Crown Crafts Urges Shareholders to Stay Focused on the Facts and Support Its Slate of Truly Independent, Highly Qualified Director Candidates
Proxy Contest Yet Another Example of Dissident Investor's History of Misrepresentations and "Self-Serving, Short-Sighted Agenda" at Expense of all Shareholders
GONZALES, La., July 19, 2010 (GLOBE NEWSWIRE) -- Crown Crafts, Inc. (the "Company") (Nasdaq:CRWS) today issued a letter to all shareholders in connection with the election of directors at the Company's annual meeting of shareholders to be held on August 10, 2010.
Commenting on the current proxy fight instigated by the New York-based investment fund Wynnefield Partners Small Cap Value L.P. and certain affiliates (the "Wynnefield Group"), E. Randall Chestnut, the Company's Chairman, President and Chief Executive Officer, said, "Crown Crafts continued to build on its successful strategic trajectory in fiscal 2010, which was a great year for Crown Crafts despite the recession-related challenges that impacted retail markets. Among other things, (1) we maintained a stable top line while generating strong cash flows from operations, (2) we instituted a new quarterly dividend payout of $0.02 per share, further strengthened our enviable balance sheet and raised shareholders' equity by 23%, and (3) we increased Adjusted EBITDA* to $10.5 million, the highest level since 1998.
* Please see discussion of non-GAAP financial measures at the end of the attached letter.
"We are proud of the positive momentum we have created for our shareholders, and we enter fiscal 2011 with great enthusiasm for the value creation opportunities that are now before us. This is why the ongoing, misleading antics by the Wynnefield Group to advance their own narrow, self-serving, short-sighted agenda are so frustrating and counterproductive."
In 2007, the Wynnefield Group pursued a costly and distracting proxy fight in which only one of their candidates was elected. In 2008, the Wynnefield Group threatened a similar campaign before the Company agreed to allow the dissident investor to add a handpicked director to the Company's Board.
Chestnut noted that neither individual appears to have the support of the Wynnefield Group anymore because their 2010 slate does not include their nominee who was elected in 2007 and whose term is expiring, and they have suggested that their director appointed in 2008 step down from the Board. "Additionally, the dissident investor's current nominees have absolutely no experience in our industry and are lacking in relevant qualifications when compared to the Company's slate," he said.
The following is the letter the Company's Board sent to Crown Crafts shareholders:
AN IMPORTANT MESSAGE FROM YOUR BOARD OF DIRECTORS
July 19, 2010
Dear Fellow Crown Crafts Shareholders:
On August 10, 2010, we will host our annual meeting of shareholders in Gonzales, Louisiana. Despite the steady progress your Board of Directors and management have made in creating greater value for Crown Crafts shareholders (see our letter of July 15, 2010 accompanying the proxy materials we sent to you previously), Wynnefield Partners Small Cap Value, L.P. and certain of its affiliates (the Wynnefield Group) are insistent on continuing their efforts to embroil your Company in an unnecessary, distracting and costly proxy battle to drive their self-serving agenda. Your Board strongly urges all Crown Crafts shareholders to vote FOR all of the Company's nominees on the enclosed WHITE proxy card today. We urge you to discard and not return any gold proxy card you may receive from the Wynnefield Group.
DOES THE WYNNEFIELD GROUP TRULY WANT INDEPENDENT DIRECTORS?
In its proxy materials, the Wynnefield Group conveniently ignores the fact that their two handpicked Board members -- Frederick Wasserman and Joseph Kling -- have overwhelmingly supported the very business strategy for long-term value creation that the Wynnefield Group criticizes, while offering no alternatives. They also fail to tell you that Mr. Kling supports our agenda, our strategic plan and our nominees, not theirs.
