SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
(Amending Item 7(b))
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 23, 2001
Crown Crafts, Inc.
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(Exact name of registrant as specified in its charter)
Georgia 1-7604 58-0678148
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification Number)
1600 RiverEdge Parkway, Suite 200, Atlanta, Georgia 30328
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (770) 644-6400
This Form 8-K/A amends Item 7(b) of the Form 8-K previously filed with the
Securities and Exchange Commission on August 7, 2001 by including the pro forma
financial information referred to below.
Item 7. Financial Statements, Pro Forma Information and Exhibits
(b) Pro Forma Information
The following unaudited pro forma financial information and accompanying notes
should be read in conjunction with the historical financial statements and
related notes of Crown Crafts, Inc. (the "Company"). The unaudited pro forma
financial information is provided for informational purposes only and does not
purport to represent what the financial position and results of operations would
actually have been had the sale of assets and refinancing transactions in fact
occurred at the dates indicated. The following unaudited pro forma condensed
balance sheet and unaudited pro forma statement of operations and comprehensive
income illustrate the estimated effects of the transactions as if the
transactions had occurred at the end of the period for the balance sheet and at
the beginning of the period presented for the statement of operations and
comprehensive income. The unaudited pro forma information was derived using the
Company's consolidated year end financial statements as filed in its Annual
Report on Form 10-K as of and for the year ended April 1, 2001 as well as
internal management reports. Adjustments have been made to reclassify the
presentation of the historical financial statements for the businesses and
assets sold during fiscal year 2001, including the Wovens Products division
which was sold to Aladdin Manufacturing Corporation (an affiliate of Mohawk
Industries) on November 14, 2000, and certain other asset dispositions before
and subsequent to April 1, 2001, including the sale of the adult bedding
business to Design Works, Inc. on July 23, 2001 as well as the refinancing of
the Company's indebtedness effective as of the same date.
Crown Crafts, Inc. And Subsidiaries
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
in millions of dollars
Asset Pro forma
April 1, 2001 Sales Refinancing April 1, 2001
------------- ------- ----------- -------------
Current assets $ 40.7 $ 0.6 $ 1.2 $ 42.5
Assets held for sale 21.7 (21.7)A --
Fixed assets, net 3.9 3.9
Other assets 24.4 24.4
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Total assets $ 90.7 $ (21.1) $ 1.2 $ 70.8
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Accounts payable $ 8.5 $ (2.5) $ 6.0
Accrued liabilities 6.5 (0.3) 6.2
Current maturities of long term debt 44.0 (17.5) (26.2) 0.3
------- ------- ------- -------
Total current liabilities 59.0 (20.3) (26.2) 12.5
Long term debt 47.7 47.7
Other liabilities 0.8 (0.8) --
Shareholders' (deficit) equity (16.8) 27.4 B 10.6
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Total liabilities and shareholders' (deficit) equity $ 90.7 $ (21.1) $ 1.2 $ 70.8
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Crown Crafts, Inc. and Subsidiaries
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
Fiscal year ended April 1, 2001
As Asset Pro
in thousands, except income (loss) per share Reported Sales Refinancing Forma
--------- --------- ----------- ---------
Net sales $ 247,515 $(139,473) $ $ 108,042
Cost of products sold 228,973 (143,109) 85,864
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Gross profit 18,542 3,636 22,178
Marketing and administrative expenses 43,311 (29,606) 13,705
Provision for impairment 28,240 (28,240)
Loss on disposition of assets 6,546 (6,546)
--------- --------- --------- ---------
Income (loss) from operations (59,555) 68,028 8,473
Other income (expense):
Interest expense (14,781) 4,645 C 4,782 D (5,354)
Other -- net 726 (867) (141)
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Income (loss) before income taxes (73,610) 71,806 4,782 2,978
Income tax benefit (23) E (23)
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Net income (loss) (73,587) 71,806 4,782 3,001
Other comprehensive loss, net of tax:
Foreign currency translation adjustment (1) (1)
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Comprehensive income (loss), net of tax $ (73,588) $ 71,806 $ 4,782 $ 3,000
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Basic income (loss) per share $ (8.55) $ 0.32
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Diluted income (loss) per share $ (8.55) $ 0.10
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Weighted average shares outstanding -- basic 8,609 812 F 9,421
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Weighted average shares outstanding -- diluted 8,609 22,949 F 31,558
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NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
A. Assets held for sale as of April 1, 2001 include the adult bedding
business sold to Design Works Inc. on July 23, 2001, the Timberlake,
North Carolina plant sold to Vector Tobacco (USA) Ltd. on June 14,
2001, as well as certain other assets. Liabilities assumed by Design
Works Inc. totaled $3.5 million.
B. On July 23, 2001 the Company completed a refinancing of its debt. The
new credit facilities include the following:
A Revolving Credit Facility of up to $19 million including a $3 million
sub-limit for letters of credit, with $14.0 million drawn at closing.
The interest rate is equal to LIBOR plus 2.75% with a maturity date of
June 30, 2004. The facility is secured by a first lien on all assets.
Senior Notes of $14 million with an interest rate of 10% plus
additional interest contingent upon cash flow availability of 3%. The
maturity date is June 30, 2006 and the notes are secured by a first
lien on all assets.
Senior Subordinated Notes of $16 million with an interest rate of 10%
plus an additional 1.65% payable by delivery of a promissory note due
July 23, 2007. The maturity date is July 23, 2007, and the security is
a second lien on all assets. In addition to principal and interest, a
payment of $8 million is due on the earliest of (i) maturity of the
notes, (ii) prepayment of the notes, or (iii) sale of the Company. The
original issue discount of $4.1 million on this non-interest bearing
note at a market interest rate of 12% will be amortized over the life
of the notes.
As part of the refinancing, the Company issued to the Lenders warrants
for non-voting common stock that are convertible into common stock
equivalent to 65% of the shares of the Company on a fully diluted basis
at a price of 11.3 cents per share. The warrants are non-callable and
expire in six years. The value of the warrants of $2.4 million using
the Black-Scholes option pricing model was credited to additional paid
in capital in the second quarter of fiscal year 2002. Also in the
second quarter of fiscal year 2002, the Company recognized an
extraordinary item of $25.0 million representing cancellation of debt
income in connection with the refinancing.
C. Interest expense associated with the remaining debt balance of $76.2
million following asset sales was recalculated using average interest
rates in effect for fiscal year 2001.
D. Interest expense was projected using the new loan balance of $48.0
million and the stated rates, with an assumed rate of 7.0 percent on
the variable rate portion of the debt.
E. As of April 1, 2001, the Company has federal income tax net operating
loss carryforwards totaling $55.9 million which begin expiring in the
year ending March 2020. Therefore, no additional tax provision was
included.
F. Basic shares outstanding increased for issuance of restricted shares to
management in connection with the refinancing of the Company's
indebtedness. Diluted shares outstanding include common stock
equivalents of 19,511 associated with the lenders' warrants and 2,626
common stock equivalents related to anti-dilution provisions of the
restricted stock. Common stock equivalents of the lenders' warrants
assume the repurchase of shares with the exercise proceeds of $2.5
million at the average stock price in fiscal year 2001 of $0.89.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CROWN CRAFTS, INC.
Date: September 28, 2001 /s/ Carl A. Texter
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CARL A. TEXTER
(Vice President and Treasurer)
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