Notes
to Consolidated Financial Statements (Unaudited)
|
America’s
Car-Mart, Inc
.
|
A
– Organization and Business
America’s
Car-Mart, Inc., a Texas corporation (the “Company”), is the largest publicly
held automotive retailer in the United States focused exclusively on the “Buy
Here/Pay Here” segment of the used car market. References to the
Company typically include the Company’s consolidated
subsidiaries. The Company’s operations are principally conducted
through its two operating subsidiaries, America’s Car-Mart, Inc., an Arkansas
corporation (“Car-Mart of Arkansas”), and Colonial Auto Finance, Inc., an
Arkansas corporation (“Colonial”). Collectively, Car-Mart of Arkansas
and Colonial are referred to herein as “Car-Mart.” The Company
primarily sells older model used vehicles and provides financing for
substantially all of its customers. Many of the Company’s customers have limited
financial resources and would not qualify for conventional financing as a result
of limited credit histories or past credit problems. As of January
31, 2008, the Company operated 94 stores located primarily in small cities
throughout the South-Central United States.
B
– Summary of Significant Accounting Policies
General
The
accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and
footnotes required by accounting principles generally accepted in the United
States of America for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three and nine month periods ended January 31, 2008 are not
necessarily indicative of the results that may be expected for the year ending
April 30, 2008. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company’s annual
report on Form 10-K for the year ended April 30, 2007.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses
during the period. Actual results could differ from those
estimates.
Concentration
of Risk
The
Company provides financing in connection with the sale of substantially all of
its vehicles. These sales are made primarily to customers residing in
Arkansas, Oklahoma, Texas, Kentucky and Missouri, with approximately 54% of
revenues resulting from sales to Arkansas customers. Periodically,
the Company maintains cash in financial institutions in excess of the amounts
insured by the federal government. Car-Mart’s revolving credit
facilities mature in April 2009. The Company expects that these
credit facilities will be renewed or refinanced on or before the scheduled
maturity dates.
Restrictions
on Subsidiary Distributions/Dividends
Car-Mart’s
revolving credit facilities limit distributions from Car-Mart to the Company
beyond (i) the repayment of an intercompany loan ($10.0 million at January 31,
2008), and (ii) dividends equal to 75% of Car-Mart of Arkansas’ net
income. At January 31, 2008, the Company’s assets (excluding its $119
million equity investment in Car-Mart) consisted of $3,000 in cash, $2.5 million
in other net assets and a $10.0 million receivable from
Car-Mart. Thus, the Company is limited in the amount of dividends or
other distributions it can make to its shareholders without the consent of
Car-Mart’s lender. Beginning in February 2003, Car-Mart assumed
substantially all of the operating costs of the Company.
Finance
Receivables, Repossessions and Charge-offs and Allowance for Credit
Losses
The
Company originates installment sale contracts from the sale of used vehicles at
its dealerships. Finance receivables are collateralized by vehicles
sold and consist of contractually scheduled payments from installment contracts,
net of unearned finance charges and an allowance for credit
losses. Unearned finance charges represent the balance of interest
income remaining from the total interest to be earned over the term of the
related installment contract. An account is considered delinquent
when a contractually scheduled payment has not been received by the scheduled
payment date. At January 31, 2008 and 2007, 3.7% and 3.8%,
respectively, of the Company’s finance receivables balance were 30 days or more
past due.
The
Company takes steps to repossess a vehicle when the customer becomes delinquent
in his or her payments, and management determines that timely collection of
future payments is not probable. Accounts are charged-off after the
expiration of a statutory notice period for repossessed accounts, or when
management determines that timely collection of future payments is not probable
for accounts where the Company has been unable to repossess the vehicle. For
accounts with respect to which the vehicle has been repossessed, the fair value
of the repossessed vehicle is a reduction of the gross finance receivables
balance charged-off. On average, accounts are approximately 59 days
past due at the time of charge-off. For previously charged-off
accounts that are subsequently recovered, the amount of such recovery is
credited to the allowance for credit losses.
The
Company maintains an allowance for credit losses on an aggregate basis at a
level it considers sufficient to cover estimated losses in the collection of its
finance receivables. The allowance for credit losses is based
primarily upon historical and recent credit loss experience, with consideration
given to recent credit loss trends and changes in loan characteristics (i.e.,
average amount financed and term), delinquency levels, collateral values,
economic conditions and underwriting and collection practices. The
allowance for credit losses is periodically reviewed by management with any
changes reflected in current operations. Although it is at least
reasonably possible that events or circumstances could occur in the future that
are not presently foreseen which could cause actual credit losses to be
materially different from the recorded allowance for credit losses, management
believes appropriate consideration has been given to all relevant factors and
reasonable assumptions have been made in determining the allowance for credit
losses.