In Board votes during their tenures, Mr. Wasserman has voted with the majority more than 92% of the time, and Mr. Kling has voted with the majority more than 94% of the time. This time, the Wynnefield Group has chosen not to re-nominate Mr. Wasserman, whose term is expiring this year, even though he has gained a thorough understanding of the Company and its business during his three years on the Board. Also, the Wynnefield Group proposed to the Board earlier this year that the Board use its best efforts to request Mr. Kling to resign and that the Board elect a different handpicked representative of the Wynnefield Group to serve as a director in his place.
Could it be that the Wynnefield Group became disillusioned with Messrs. Wasserman and Kling because, as fully informed directors having a fiduciary obligation to act in the best interest of all shareholders, they overwhelmingly supported the very business strategy that the Wynnefield Group is so critical of? Ask yourself -- does the Wynnefield Group truly want INDEPENDENT directors for the Company?
YOU CANNOT VOTE THE GOLD CARD AND VOTE FOR YOUR CEO
The Wynnefield Group's proxy card permits you to vote for their nominees, Melvin L. Keating and Jon C. Biro, but not for any of the Company's Class I nominees, including E. Randall Chestnut. The Wynnefield Group states that they are not seeking authority to vote for such individuals and will not exercise any such authority. As a result, you cannot vote the gold proxy card provided by the Wynnefield Group and also vote for Mr. Chestnut. This means that if you vote for the Wynnefield Group's nominees, then your Chief Executive Officer, the person primarily responsible for managing the Company's business and implementing its strategy, may no longer be a member of the Board. Do you want to run this risk?
THE WYNNEFIELD GROUP IS WRONG ON THE FACTS
As they did in their previous proxy challenge in 2007, the Wynnefield Group is relying largely on fictitious assertions and misleading allegations to support their case. We believe the consistent misstatements made by the Wynnefield Group demonstrate their clear lack of knowledge both about us and our industry, and we must question the integrity of those who so willingly play fast and loose with the facts. Following are some of the Wynnefield Group's more egregious claims:
THE
FAC
THE WYNNEFIELD GROUP'S CLAIM TS
----------------------------------------------------------------------------------------------------------------------------
Whil
e it
is
tru
e
tha
t
the
Wyn
nefi
eld
Gro
up
has
bee
n a
sha
reho
lder
sin
ce
199
6,
the
fac
t is
the
y
hav
e
enj
oyed
an
att
ract
ive
ret
urn
on
the
ir
inv
estm
ent.
Acc
ordi
ng
to
the
ir
SEC
fil
ings
,
the
cos
t
bas
is
of
the
Wyn
nefi
eld
Gro
up's
hol
ding
s in
the
Com
pany
's
sto
ck
is
app
roxi
mate
ly
90.
4
cen
ts
per
sha
re,
com
pare
d
wit
h
the
sto
ck's
cur
rent
val
ue
of
$4.
00
per
sha
re
on
Jul
y
16,
201
0,
whi
ch
is
app
roxi
mate
ly
4.5
tim
es
the
amo
unt
the
y
pai
d
for
the
ir
sha
res.
In
add
itio
n,
the
Boa
rd
has
dec
lare
d,
and
the
Com
pany
has
pai
d,
div
iden
ds
of
$0.
02
per
sha
re
for
the
pas
t
two
qua
rter
s.
Pay
ing
out
ann
ual
div
iden
ds
at
thi
s
rat
e
wou
ld
rea
p an
att
ract
ive
8.9
%
ret
urn
for
the
Wyn
nefi
eld
Gro
up
on
the
ir
inv
estm
ent
thr
ough
div
iden
ds
"The Wynnefield Group has been a stockholder of the Company since 1996, and like other long-term stockholders, has alo
suffered from the diminution of value of its shares." ne.
