 2011 and the results of its operations
and cash flows for the periods presented. Such
adjustments include normal, recurring accruals, as well as
the elimination of all significant intercompany balances and
transactions. Operating results for the quarter
ended July 3, 2011 are not necessarily indicative of the
results that may be expected for the fiscal year ending April
1, 2012. For further information, refer to the
Company’s consolidated financial statements and notes
thereto included in the Company’s annual report on Form
10-K for the year ended April 3, 2011.
Fiscal
Year: The Company’s fiscal year ends
on the Sunday nearest March 31. References herein
to “fiscal year 2012” represent the 52-week
period ending April 1, 2012 and references herein to
“fiscal year 2011” represent the 53-week period
ended April 3, 2011.
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 the 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 has a certain amount of
discontinued finished goods which necessitate the
establishment of inventory reserves that are highly
subjective. Actual results could differ 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.
Financial
Instruments: The following methods and
assumptions were used to estimate the fair value of each
class of financial instruments for which it is practicable to
estimate such value:
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 sixteen 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.
Segment and
Related Information: The Company operates
primarily in one principal segment, infant and toddler
products. These products consist of infant and
toddler bedding, infant bibs and related soft
goods. Net sales of bedding, blankets and
accessories amounted to $13.0 million and $12.5 million for
the quarters ended July 3, 2011 and June 27, 2010,
respectively, and net sales of bibs, bath and disposable
products amounted to $4.5 million and $4.6 million for the
quarters ended July 3, 2011 and June 27, 2010,
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 accompanying 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
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
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 such
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 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
funding requests should have no 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 the exposure to credit losses and to enhance the
predictability of its cash flows, the Company assigns the
majority of its trade accounts receivable under factoring
agreements with The CIT Group/Commercial Services, Inc., a
subsidiary of CIT Group, Inc.
(“CIT”). In the event a factored
receivable becomes uncollectible due to creditworthiness,
CIT bears the risk of loss. The Company must
make estimates of the uncollectibility 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 to evaluate the adequacy of its allowance for
doubtful accounts. The Company’s accounts
receivable at July 3, 2011 amounted to $13.3 million, net
of allowances of $1.3 million. Of this amount,
$12.7 million is due from CIT under the factoring
agreements, which amount represents the maximum amount of
loss that the Company could incur under the factoring
agreements if CIT failed completely to perform its
obligations thereunder.
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 goods sold in the
accompanying consolidated statements of income and,
therefore, has a significant impact on the amount of net
income in the accounting periods reported. The
basis of accounting for inventories is cost, which is the
sum of expenditures and charges, both direct and indirect,
incurred to acquire inventory, bring it to a condition
suitable for sale, and store it 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, the amount and timing of the
Company's cost of goods sold and the resulting net income
for any accounting period.
On
a periodic basis, management reviews the Company’s
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 normal operating cycle of the Company's
operations. 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 goods 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 of 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.
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 accompanying consolidated balance sheets.
The
Company tests the fair value of the goodwill of its reporting
units annually as of the first day of the Company’s
fiscal year. An additional interim impairment test
is 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 fallen below its carrying
value. The annual or interim impairment test is
performed in a two-step approach. The first step
is the estimation of the fair value of each reporting unit to
ensure that its fair value exceeds its carrying
value. If step one indicates that a potential
impairment exists, then the second step is 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.
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
sales and amounted to $1.3 million for each of the
three-month periods ended July 3, 2011 and June 27,
2010.
Provisions for
Income Taxes: The Company’s provisions for
income taxes include all currently payable federal, state,
local and foreign taxes and are based upon the
Company’s estimated annual effective tax rate, which is
based on the Company’s forecasted annual pre-tax
income, as adjusted by certain expenses within the financial
statements which will never be deductible on the
Company’s tax returns, multiplied by the statutory tax
rates for the various jurisdictions in which the Company
operates and reduced by certain anticipated tax
credits. 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.
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 general examination or other adjustment
as of July 3, 2011 were the tax years ended March 30, 2008,
March 29, 2009, March 28, 2010 and April 3, 2011, as well as
the tax year ended April 1, 2007 for several states.
The
Internal Revenue Service has notified the Company that its
consolidated federal income tax return for the tax year ended
March 29, 2009 has been selected for
examination. Although management believes that the
calculations and positions taken on this and all other filed
income tax returns are reasonable and justifiable, the final
outcome of this or any other examination could result in an
adjustment to the position that the Company took on such
income tax return. Such adjustment could be
favorable or unfavorable and could result in adjustments to
one or more state income tax returns, or to prior or
subsequent income tax returns, or both. The
cumulative effect of such adjustments could have a material
impact on the Company’s future results of
operations.
