Crown Group, Inc. to Become America's Car-Mart, Inc.; Company to Focus Exclusively Upon Growth of Its Highly Profitable Used Car Sales/Finance Subsidiary.Business Editors IRVING, Texas--(BUSINESS WIRE)--Nov. 13, 2001 Crown Group, Inc. (Nasdaq:CNGR CNGR Commission on the National Guard and Reserves ) ("Crown" or the "Company") today announced that it plans to change its name to "America's Car-Mart, Inc." and will sell all of its subsidiaries and investments other than its 95%-owned America's Car-Mart, Inc. ("Car-Mart") subsidiary. "Our strategic decision to focus exclusively on Car-Mart represents a 'watershed' event that we believe will unlock the substantial value of this subsidiary," stated Edward R. McMurphy, President and Chief Executive Officer of Crown Group, Inc. "We believe that the value of Car-Mart alone is far greater than Crown's current equity market capitalization Equity Market Capitalization A measure of the total market value of an equity market. The measure is calculated by taking the market capitalization of all companies in the equity market and adding them together to arrive at the capitalization for the market as a whole. . Accordingly, we believe that the expected future increase in earnings, reduction in debt and specific focus provided by this strategy should result in a higher stock price, thereby providing a substantial benefit to our shareholders." "Car-Mart is an outstanding company that has compiled a 20-year record of profitability, with significant growth in revenues and earnings throughout its history," added McMurphy. "Car-Mart's management team has developed a highly successful business model that has been consistently replicated in new geographic markets. Historically, the accomplishments of Car-Mart have been masked A state of being disabled or cut off. in the consolidated results of Crown Group, where its profitability has been diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. by losses at Smart Choice Automotive, and its conservative balance sheet has been consolidated with the highly leveraged balance sheets of Smart Choice and Paaco Automotive. The sale of these and Crown's other non-core businesses will reduce the Company's debt-to-equity ratio debt-to-equity ratio The relationship between long-term funds provided by creditors and funds provided by owners. A firm's debt-to-equity ratio is calculated by dividing long-term debt by owners' equity. Both items are shown on the balance sheet. from 3.6 to 1 on July 31, 2001, to less than 1.0 to 1 going forward." "In the fiscal year ended April 30, 2001, our Car-Mart subsidiary alone earned $16.4 million pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern on revenues of $106 million," continued McMurphy. "On a pro-forma basis, taking into account the removal of all other businesses except Car-Mart and the planned downsizing (1) Converting mainframe and mini-based systems to client/server LANs. (2) To reduce equipment and associated costs by switching to a less-expensive system. (jargon) downsizing of our corporate overhead, Crown Group would have earned approximately $1.16 per diluted share in FY2001, compared with actual reported earnings of $0.74 per diluted share. "In the past, Crown's ownership of businesses in a variety of different industries seemed to create confusion within the investment community, apparently making it difficult for investors to analyze and properly value the Company's common stock. For the past several fiscal years, the Years, The the seven decades of Eleanor Pargiter’s life. [Br. Lit.: Benét, 1109] See : Time Company's stock has traded at a significant discount to book value and to the intrinsic value Intrinsic Value 1. The value of a company or an asset based on an underlying perception of the value. 2. For call options, this is the difference between the underlying stock's price and the strike price. of its underlying businesses. The change in corporate name clearly demonstrates management's decision to focus exclusively upon Car-Mart's tremendous potential as a leader in the used car sales and finance industry. We believe investors will find it easier to properly value the Company following its transformation into America's Car-Mart, Inc." The schedule below summarizes certain financial and operating data pertaining per·tain intr.v. per·tained, per·tain·ing, per·tains 1. To have reference; relate: evidence that pertains to the accident. 2. to Car-Mart for the past six fiscal years. Since its inception in 1981, Car-Mart has grown from a single location in Rogers, Arkansas
tr.v. fore·saw , fore·seen , fore·see·ing, fore·sees To see or know beforehand: foresaw the rapid increase in unemployment. future. Over the past six years, Car-Mart has grown revenues and earnings at compound annual growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. of 19.4% and 21.7%, respectively. Car-Mart believes its success is attributable to a proven operating model Operating Model is a term that is used in many contexts. In essence an operating model describes how an organization operates across both business and technology domains. The Operating Model describes what is important for the organization. , low cost structure, conservative business practices and the pride and work ethic work ethic n. A set of values based on the moral virtues of hard work and diligence. work ethic Noun a belief in the moral value of work of its management and associates. Subsidiaries and investments to be sold as a part of this transition include the Company's (i) 70% ownership interest in Smart Choice Automotive Group, Inc. ("Smart Choice") which sells and finances used cars and trucks; (ii) 80% ownership interest in Concorde Acceptance Corporation ("Concorde"), a prime and sub-prime mortgage