THE WYNNEFIELD GROUP'S CLAIM THE FACTS
--------------------------------------------------------------------------------------------------------------------------------
While no other public company qualifies as a
true peer of Crown Crafts based on product
portfolios and markets served, the Wynnefield
Group cites Summer Infant, Inc. (Nasdaq:SUMR)
and Kid Brands, Inc. (NYSE:KID) as the
Company's peers and uses them as exemplars to
criticize the performance of the Company's
stock. What the Wynnefield Group fails to
tell you, not surprisingly, is that the
Company's stock price has considerably
outperformed that of SUMR and KID for each of
"The Company continues to underperform its peers in the infant and juvenile the time periods below (through July 16,
products industry." 2010):
1 Month 3 Months 6 Months 5 Years
----------------------------------------------
CRWS 2.6% 6.7% 51.5% 788.9%
KID -10.4% -21.6% 42.4% -52.8%
SUMR -8.8% -5.0% 22.6% 29.2%
The
Boa
rd
has
lon
g
hel
d
the
vie
w
tha
t
eff
ecti
ve
suc
cess
ion
pla
nnin
g is
piv
otal
to
the
suc
cess
ful
gov
erna
nce
and
man
agem
ent
of
the
Com
pany
. To
tha
t
end
, it
has
bee
n
vig
ilan
t in
pla
nnin
g
and
pre
pari
ng
for
a
sea
mles
s
lea
ders
hip
tra
nsit
ion
--
bot
h
pla
nned
and
unp
lann
ed
--
to
pre
serv
e
sta
bili
ty
and
acc
ount
abil
ity,
as
wel
l as
to
mai
ntai
n
the
con
fide
nce
and
sup
port
of
all
of
the
Com
pany
's
sta
keho
lder
s
and
con
stit
uent
s.
You
sho
uld
kno
w
tha
t
the
Boa
rd
has
a
det
aile
d,
wri
tten
CEO
suc
cess
ion
pla
n in
pla
ce,
whi
ch
it
rev
iews
at
lea
st
onc
e a
yea
r.
If
the
Com
pany
wer
e to
pub
licl
y
des
igna
te a
pot
enti
al
suc
cess
or
or
gro
up
of
suc
cess
or
can
dida
tes,
it
is
our
vie
w
tha
t
oth
ers
who
are
not
pub
licl
y
des
igna
ted
as
pot
enti
al
suc
cess
ors
mig
ht
lea
ve
the
Com
pany
or
tha
t
the
Com
pany
's
oth
er
rec
ruit
ment
or
ret
enti
on
eff
orts
mig
ht
be
und
ermi
ned.
Pub
lic
dis
clos
ure
of
the
Com
pany
's
suc
cess
ion
pla
n
may
als
o
res
ult
in
the
pub
lic
dis
clos
ure
of
lon
g-te
rm
str
ateg
ic
obj
ecti
ves
tha
t
are
not
oth
erwi
se
dis
clos
able
and
the
dis
clos
ure
of
whi
ch
cou
ld
res
ult
in
com
peti
tive
har
m to
the
Com
pany
fro
m
its
cur
rent
and
fut
ure
com
peti
"Failure to publicly disclose a non-emergency CEO succession plan, we believe, is evidence of the Board's desire to tors
maintain the status quo and its deference to Mr. Chestnut as Chairman and CEO." .
----------------------------------------------------------------------------------------------------------------------------
THE
THE WYNNEFIELD GROUP'S CLAIM FACTS
------------------------------------------------------------------------------------------------------------------------------
There
shoul
d be
no
doubt
that
a
thoro
ugh
revie
w of
strat
egic
alter
native
s took
place
. Your
Board
engag
ed a
well-
respec
ted,
indep
endent
consu
ltant,
with
a
backg
round
of
direc
tly
relat
ed
indus
try
exper
ience,
to
lead
the
strat
egic
plann
ing
proce
ss.
Subje
ct to
the
appro
val of
the
Strat
egic
Revie
w
Commi
ttee
--
which
inclu
ded
Mr.
Wasse
rman,
who
was
the
Wynne
field
Group
's
nomin
ee in
2007
--
the
Board
's
consu
ltant
deter
mined
the
scope
of
the
proje
ct and
its
timel
ine
and
prepa
red a
repor
t
based
on
objec
tive
resea
rch,
inclu
ding
inter
views
and
metri
cs
deriv
ed
from
the
consu
ltant'
s
propr
ietary
finan
cial
model
.
