Crown Crafts Swings to Loss on Goodwill Impairment
February 23, 2009-- Home Textiles Today,
A $9.0 million goodwill impairment charge, triggered by the decline in the company's market capitalization, pressed Crown Crafts Inc. into a third quarter loss of $8.2 million.
The Q3 loss was 88 cents on a per share basis. In the same period last year, the company recorded net income of $1.2 million, or 12 cents per diluted share.
The company stressed, "The impairment charge did not result in any cash expenditures and did not affect the company's cash position, cash flows from operating activities or availability under its credit facility."
Randall Chestnut, chairman, president and ceo of the infant and juvenile products maker, noted, "Although we regret the need to record such a sizeable charge to our goodwill, we are convinced that our business model, our focus on cost controls, and our strong cash position will keep us in an excellent competitive position to manage through this economic downturn and subsequently benefit from its recovery. Notably, year-to-date EBITDA (earnings before interest, taxes, depreciation and amortization) for the current year was $6.3 million, up from $5.5 million in the prior year, and we continue to generate strong cash flow."
Quarterly sales of $19.3 million were up 4.9% from $18.4 million in the year-ago period, reflecting the positive impact of the baby products line Crown Crafts acquired last year from Springs Global.
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