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 options, which are added to basic
shares to arrive at diluted shares.
The
following table sets forth the computation of basic and
diluted net income per common share for the three-month
periods ended July 3, 2011 and June 27, 2010.
Recently Issued
Accounting Standards: On May 12, 2011, the
FASB issued FASB ASU No. 2011-04, Fair Value
Measurement (Topic 820): Amendments to Achieve
Common Fair Value Measurements and Disclosure Requirements in
U.S. GAAP and IFRSs. This ASU is intended
to improve consistency across jurisdictions to ensure that
U.S. GAAP and International Financial Reporting Standards
(“IFRSs”) fair value measurement and disclosure
requirements are described in the same way. For
public entities, the amendments in this ASU are to be applied
prospectively effective for annual periods beginning after
December 15, 2011, and early application is not
permitted. The Company does not anticipate that
its adoption of ASU No. 2011-04 on April 2, 2012 will impact
its consolidated financial statements.
|
Note 4 - Discontinued Operations
|
3 Months Ended |
---|---|
Jul. 03, 2011
|
|
Disposal Groups, Including Discontinued Operations, Disclosure [Text Block] |
Note
4 – Discontinued Operations
In
June 2007, the operations of Churchill Weavers, Inc.
(“Churchill”), a wholly-owned subsidiary of the
Company, ceased and all employees were
terminated. The Company is actively marketing
Churchill’s land and building for sale. The
Churchill property is recorded at fair value, less cost to
sell, and is classified as assets held for sale in the
accompanying consolidated balance sheets. The
costs to maintain the Churchill property are classified as
discontinued operations in the accompanying consolidated
statements of income.
|
Note 5 - Stock-based Compensation
|
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 03, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] |
Note
5 – Stock-based Compensation
The
Company has two incentive stock plans, the 1995 Stock
Option Plan (“1995 Plan”) and the 2006 Omnibus
Incentive Plan (“2006 Plan”). The
Company granted non-qualified stock options to employees
and non-employee directors from the 1995 Plan through the
fiscal year ended April 2, 2006. In conjunction
with the approval of the 2006 Plan by the Company’s
stockholders at its Annual Meeting in August 2006, options
may no longer be issued from the 1995 Plan.
The
2006 Plan is intended to attract and retain directors,
officers and employees of the Company and to motivate these
persons to achieve performance objectives related to the
Company’s overall goal of increasing stockholder
value. The principal reason for adopting the
2006 Plan was to ensure that the Company has a mechanism
for long-term, equity-based incentive compensation to
directors, officers and employees. Awards
granted under the 2006 Plan may be in the form of qualified
or non-qualified stock options, restricted stock, stock
appreciation rights, long-term incentive compensation units
consisting of a combination of cash and shares of the
Company’s common stock, or any combination thereof
within the limitations set forth in the 2006
Plan. The 2006 Plan is administered by the
compensation committee of the Company’s Board of
Directors (the “Board”), which selects eligible
employees and non-employee directors to participate in the
2006 Plan and determines the type, amount, duration and
other terms of individual awards. At July 3,
2011, 237,000 shares of the Company’s common stock
were available for future issuance under the 2006
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 $137,000 and
$163,000 of stock-based compensation expense during the
three-months ended July 3, 2011 and June 27, 2010,
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 have been capitalized as part
of the cost of an asset as of July 3, 2011.
Stock
Options: The following table represents stock option
activity for the
three-month periods ended July 3, 2011 and June 27,
2010:
The
total intrinsic value of the stock options exercised during
the three months ended July 3, 2011 and June 27, 2010 was
$332,000 and $271,000, respectively. As of July 3,
2011, the intrinsic value of the outstanding and exercisable
stock options was $897,000 and $697,000, respectively.
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 the fair value, and the resulting grant-date fair
value per option, of the non-qualified stock options which
were awarded to certain employees during the three-month
periods ended July 3, 2011 and June 27, 2010, which options
vest over a two-year period, assuming continued
service.
Because the
Company’s historical stock option exercise experience
did not provide a reasonable basis upon which to estimate the
expected life of the stock options granted during each of the
three months ended July 3, 2011 and June 27, 2010, the
Company has elected to use the simplified method to estimate
the expected life of the stock options granted, as allowed by
SEC Staff Accounting Bulletin No. 107 and the continued
acceptance of the simplified method indicated in SEC Staff
Accounting Bulletin No. 110.
For the
three-month periods ended July 3, 2011 and June 27, 2010, the
Company recognized compensation expense associated with stock
options as follows (in thousands):
As of July 3,
2011, total unrecognized stock option compensation expense
amounted to $322,000, which will be recognized as the
underlying stock options vest over a period of up to two
years. 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
individual who has received stock options that are unvested
as of such individual’s separation date.