Follo
wing a
thoro
ugh
evalu
ation
of
this
repor
t,
both
the
Strat
egic
Revie
w
Commi
ttee
and
the
Board
unani
mously
appro
ved
the
Compa
ny's
curre
nt
strat
egic
growt
h plan
and
concl
uded
that
it is
the
best
alter
native
avail
able
to
the
Compa
ny to
creat
e
long-
term
value
for
all
our
share
holder
s.
While
we
may,
at
times
,
discu
ss
gener
al
point
s of
this
plan,
it is
not
prude
nt
from
a
compe
titive
and
propr
ietary
stand
point,
nor
is it
accep
ted
corpo
rate
gover
nance
best
pract
ice,
to
publi
cize
this
detai
led
and
confi
dentia
l
strat
egic
plann
ing
docum
ent in
its
entir
ety.
If
the
Wynne
field
Group
has a
parti
cular
agend
a they
would
like
to
const
ructiv
ely
discu
ss
with
us,
they
know
we
remai
n open
to
heari
ng
from
them
and
all
other
"Despite our urgings over many years in this regard, and the Company's obligation to comply with the terms of our share
Standstill Agreement, which required a comprehensive review of all strategic options, we [Wynnefield] believe the Boardholder
has not publicly communicated to its stockholders the nature and extent of any strategic review." s.
------------------------------------------------------------------------------------------------------------------------------
Des
pit
e
th
e
re
ces
sio
n-r
ela
ted
ch
all
eng
es
of
fi
sca
l
20
10,
yo
ur
Co
mpa
ny
fu
rth
er
st
ren
gth
ene
d
it
s
ba
lan
ce
sh
eet
,
ra
ise
d
sh
are
hol
der
s'
eq
uit
y
by
23
%
an
d
ac
hie
ved
it
s
hi
ghe
st
Ad
jus
ted
EB
ITD
A*
si
nce
19
98.
Re
spo
ndi
ng
ag
gre
ssi
vel
y
to
a
ch
all
eng
ing
ec
ono
mic
en
vir
onm
ent
,
th
e
Bo
ard
la
unc
hed
it
s
ag
gre
ssi
ve
fi
ve-
yea
r
st
rat
egi
c
pl
an
in
fi
sca
l
20
10,
de
sig
ned
to
dr
ive
su
sta
ine
d
to
p-t
ier
sa
les
gr
owt
h
an
d
pr
ofi
tab
ili
ty.
So
fa
r,
th
e
ev
ide
nce
in
dic
ate
s
th
at
th
e
pl
an'
s
ex
ecu
tio
n
is
on
tr
ack
an
d
de
liv
eri
ng
th
e
de
sir
ed
re
sul
ts.
Ma
kin
g
th
eir
as
ser
tio
n
ev
en
mo
re
lu
dic
rou
s,
in
ou
r
op
ini
on,
is
th
e
fa
ct
th
at
th
e
Wy
nne
fie
ld
Gr
oup
ha
s
ne
ver
pr
opo
sed
an
al
ter
nat
ive
st
rat
egi
c
pl
an
of
th
"...[T]here is a lack of willingness of the current management-endorsed members of the Board to provide the leadershipeir
necessary to address, in the opinion of the Wynnefield Group, deficiencies in the Company's financial performance, ow
strategic analysis, corporate governance and alignment of compensation practices with stockholder interests." n.
*
Pl
eas
e
se
e
di
scu
ssi
on
of
no
n-G
AAP
fi
nan
cia
l
me
asu
res
at
th
e
en
d
of
th
is
le
tte
r.