Beginning
May 1, 2007, the Company began offering retail customers in certain states the
option of purchasing a payment protection plan product as an add-on to the
installment sale contract. This product contractually obligates the
Company to cancel the remaining principal outstanding for any loan where the
retail customer has totaled the vehicle, as defined, or the vehicle has been
stolen. The Company periodically evaluates anticipated losses to
ensure that if anticipated losses exceed deferred payment protection plan
revenues, an additional liability is recorded for such difference. No
such additional liability was required at January 31, 2008.
Inventory
Inventory
consists of used vehicles and is valued at the lower of cost or market on a
specific identification basis. Vehicle reconditioning costs are
capitalized as a component of inventory. Repossessed vehicles are
recorded at fair value, which approximates wholesale value. The cost
of used vehicles sold is determined using the specific identification
method.
Goodwill
Goodwill
reflects the excess of purchase price over the fair value of specifically
identified net assets purchased. In accordance with Statement of Financial
Accounting Standards No. 142, “Goodwill and Other Intangibles”
(“SFAS 142”), goodwill and intangible assets deemed to have indefinite
lives are not amortized but are subject to annual impairment tests. The
impairment tests are based on the comparison of the fair value of the reporting
unit to the carrying value of such unit. If the fair value of the reporting unit
falls below its carrying value, goodwill is deemed to be impaired and a
write-down of goodwill would be recognized. There was no impairment
of goodwill during fiscal 2007, and to date, there has been none in fiscal
2008.
Property
and Equipment
Property
and equipment are stated at cost. Expenditures for additions,
renewals and improvements are capitalized. Costs of repairs and
maintenance are expensed as incurred. Leasehold improvements are
amortized over the shorter of the estimated life of the improvement or the lease
period. The lease period includes the primary lease term plus any
extensions that are reasonably assured. Depreciation is computed
principally using the straight-line method generally over the following
estimated useful lives:
Furniture,
fixtures and equipment
|
3
to 7 years
|
Leasehold
improvements
|
5
to 15 years
|
Buildings
and improvements
|
18
to 39 years
|
Property
and equipment are reviewed for impairment whenever events or changes in
circumstances indicate the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured
by a comparison of the carrying amount of an asset to future undiscounted net
cash flows expected to be generated by the asset. If such assets are
considered to be impaired, the impairment to be recognized is measured by the
amount by which the carrying values of the impaired assets exceed the fair
values of such assets. Assets to be disposed of are reported at the
lower of the carrying amount or fair value less costs to sell.
Cash
Overdraft
The
Company’s primary disbursement bank account is set up to operate with a fixed
$100,000 cash balance. As checks are presented for payment, monies
are automatically drawn against cash collections for the day and, if necessary,
are drawn against one of the Company’s revolving credit
facilities. The cash overdraft balance principally represents
outstanding checks, net of any deposits in transit that as of the balance sheet
date had not yet been presented for payment.
Deferred
Sales Tax
Deferred
sales tax represents a sales tax liability of the Company for vehicles sold on
an installment basis in the State of Texas. Under Texas law, for
vehicles sold on an installment basis, the related sales tax is due as the
payments are collected from the customer, rather than at the time of
sale.
Income
Taxes
Income
taxes are accounted for under the liability method. Under this
method, deferred tax assets and liabilities are determined based upon
differences between financial reporting and tax bases of assets and liabilities,
and are measured using the enacted tax rates expected to apply in the years in
which these temporary differences are expected to be recovered or
settled.
From time
to time, the Company is audited by taxing authorities. These audits
could result in proposed assessments of additional taxes. The Company
believes that its tax positions comply in all material respects with applicable
tax law. However, tax law is subject to interpretation, and
interpretations by taxing authorities could be different from those of the
Company, which could result in the imposition of additional taxes.
Revenue
Recognition
Revenues
are generated principally from the sale of used vehicles, which in most cases
includes a service contract, interest income and late fees earned on finance
receivables, and revenues generated from the payment protection plan product
sold in certain states.
Revenues
from the sale of used vehicles are recognized when the sales contract is signed,
the customer has taken possession of the vehicle and, if applicable, financing
has been approved. Revenues from the sale of service contracts are
recognized ratably over the five-month service contract
period. Service contract revenues are included in sales and the
related expenses are included in cost of sales. Payment protection
plan revenues are initially deferred and then recognized to income using the
“Rule of 78’s” interest method over the life of the loan so that revenues are
recognized in proportion to the amount of cancellation protection
provided. Payment protection plan revenues are included in sales and
related losses are included in cost of sales. Interest income is
recognized on all active finance receivables accounts using the interest method.
Late fees are recognized when collected and are included in interest income.
Active accounts include all accounts except those that have been paid-off or
charged-off. At January 31, 2008 and 2007, finance receivables more
than 90 days past due were approximately $430,000 and $271,000,
respectively.
