|
Accounting Policies, by Policy (Policies)
|
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Dec. 30, 2012
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basis of Accounting, Policy [Policy Text Block] |
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 U.S. generally accepted accounting principles
(“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 December 30, 2012 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 three and
nine-month periods ended December 30, 2012 are not
necessarily indicative of the results that may be expected by
the Company for its fiscal year ending March 31,
2013. 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 fiscal year ended April 1, 2012
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reclassification, Policy [Policy Text Block] |
Reclassifications: The
Company has reclassified certain prior year financial
information to conform to the amounts presented for the
current year. None of the changes impact the
Company’s previously reported financial position or
results of operations
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fiscal Period, Policy [Policy Text Block] |
Fiscal
Year: The Company’s fiscal year ends
on the Sunday that is nearest to or on March
31. References herein to “fiscal year
2013” represent the 52-week period ending March 31,
2013 and references herein to “fiscal year 2012”
represent the 52-week period ended April 1, 2012
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Use of Estimates, Policy [Policy Text Block] |
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 also has a certain amount of
discontinued finished goods which necessitates the
establishment of inventory reserves and allocates indirect
costs to inventory based on an estimated percentage of the
supplier purchase price, each of which is highly
subjective. Actual results could differ from those
estimates.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash and Cash Equivalents, Policy [Policy Text Block] |
Cash and Cash
Equivalents: The Company considers
highly-liquid investments, if any, purchased with original
maturities of three months or less to be cash
equivalents
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value of Financial Instruments, Policy [Policy Text Block] |
Financial
Instruments: For short-term instruments such as cash
and cash equivalents, accounts receivable and accounts
payable, the Company uses carrying value as a reasonable
estimate of fair value
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting, Policy [Policy Text Block] |
Segment and
Related Information: The Company operates
primarily in one principal segment, which is infant, toddler
and juvenile products. These products consist of
crib and toddler bedding, nursery accessories, room
décor, infant bibs and related soft
goods. Net sales of bedding, blankets and
accessories and net sales of bibs, bath and disposable
products for the three and nine-month periods ended December
30, 2012 and January 1, 2012 are as follows (in
thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue Recognition, Services, Royalty Fees [Policy Text Block] |
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 in the accompanying consolidated statements of income
and amounted to $4.7 million and $4.5 million for the nine
months ended December 30, 2012 and January 1, 2012,
respectively
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Advertising Costs, Policy [Policy Text Block] |
Advertising
Costs: The Company’s advertising
costs are primarily associated with cooperative advertising
arrangements with certain of the Company’s customers
and are recognized using the straight-line method based upon
aggregate annual estimated amounts for those customers, with
periodic adjustments to the actual amounts of authorized
agreements. Advertising expense is included in
marketing and administrative expenses in the accompanying
consolidated statements of income and amounted to $605,000
and $767,000 for the nine-month periods ended December 30,
2012 and January 1, 2012, respectively.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue Recognition, Policy [Policy Text Block] |
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, cooperative 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
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Receivables, Policy [Policy Text Block] |
Allowances
Against Accounts Receivable: The Company’s
allowances against accounts receivable are primarily
contractually agreed-upon deductions for items such as
cooperative 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.
(“CIT”), a subsidiary of CIT Group,
Inc. 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 December 30, 2012 amounted to $18.8 million,
net of allowances of $450,000. Of this amount,
$18.2 million was due from CIT under the factoring
agreements and the Company held $234,000 in cash at CIT;
such amounts together represented the maximum loss that the
Company could incur if CIT failed completely to perform its
obligations under its agreements with the
Company. Of the remaining accounts receivable at
December 30, 2012 that were not due from CIT under the
factoring agreements, $343,000 was secured by letters of
credit in respect of the underlying invoices
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Depreciation, Depletion, and Amortization [Policy Text Block] |
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 twenty-one years for property, plant and equipment,
and one to twenty 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.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Intangible Assets, Policy [Policy Text Block] |
Valuation of
Long-Lived Assets and Identifiable Intangible
Assets: 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
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Intangible Assets, Finite-Lived, Policy [Policy Text Block] |
Patent
Costs: The Company incurs certain legal and
related costs in connection with patent
applications. The Company capitalizes such costs
to be amortized over the expected life of the patent to the
extent that an economic benefit is anticipated from the
resulting patent or an alternative future use is available to
the Company. The Company also capitalizes legal
costs incurred in the defense of the Company’s patents
when it is believed that the future economic benefit of the
patent will be maintained or increased and a successful
defense is probable. Capitalized patent defense
costs are amortized over the remaining expected life of the
related patent. The Company’s assessment of
future economic benefit or a successful defense of its
patents involves considerable management judgment, and a
different conclusion or outcome of litigation could result in
a material impairment charge up to the carrying value of
these assets
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventory, Policy [Policy Text Block] |
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 includes
the direct supplier acquisition cost, duties, taxes and
freight, and the indirect costs incurred to design, develop,
source and store the product 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
indirect costs allocated to inventory are done so as a
percentage of projected annual supplier purchases and can
impact the Company’s results of operations as purchase
volume fluctuates from quarter to quarter and year to
year. The difference between indirect costs
incurred and the indirect costs allocated to inventory
creates a burden variance, which is generally favorable when
actual inventory purchases exceed planned inventory
purchases, and is generally unfavorable when actual inventory
purchases are lower than planned inventory
purchases. While the burden variance can be
significant during interim periods, it is generally not
material by the end of each fiscal year. 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.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax, Policy [Policy Text Block] |
Provision for
Income Taxes: The Company’s provision
for income taxes includes all currently payable federal,
state, local and foreign taxes and is based upon the
Company’s estimated annual effective tax rate, which is
based on the Company’s forecasted annual pre-tax
income, as adjusted for certain expenses within the financial
statements that will never be deductible on the
Company’s tax returns and certain charges expected to
be deducted on the Company’s tax returns that will
never be deducted on the financial statements, 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
within which it operates, including the U.S., several U.S.
states and the People’s Republic of
China. The prescription period for the
Company’s income tax returns varies by jurisdiction;
tax returns open to examination or other adjustment by
federal or state authorities as of December 30, 2012 were for
the fiscal years ended March 28, 2010, April 3, 2011 and
April 1, 2012, as well as the fiscal year ended March 29,
2009 for several states
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Share, Policy [Policy Text Block] |
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
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||