THE
THE WYNNEFIELD GROUP'S CLAIM FACTS
------------------------------------------------------------------------------------------------------------------------------
You
r
Bo
ard
ha
s
al
way
s
ta
ken
ve
ry
se
rio
usl
y
it
s
fi
duc
iar
y
du
ty
to
pr
ope
rly
al
ign
th
e
in
ter
est
s
of
th
e
Co
mpa
ny'
s
le
ade
rsh
ip
wi
th
th
ose
of
al
l
sh
are
hol
der
s
an
d
ha
s
pu
t a
pl
an
in
pl
ace
to
en
sur
e
th
ey
ar
e
al
ign
ed.
Yo
ur
Bo
ard
en
gag
ed
a
hi
ghl
y
re
gar
ded
,
in
dep
end
ent
,
na
tio
nal
co
mpe
nsa
tio
n
co
nsu
lta
nt,
wi
th
mo
re
th
an
30
ye
ars
of
ex
per
ien
ce
in
hu
man
re
sou
rce
s
ma
nag
eme
nt,
in
clu
din
g
ex
per
ien
ce
wi
th
ma
jor
hu
man
re
sou
rce
s
co
nsu
lti
ng
fi
rms
,
to
ma
ke
re
com
men
dat
ion
s
re
gar
din
g
Bo
ard
co
mpe
nsa
tio
n
an
d
th
e
co
mpe
nsa
tio
n
of
ex
ecu
tiv
es,
in
clu
din
g
sa
lar
y,
bo
nus
an
d
lo
ng-
ter
m
in
cen
tiv
e
aw
ard
s
su
ch
as
re
str
ict
ed
st
ock
an
d
st
ock
op
tio
n
gr
ant
s.
Th
e
mo
st
re
cen
t
in
cen
tiv
e
aw
ard
to
th
e
ex
ecu
tiv
e
te
am
wa
s
of
re
str
ict
ed
sh
are
s
th
at
wi
ll
ve
st
on
ly
wh
en
ou
r
st
ock
tr
ade
s
at
or
ab
ove
ta
rge
t
pr
ice
s
ra
ngi
ng
fr
om
$5
to
$7
fo
r
10
ou
t
of
30
co
nse
cut
ive
tr
adi
ng
da
ys
an
d
wi
ll
te
rmi
nat
e
af
ter
fi
ve
ye
ars
if
th
e
sh
are
s
ha
ve
no
t
pr
evi
ous
ly
ve
ste
d.
Con
tra
ry
to
th
e
Wy
nne
fie
ld
Gr
oup
's
cl
aim
s,
th
e
Co
mpa
ny'
s
ch
ang
e
in
co
ntr
ol
ag
ree
men
ts
al
so
se
rve
to
al
ign
th
e
fi
nan
cia
l
in
ter
est
s
of
ma
nag
eme
nt
an
d
th
ose
of
th
e
Co
mpa
ny'
s
sh
are
hol
der
s.
Th
ese
ar
ran
gem
ent
s
pr
ovi
de
a
si
gni
fic
ant
in
cen
tiv
e
to
ma
nag
eme
nt
to
cr
eat
e
va
lue
in
th
e
Co
mpa
ny
--
fo
r
al
l
sh
are
hol
der
s
--
gi
vin
g
ma
nag
eme
nt
a
lo
ng-
ter
m
st
ake
in
th
e
Co
mpa
ny'
s
st
rat
egi
c
pl
an,
ef
fic
ien
cy
an
d
pr
ofi
tab
ili
ty.
Th
ese
ar
ran
gem
ent
s
ha
ve
th
e
ad
ded
be
nef
it
of
at
tra
cti
ng
an
d
re
tai
nin
g
ke
y
ma
nag
eme
nt
pe
rso
nne
l,
th
us
st
abi
liz
ing
th
e
Co
mpa
ny'
s
le
ade
rsh
ip
fo
r
th
e
lo
ng-
ter
m.
In
ma
kin
g
it
s
co
mpe
nsa
tio
n-r
ela
ted
cl
aim
s,
th
e
Wy
nne
fie
ld
Gr
oup
al
so
ne
gle
cts
to
in
for
m
yo
u
th
at
it
s
ha
ndp
ick
ed
di
rec
tor
--
Mr
.