lender; (iii) 50% ownership interest in Precision IBC IBC International Building Code IBC Iraq Body Count IBC Institutional Biosafety Committee IBC Inflammatory Breast Cancer IBC International Business Company IBC Independence Blue Cross IBC Insurance Bureau of Canada IBC International Broadcasting Convention , Inc. ("Precision"), a firm specializing in the sale and rental of intermediate bulk containers An Intermediate bulk container (IBC) is a container constructed of molded plastic, fiberglass, or plywood with steel reinforcing and is used for storage and transportation of goods. ; and (iv) minority investments in Mariah Vision 3, Inc. ("Mariah") and Monarch Venture Partners' Fund I, L.P. ("Monarch"). In connection with this transition, the Company is streamlining its corporate structure and plans to relocate re·lo·cate v. re·lo·cat·ed, re·lo·cat·ing, re·lo·cates v.tr. To move to or establish in a new place: relocated the business. v.intr. its headquarters from Irving, Texas Irving (pronounced 'er-ving') is a city located in the U.S. state of Texas within Dallas County. According to the 2000 U.S. Census, the city population was 191,615; the 2006 estimate was 201,927 according to the North Central Texas Council of Governments, and 196,084 according to , to Rogers, Arkansas, where Car-Mart is based. The name change is subject to shareholder approval, which the Company will seek at its annual shareholders meeting in January 2002. Crown Group is headquartered in Irving, Texas, and its common stock is traded on the Nasdaq National Market under the symbol "CNGR." This press release includes statements that may constitute "forward-looking" statements, usually containing the words "believe," "estimate," "project," "expect," "anticipate" or similar expressions. These statements are made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the development of the Company's business, availability of lines of credit for the Company's business, changes in interest rates, the Company's ability to effectively underwrite To insure; to sell an issue of stocks and bonds or to guarantee the purchase of unsold stocks and bonds after a public issue. The word underwrite has two meanings. and collect its loans, changes in estimates and assumptions in determining the adequacy of the Company's allowance for credit losses, competition, adverse economic conditions, dependence on existing management, and other risks which are discussed in the Company's periodic filings with the Securities and Exchange Commission. All forward-looking statements in this release are based upon information available as of the date of this release. Such information may change or become invalid after the date of this release, and by making these forward-looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this release.
America's Car-Mart, Inc.
Financial and Operating Data
(in thousands, except operating data)
Crown
and Prior
Prior Ownership Ownership(a) Crown Ownership
--------------- ---------- ---------------
(unaudited)
Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended
5-31-96 5-31-97 5-31-98 4-30-99 4-30-00 4-30-01
------- ------- ------- ------- ------- -------
Operating data (unaudited):
Retail units
sold 10,267 11,604 11,657 12,501 13,852 15,659
Average number
of lots in
operation 28.2 28.9 27.2 30.3 37.9 41.2
Avg monthly
retail units
sold per lot 30.4 33.4 35.8 34.4 30.4 31.7
Gross profit % 43.4% 43.2% 45.2% 44.3% 45.3% 45.4%
Credit loss
as a % of
sales 20.1% 20.2% 19.5% 19.2% 17.0% 17.6%
SG & A as a
% of revenue 14.8% 16.9% 15.2% 14.8% 14.5% 14.1%
Operating results:
Revenues:
Sales $40,942 $54,032 $60,968 $71,043 $82,916 $97,848
Interest
income 2,616 4,059 4,723 5,416 6,466 7,858
------ ------ ------ ------ ------ ------
Total 43,558 58,091 65,691 76,459 89,382 105,706
Costs and expenses:
Cost of
sales 23,173 30,698 33,435 39,599 45,383 53,413
Selling,
general and
admin 6,430 9,834 9,999 11,350 12,960 14,950
Provision for
credit
losses 8,217 10,909 11,915 13,632 14,104 17,215
Interest
expense - 59 10 922 3,239 3,613
Depreciation
and amort 70 89 111 147 134 141
------ ------ ------ ------ ------ ------
Total 37,890 51,589 55,470 65,650 75,820 89,332
Pretax
income 5,668 6,502 10,221 10,809 13,562 16,374
Provision for
income taxes 1,935 2,771 3,898 4,106 5,333 6,400
------ ------ ------ ------ ------ ------
Net income $ 3,733 $ 3,731 $ 6,323 $ 6,703 $ 8,229 $ 9,974
====== ====== ====== ====== ====== ======
Balance sheet data:
Assets:
Finance
receiv-
ables $32,336 $39,312 $44,423 $50,626 $62,093 $76,037
Allowance
for credit
losses (5,982) (7,273) (8,218) (9,458) (11,493)(14,067)
Inventory 1,340 1,027 953 2,173 2,343 3,013
Other assets 1,082 1,293 1,910 6,221 6,033 7,907
------ ------ ------ ------ ------ ------
Total
assets $28,776 $34,359 $39,068 $49,562 $58,976 $72,890
====== ====== ====== ====== ====== ======
Liabilities:
Other
liabil-
ities $ 2,243 $ 3,143 $ 3,320 $ 6,174 $ 5,075 $ 9,412
Revolving
credit
facility 25,177 27,503 29,768
Note payable
to affiliate 3,365 4,317 2,525 7,646 7,500 4,500
------ ------ ------ ------ ------ ------
Total
liabil-
ities 5,608 7,460 5,845 38,997 40,078 43,680
------ ------ ------ ------ ------ ------
Equity 23,168 26,899 33,223 10,565 18,898 29,210
------ ------ ------ ------ ------ ------
Total
liabilities
and
equity $28,776 $34,359 $39,068 $49,562 $58,976 $72,890
====== ====== ====== ====== ====== ======
(a) On January 15, 1999, Crown acquired America's Car-Mart. In
connection with the acquisition, Car-Mart was recapitalized and its
fiscal year-end was changed to April 30 to conform to Crown's
year-end. Thus, the year ended April 30, 1999 includes 8.5 months
under the prior owner and 3.5 months under Crown's ownership.
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