Non-vested
Stock: The fair value of non-vested stock granted is
determined based on the number of shares granted multiplied
by the closing price of the Company’s common stock on
the date of the grant.
The Board granted
30,000 shares of non-vested stock to its non-employee
directors during each of the quarters ended September 26,
2010, September 27, 2009 and September 28, 2008 with a
weighted-average fair value of $4.36, $3.02 and $3.87,
respectively, as of the date of each of the
grants. These shares vest over a two-year period,
assuming continued service.
The Board awarded
345,000 shares of non-vested stock to certain employees as of
June 23, 2010 (the “Grant Date”) in a series of
grants which will vest only if 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 (the “Market
Condition”), assuming continued service through the
date the Market Condition is achieved.
As of July 29,
2010 (the “Modification Date”), the Company
amended these non-vested stock grants to require as a
condition to vesting a five-year period of continuous service
after the Modification Date in addition to the achievement of
the Market Condition. The amendment of these
non-vested stock grants will be accounted for as a
modification. As such, the initial aggregate Grant
Date fair value and the incremental cost resulting from the
modification, if any, will be recognized as compensation
expense over the vesting term of the modified
awards. The Company, with the assistance of an
independent third party, has determined that the aggregate
Grant Date fair value of the original awards amounted to $1.2
million, and has further determined that there is no
incremental cost resulting from the
modification. Therefore, the aggregate Grant Date
fair value will be recognized as compensation expense over a
period beginning on the Grant Date and ending on the fifth
anniversary of the Modification Date.
For the
three-month periods ended July 3, 2011 and June 27, 2010, the
Company recognized compensation expense associated with
non-vested stock grants, which is included in marketing and
administrative expenses in the accompanying consolidated
statements of income, as follows (in thousands):
As of July 3,
2011, total unrecognized compensation expense related to the
Company’s non-vested stock grants amounted to $923,000,
which will be recognized over the respective vesting terms
associated with each block of grants as indicated
above. The amount of future compensation expense
related to the Company’s 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
received non-vested stock grants that remain non-vested as of
such individual’s separation date.
|
Note 6 - Financing Arrangements
|
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 03, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Text Block] |
Note
6 – Financing Arrangements
Factoring
Agreement: The Company assigns the majority
of its trade accounts receivable to CIT under factoring
agreements. 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, then the Company is charged interest at prime plus
1.0%, which was 4.25% at July 3, 2011, until payment is
received. The Company incurred interest expense of
$17,000 for each of the three-month periods ended July 3,
2011 and June 27, 2010 as a result of the failure of the
Company’s 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 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 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. Factoring fees, which
are included in marketing and administrative expenses in the
accompanying consolidated statements of income, were $83,000
and $134,000 for the three-month periods ended July 3, 2011
and June 27, 2010, respectively. There were no
advances from the factor at either July 3, 2011 or June 27,
2010.
Notes Payable
and Other Credit Facilities: At July 3, 2011 and April
3, 2011, long-term debt of the Company consisted of (in
thousands):
The
Company’s credit facilities at July 3, 2011 consisted
of the following:
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, with an interest rate of prime plus 1.00%,
which was 4.25% at July 3, 2011, or LIBOR plus 3.00%, which
was 3.19% at July 3, 2011, maturing on July 11, 2013 and
secured by a first lien on all assets of the
Company. As of July 3, 2011, the Company had
elected to pay interest on the revolving line of credit under
the LIBOR option. Also under the financing
agreement, a monthly fee is assessed based on 0.25% of the
average unused portion of the $26.0 million revolving line of
credit, less any outstanding letters of
credit. This unused line fee amounted to $16,000
and $10,000 for the three-month periods ended July 3, 2011
and June 27, 2010, respectively. At July 3, 2011,
there was a balance due on the revolving line of credit of
$427,000, there was a $500,000 letter of credit outstanding
and the Company had $21.5 million available under the
revolving line of credit based on its eligible accounts
receivable and inventory balances.
The
financing agreement for the revolving line of credit 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, dividends and transactions with
affiliates. The Company was in compliance with these
covenants as of July 3, 2011.
Subordinated
Notes totaling $2.0 million. The notes do
not bear interest and are due on July 11,
2011. The original issue discount of $12,000 on
these non-interest bearing obligations at a market interest
rate of 7.25% is being amortized over the life of the
notes.