Wa
sse
rma
n
--
ha
s
be
en
on
th
e
Co
mpa
ny'
s
Co
mpe
nsa
tio
n
Co
mmi
tte
e
fo
r
th
e
pa
st
th
ree
ye
ars
,
du
rin
g
wh
ich
ti
me
he
ha
s
ap
pro
ved
th
e
co
mpe
nsa
tio
n
pa
id
to
bo
th
th
e
Co
mpa
ny'
s
di
rec
tor
s
an
d,
wi
th
ra
re
ex
cep
tio
n,
it
s
ex
ecu
tiv
e
of
"We [Wynnefield] believe that the current executive compensation arrangements and change in control agreements, coupled fic
with rich Board annual cash retainers, fail to align the financial interests of management and the Board with those of theers
stockholders." .
THE COMPANY'S NOMINEES ARE EXPERIENCED, INDEPENDENT AND FIRMLY COMMITTED
TO ENHANCING VALUE FOR ALL CROWN CRAFTS SHAREHOLDERS
Your Board is comprised of respected business leaders with extensive professional experience and knowledge of our industry. This Board led an unprecedented turnaround at Crown Crafts that has resulted in significant increases in shareholder value. In addition to their experience and knowledge, the incumbent nominees have demonstrated a commitment to our shareholders that is vital to the stability and success of Crown Crafts. The Wynnefield Group's suggestion that its nominees be added to the Board to build shareholder value and that they alone -- not the Board -- are capable of doing this is an unwarranted and misguided attack on the highly qualified, dedicated and experienced members of your Board.
Consider the following qualifications of our Class I nominees, against whom the Wynnefield Group's nominees are running:
-- E. Randall Chestnut joined Crown Crafts in January 1995 and has been
President, Chief Executive Officer and Chairman of the Company since
2001. He has overseen the successful transformation and complete
financial turnaround of the Company. Prior to joining Crown Crafts, Mr.
Chestnut served as President of Beacon Manufacturing Company, a producer
of adult and infant blankets, from December 1988 to January 1995 and as
Vice Chairman of Wiscassett Mills Company, a yarn manufacturer, from
1990 to 1994.
-- William T. Deyo, Jr. has served the Company as a director since its
successful reorganization in 2001. He has been a principal of Goddard
Investment Group, LLC, a real estate investment firm, since 1999. From
1966 to 1999, he held various positions with Wachovia Bank in Atlanta,
Georgia, serving last as Executive Vice President. Mr. Deyo's more than
30 years in the banking industry give him significant insight into
issues faced by the Company that relate to lending and financing
activities.
-- Richard L. Solar brings extensive industry, financial, M&A, public
company and licensing experience to the Company, including serving as a
director and as Chairman of the Audit Committee of Marvel Entertainment,
Inc. until its sale to The Walt Disney Company in 2009 in a transaction
valued at more than $4 billion. From 1996 to June 2002, Mr. Solar served
as Senior Vice President, Director and Chief Financial Officer of Gerber
Childrenswear, a publicly-traded infant and children's consumer products
company. He also co-led the acquisition of the company prior to its
going public and served the company as a consultant from June 2002 to
February 2003.
The Company is also running a highly qualified Class II nominee in Sidney Kirschner. Mr. Kirschner, who previously served as a director of the Company for almost nine years, brings a valuable understanding of its business and industry. During a successful and varied career, he has held top executive officer positions with a former Fortune 500 company and has served on the boards of other successful companies, including companies in the textile and manufacturing industries.
In its proxy materials, the Wynnefield Group again criticizes the Company's staggered board structure, asserting that it adversely affects shareholder democracy. However, all Board members are subject to the same fiduciary duties to the Company and its shareholders without regard to the length of their term of service or the frequency of their standing for re-election. Moreover, a staggered board means that the majority of your Board at any given time will have experience in the Company's business and affairs, promoting continuity and stability of the Company's business strategies and policies.
