Crown Crafts reports results for Q4 & full fiscal year 2009
Crown Crafts Inc reported a net loss (after recording a substantial goodwill impairment charge) for the fourth quarter and full fiscal year 2009, which ended March 29, 2009.
Results for Fourth Quarter and Full Fiscal Year 2009
The Company's net loss for the fourth quarter of 2009 was $10.6 million, or $1.15 per diluted share, on net sales of $24.6 million compared to net income for the fourth quarter of 2008 of $1.6 million, or $0.16 per diluted share, on net sales of $24.0 million.
The net loss for the fourth quarter of fiscal 2009 included a non-cash pre-tax charge of $13.9 million for an impairment to goodwill. Excluding the goodwill impairment charge recorded in the fourth quarter, the Company would have reported net income of $3.3 million, or $0.35 per diluted share, in the fourth quarter of fiscal year 2009.
The Company's net loss for fiscal 2009 was $17.1 million, or $1.83 per diluted share, on net sales of $87.4 million compared to net income for fiscal 2008 of $4.4 million, or $0.43 per diluted share, on net sales of $74.9 million. The net loss for fiscal 2009 included a non-cash pre-tax charge of $22.9 million for an impairment to goodwill. Excluding the goodwill impairment charge, the Company would have reported net income of $5.8 million, or $0.61 per diluted share, in fiscal 2009.
The Company performed an impairment test for goodwill as a result of the decline in the market capitalization of the Company. The impairment test resulted in a determination that the goodwill of the reporting units of the Company have no implied value. Accordingly, the Company recorded an impairment charge in fiscal year 2009 of $22.9 million, which represented the aggregate carrying value of the goodwill of its reporting units.
This impairment charge did not result in any cash expenditures, did not have an adverse effect on the Company's compliance with covenants under the Company's financing agreement and did not affect the Company's cash position, cash flows from operating activities or availability under its revolving line of credit.
The Company has increased its cash position from $7.9 million at March 30, 2008 to $15.2 million at March 29, 2009 due to management's decision to build up its cash reserves instead of paying down its revolving line of credit. This decision was made to preserve the Company's ability to meet its working capital needs in the event that the Company's primary lender should suffer an adverse liquidity event that would jeopardize the Company's ability to draw on its revolving line of credit.
"We are very pleased with our fourth quarter 2009 earnings and the benefits we have gained from the acquisition of the baby products line of Springs Global in November 2007, which we are proud to say has proven to be a great strategic addition," commented E. Randall Chestnut, Chairman, President and Chief Executive Officer of the Company.
"We remain convinced thatdes