Minimum
annual maturities as of July 3, 2011 are as follows (in
thousands):
|
Note 2 - Acquisitions
|
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 03, 2011
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination Disclosure [Text Block] |
Note
2 – Acquisition
On
May 27, 2010, Hamco, Inc., a wholly-owned subsidiary of the
Company, paid $1.8 million to The Procter & Gamble
Company (“P&G”) to acquire certain
intellectual property related to P&G’s line of
Bibsters®
disposable infant bibs. In a separate but related
transaction, Hamco also acquired the inventory associated
with the Bibsters®
product line from the exclusive licensee of Bibsters®
for P&G, whose license was terminated to coincide with
the closing (collectively, the two transactions represent the
“Bibsters®
Acquisition”). Hamco also recognized as
expense $100,000 of direct costs associated with the
acquisition, which were included in marketing and
administrative expenses during the fiscal year ended April 3,
2011, $60,000 of which were recognized during the three-month
period ended June 27, 2010. Because the operations
of the Bibsters®
product line have been integrated with Hamco, and because the
assets acquired do not exist as a discrete entity within the
Company’s internal corporate structure, it is
impracticable to determine the earnings generated by the
assets acquired from the Bibsters®
product line since the acquisition date. The
Company believes that the pro forma impact of the acquisition
is not material.
The
fair values of the assets acquired were determined by the
Company with the assistance of an independent third
party. The Company’s allocation of the
acquisition cost is as follows (in thousands):
|
FR&E1JTXS^IU=`K&):INR%V3,NT'&H:N`AA!B!'RDW&L^ZP
MI:G8>1J`_ Y);8?!VMH2=6:35LUFCY4G.)I'3.M17IYEL:J
M9N(QJ(LJE(;*P#"''1C?QDW%S?)&L, 9%@D"RZUJ&<1VQZ[I8,[:%
ME"10:P_=R*XCNZXI`2^NR'_UTE67/#2V\ZX^Z<10',#%]X@;KHY+,U\1P1G/PL_-!S#7/!
MQW%\!!M[_C1R>`^O,E@3)@/&F>5X("4G^!8(@RT<&)J'ZB%EF.,N$W_$0X5>
MNJK =Y=E
M3D:LI^:I-#67O^\BJ1M'`Q:<$Q,MH(_+94J@*BP3&D#S_T),/N(%,'=[;(VG
M=*FAD+S..IQ;G_?36&F9@H3(NQ[9)B5XJ:J8!7V^'_?.9,IW=%R"_GIBKM&Z
MU%'4S[Z%MI[U *+&,XOL.X;U
M3"8XP&'/_>.>`UBG\XY@!&[`K..\XUMKLP+O]RAE73_T
I!#WH!!;D]R>/?.;L].A*0^@S2JRA63\=H,I
M)H1D.T>RQ=><8G6]".F.A'A&F%N%>,9SP:XA;W!SUKNH.1H0\!'P':;LD@EW
MJ"9<__3JBDPX0K)CD50RX8[>A+N^Z)UU,&_T,&%O`Z[>?621+H37<_+U;NR.
M^VO77GB[O=-.X::,
ZS-+SS
4DQ=E2F2#$>O6(\
MNS&7PR/-N']&)/0C]&LK\0X#_<[-;4T(^_;.AH1]A'UM)1YA7Y5TA'UMB%]0
MAX/-BKJA1-.1K)R:W"\#HV.F3Q
F-KUH<:#_L"$!H?PIFQ!*$]@"U*M;
M)!GF7ZA/N@"B$K8&V>@Z`(93HLLSX)>:9?,&',YML@@!W2G4Y?M82CNGY&&C
M*O,E*M`\"(<"-2F"C6QM*%^:`N2K="4+"C,551D%&%OJX,2F3-TS>TN=-HBE
MJ-4HS>8JTRWT)%SAF>#,Q+!:HJ,81[TQ8A-!M$!#28>U$30U4\_O'J8]7W?W
M,/7=903"075Y`U;>:KR><9;8CR$!AIJ"E6R$JUL0&69=DME)P5&&/^B-/<*$
M$;*)OF!Q-J.@]L;N#%0KR\6+BBH#@))N<7N9$_Q"$GZ)G'I![21:I3-78%4E
M("C#A
JRO;1?*F]R:!;;\.\[<&EMZ8]#RPT
MM=C"9+T"3$"$[`IR/ABL^&C7/IQ25*)>%H)5MLVK'R]78;R&D!U6PJ"BB@.J
MC!ZI[?21EB*Y*N$,!N#!NX4)*[2:PP@N4.K\)-M8L%4%,V-#IX8[E%U7\=H+
M!]8Q&2H';79$=&CT"1?#G9\$:D2V99ZD2^VL,Z