All members of your Board, other than Mr. Chestnut, are independent. In addition, because the Board believes that strong, independent board leadership is a critical aspect of effective corporate governance, the Board has established the position of lead director, currently held by Zenon S. Nie. The lead director, who is elected by the independent directors and must be independent himself, presides over executive sessions of the independent directors, consults with the Chairman, oversees the flow of information to the Board and acts as liaison between the non-employee directors and management. As the primary interface between the CEO and the Board, he provides a valuable counterweight to the Company's combined Chairman and CEO role.
WE HAVE OUR OWN QUESTIONS ABOUT
THE WYNNEFIELD GROUP'S CURRENT NOMINEES
We believe that the experience and qualifications of the Wynnefield Group's nominees -- Melvin L. Keating and Jon C. Biro -- raise certain red flags for shareholders.
Mr. Keating's experience, in particular, causes concern. For example, Mr. Keating was President and Chief Executive Officer of Alliance Semiconductor Corporation from December 2005 until September 2008 when Alliance's Board decided to liquidate the company. This was after Alliance, under Mr. Keating's leadership, had sold virtually all of its operating assets and had invested $59.4 million of the cash proceeds in short-term, high-risk, high-yield securities that were later completely written off. Mr. Keating also has served on the boards of a number of troubled companies, including Plymouth Rubber Co., which delisted itself from the American Stock Exchange in 2004 following sustained operating losses, and Kitty Hawk, Inc., which filed for Chapter 11 bankruptcy reorganization in 2007.
Mr. Biro is a certified public accountant whose public company experience appears to be limited to approximately two years as a CFO with a printing company, about 13 years in various positions, including serving as a director for a resin manufacturer, and seven months as a director (with Mr. Keating) for Aspect Medical Systems, Inc. prior to its sale to United States Surgical Corporation. This lack of breadth and depth in relevant expertise for our industry is not comparable to the highly qualified Company-nominated candidates who have been fully vetted by the Board.
We believe that Messrs. Biro and Keating stand in marked contrast to the Company's Class I nominees against whom they are running when considering relevant industry experience. Your Board-supported nominees -- E. Randall Chestnut, William T. Deyo, Jr., Sidney Kirschner and Richard L. Solar -- are highly qualified stewards of your investment and are fully committed to diligently pursuing our successful growth strategy and acting in the best long-term interests of all shareholders.
SUPPORT YOUR BOARD'S NOMINEES AND YOUR COMPANY
Your Board firmly believes that the best path to maximize value for all shareholders is the continued execution of our strategic plan. This is not the time to disrupt our operations or distract our employees with concerns about their future and that of Crown Crafts. This is the time to grow our Company with the leadership of an experienced Board and management team.
Your vote is very important to us, no matter the size of your holdings. We urge you to vote your shares today by signing, dating and returning the enclosed WHITE proxy card by mailing it in the enclosed pre-addressed, stamped envelope. You can also vote by internet or telephone by following the instructions on the WHITE proxy card. Please do not sign or return any gold proxy card sent to you by the Wynnefield Group -- as a reminder, you cannot vote the gold proxy card and also vote for Mr. Chestnut or any other Class I nominee. If you have any questions or need any assistance voting your shares, do not hesitate to contact Georgeson, who is assisting us in this matter, toll free at 1-888-605-7561.
On behalf the Board of Directors and the dedicated men and women of Crown Crafts, we thank you for your ongoing support.
Sincerely,
E. Randall Chestnut Zenon S. Nie
Chairman of the Board, President Independent Lead Director
and Chief Executive Officer
YOUR VOTE IS IMPORTANT
-- To vote FOR your Company's nominees, you MUST execute a WHITE proxy
card.
-- The Board of Directors urges you to DISCARD any gold proxy cards that
you may have received from the Wynnefield Group. A "WITHHOLD AUTHORITY"
vote on the Wynnefield Group's gold proxy card is NOT a vote for the
Company's nominees.
