Exhibit 99.1
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For Immediate Release
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February 2, 2007 |
Crown Crafts, Inc. Announces Closure of Churchill Weavers, Inc.
Gonzales, Louisiana Crown Crafts, Inc. (the Company) (OTCBB: CRWS) today announced that
it intends to close its wholly-owned subsidiary, Churchill Weavers, Inc. (Churchill).
The Company had previously announced that it had entered into a non-binding letter of intent for
the possible sale of substantially all of the assets of Churchill to Bedford Cottage, LLC. Since that time,
the Company and Bedford Cottage, LLC have determined that they will not be able to complete this
transaction. Management notified the employees of Churchill today that the Company has begun the
process of liquidating Churchill.
Goodwill of $90,000 associated with the acquisition of Churchill was written-off in June 2006. In
anticipation of the liquidation of Churchill, the Company estimates that it will record valuation
allowances approximating $550,000 in the quarter ended December 31, 2006 to reflect the expected
net realizable value of Churchills receivables, inventories and prepaid expenses.
The closure of Churchill is not expected to have a significant financial impact during the fourth
quarter of fiscal year 2007 nor in the first quarter of fiscal year 2008, when the Company
anticipates the operations of Churchill will cease. The Company expects to generate cash from the liquidation of
receivables, inventories and other assets of approximately $600,000, which will be utilized to fund
liquidation costs of approximately $225,000. In addition, the Company will immediately market
Churchills land, building and equipment for sale. The property
has been appraised at greater than net
book value. Proceeds from the sale of the property are not included
in the above-noted cash and financial
impact estimates. The ultimate financial and cash impact of the closure is dependent upon the proceeds from
the liquidation of the inventory, land, building and equipment; therefore, actual results could
vary significantly from managements estimate.
We regret that we have been forced to make the tough decision to close a company as old and
respected as Churchill. However, Churchill has been unprofitable for the past few years and
efforts by management to fend off competition from lower-priced imports have been unsuccessful,
commented E. Randall Chestnut, Chairman, President and Chief Executive Officer of the Company.
This move will improve future profitability and cash flow, Mr. Chestnut continued.
Crown Crafts, Inc. designs, markets and distributes infant and juvenile consumer products,
including bedding, blankets, bibs, bath items and accessories, and luxury hand-woven home décor.
Its subsidiaries include Hamco, Inc. in Louisiana, Crown Crafts Infant Products, Inc. in California
and Churchill Weavers, Inc. in Kentucky. Crown Crafts is Americas largest distributor of infant
bedding, bibs and bath items. The Companys products include licensed and branded collections as
well as exclusive private label programs for certain of its customers.
This release contains forward-looking statements within the meaning of the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Such
statements are based upon managements current expectations, projections, estimates and
assumptions. Words such as expects, believes, anticipates and variations of such words and
similar expressions identify such forward-looking statements. Forward-looking statements involve
known and 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, including changes in interest rates, in the overall level of consumer spending
and in the price of oil, cotton and other raw materials used in the Companys products, changing
competition, changes in the retail environment, the level and pricing of future orders from the
Companys customers, the Companys dependence upon third-party suppliers, including some located in
foreign countries, customer acceptance of both new designs and newly-introduced product lines,
actions of competitors that may impact the Companys business, disruptions to transportation
systems or shipping lanes used by the Company or its suppliers, and the Companys dependence upon
licenses from third parties. Reference is also made to the Companys periodic filings with the
Securities and Exchange Commission for additional factors that may impact the Companys results of
operations and financial condition. The Company does not undertake to update the forward-looking
statements contained herein to conform to actual results or changes in our expectations, whether as
a result of new information, future events or otherwise.
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Contact:
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Olivia Elliott |
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(225) 647-9124 |