-- If you have voted on a gold proxy card but wish to support your
Company's nominees, please sign, date and mail the enclosed WHITE proxy
card in the postage-paid envelope provided as soon as possible. You can
also vote by internet or telephone by following the instructions on the
WHITE proxy card.
-- Remember -- ONLY YOUR LATEST DATED PROXY WILL DETERMINE HOW YOUR SHARES
ARE TO BE VOTED AT THE MEETING.
-- If any of your shares are held in the name of a bank, broker or other
nominee, please contact the party responsible for your account and
direct them to vote your shares FOR your Company's nominees on the WHITE
proxy card.
If you have any questions or need assistance in voting your shares,
please contact our proxy solicitor.
Georgeson
199 Water Street, 26th Floor
New York, NY 10038
Banks and Brokers (212) 440-9800
Shareholders Call Toll Free (888) 605-7561
* Crown Crafts, Inc. and Subsidiaries
Non-GAAP Reconciliation of Net Income to Adjusted EBITDA
In Thousands
Fiscal
Year
Ended
March
28,
2010
Net income $ 4,780
Interest expense 692
Interest income (17)
Income tax expense on
continuing
operations 3,103
Income tax benefit on
discontinued
operations (69)
Depreciation 286
Amortization 1,544
Impairment charge -
assets held for sale 154
-------
Adjusted EBITDA $10,473
-------
In addition to the Company's disclosure of its financial position and results of operations in conformity with accounting principles generally accepted in the United States of America ("GAAP"), the Company has also disclosed certain measures of its financial position and results of operations which are not determined in accordance with GAAP. These non-GAAP financial measures include Adjusted EBITDA, which is used by the Company internally to monitor the Company's operating results and cash flow and to evaluate the performance of its businesses. The Company believes that its presentation of Adjusted EBITDA is useful in that it is an important indicator of the Company's ability to generate cash sufficient to reduce debt, make strategic acquisitions and investments in capital expenditures, pay dividends and meet its working capital requirements and other obligations as they become due. The items excluded to calculate Adjusted EBITDA are significant components in understanding and assessing the Company's financial performance. The non-GAAP financial measures are presented as supplemental information and should be considered in addition to, and not as a substitute for, the Company's GAAP financial measures, including its net income, cash flow provided by or used in operating, investing or financing activities, and other measures of the Company's financial performance and liquidity. Because non-GAAP financial measures, by definition, are not determined in accordance with GAAP, companies calculate them in varying ways. Therefore, the non-GAAP financial measures presented by the Company may not be comparable to similarly titled measures of other companies.
***END OF SHAREHOLDER LETTER***
About Crown Crafts, Inc.
Crown Crafts, Inc. designs, markets and distributes infant, toddler and juvenile consumer products, including crib and toddler bedding and blankets; nursery and bath accessories; reusable and disposable bibs and floor mats; burp cloths; room decor; and disposable placemats, toilet seat covers and changing mats. The Company's operating subsidiaries include Hamco, Inc. in Louisiana and Crown Crafts Infant Products, Inc. in California. Crown Crafts is America's largest producer of infant bedding, bibs and bath items. The Company's products include licensed and branded collections as well as exclusive private label programs for certain of its customers. The Company's website is www.crowncrafts.com.
Forward-Looking Statements
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 management's 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 Company's products, changing competition, changes in the retail environment, the level and pricing of future orders from the Company's customers, the extent to which the Company's business is concentrated in a small number of customers, the Company's 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 Company's business, disruptions to transportation systems or shipping lanes used by the Company or its suppliers, and the Company's dependence upon licenses from third parties. Reference is also made to the Company's periodic filings with the Securities and Exchange Commission for additional factors that may impact the Company's 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.
CONTACT: Crown Crafts, Inc.
Investor Relations Department
(225) 647-9146
Halliburton Investor Relations
(972) 458-8000
Released July 19, 2010