Earnings
per Share
Basic
earnings per share is computed by dividing net income by the average number of
common shares outstanding during the period. Diluted earnings per
share takes into consideration the potentially dilutive effect of common stock
equivalents, such as outstanding stock options and warrants, which if exercised
or converted into common stock, would then share in the earnings of the
Company. In computing diluted earnings per share, the Company
utilizes the treasury stock method and anti-dilutive securities are
excluded.
Stock-based
compensation
The
Company recorded compensation cost for stock-based employee awards of $1,004,000
($653,000 after tax) and $398,000 ($251,000 after tax) during the nine months
ended January 31, 2008 and 2007, respectively. The pretax amounts
include $485,000 and $268,000 for restricted stock for the periods ended January
31, 2008 and 2007, respectively. The Company had not previously
issued restricted stock. Tax benefits were recognized for these costs
at the Company’s overall effective tax rate.
The fair
value of options granted is estimated on the date of grant using the
Black-Scholes option pricing model based on the assumptions in the table below
for the nine months ended:
|
January
31,
2008
|
|
January
31,
2007
|
|
|
|
|
Expected
term (years)
|
6.9
|
|
5.0
|
Risk-free
interest rate
|
4.40%
|
|
5.11%
|
Volatility
|
80%
|
|
60%
|
Dividend
yield
|
—
|
|
—
|
The
expected term of the options is based on evaluations of historical and expected
future employee exercise behavior. The risk-free interest rate is
based on the U.S. Treasury rates at the date of grant with maturity dates
approximately equal to the expected life at the grant
date. Volatility is based on historical volatility of the Company’s
stock. The Company has not historically issued any dividends and does
not expect to do so in the foreseeable future.
Stock
Options
On
October 16, 2007, the shareholders of the Company approved the 2007 Stock Option
Plan (the “2007 Plan”). The 2007 Plan provides for the grant of options to
purchase up to an aggregate of 1,000,000 shares of the Company’s common stock to
employees, directors and certain advisors of the Company at a price not less
than the fair market value of the stock on the date of grant and for periods not
to exceed ten years. The shares of common stock available for issuance under the
2007 Plan may, at the election of the Company’s board of directors, be unissued
shares or treasury shares, or shares purchased in the open market or by private
purchase.
The
stockholders of the Company previously approved three stock option plans,
including the 1986 Incentive Stock Option Plan ("1986 Plan"), the 1991
Non-Qualified Stock Option Plan ("1991 Plan") and the 1997 Stock Option Plan
(“1997 Plan”). No additional option grants may be made under the
1986, 1991 and 1997 Plans. The 1997 Plan set aside 1,500,000 shares
of the Company’s common stock for grants to employees, directors and certain
advisors of the Company at a price not less than the fair market value of the
stock on the date of grant and for periods not to exceed ten
years. The options vest upon issuance. At April 30, 2007
there were 28,558, shares of common stock available for grant under the 1997
Plan. Options for 15,000 of these shares were granted to the Company’s outside
directors on July 2, 2007. The 1997 Plan expired in July 2007. Outstanding
options granted under the Company’s stock option plans expire in the calendar
years 2008 through 2017.
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
1997
|
|
|
2007
|
|
|
|
Minimum
exercise price as a percentage of fair market value at date of
grant
|
|
100%
|
|
|
100%
|
|
Last
expiration date for outstanding options
|
|
July
2, 2017
|
|
|
October
16, 2017
|
|
Shares
available for grant at January 31, 2008
|
|
0
|
|
|
640,000
|
|
The
following is a summary of the changes in outstanding options for the nine months
ended January 31, 2008:
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Weighted
|
|
|
Average
|
|
|
|
|
|
|
Average
|
|
|
Remaining
|
|
|
|
Shares
|
|
|
Exercise
|
|
|
Contractual
|
|
|
|
|
|
|
Price
|
|
|
Life
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
at beginning of period
|
|
|
274,545
|
|
|
$
|
10.59
|
|
|
50.3
Months
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
375,000
|
|
|
$
|
11.96
|
|
|
116.5
Months
|
|
Exercised
|
|
|
(55,898
|
)
|
|
|
3.67
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
at end of period
|
|
|
593,647
|
|
|
$
|
11.38
|
|
|
91.6
Months
|
|
The
grant-date fair value of options granted during the first nine months of fiscal
2008 and 2007 was $3,360,000 and $130,000, respectively. The
aggregate intrinsic value of outstanding options at January 31, 2008 is
$791,000. Of the 375,000 options granted during the nine months ended January
31, 2008, 360,000 were granted to executive officers on October 16, 2007 upon
the approval by shareholders of the 2007 Plan. The options were granted at fair
market value on the date of grant. These options vest in one third increments on
April 30, 2008, April 30, 2009 and April 30, 2010 and are subject to the
attainment of certain profitability goals over the entire vesting period. As of
January 31, 2008, the Company has $2,857,000 of total unrecognized compensation
cost related to unvested options granted under the 2007 Plan. At each
period end, the Company will evaluate and estimate the likelihood of attaining
the underlying performance goals and recognize compensation cost accordingly.
These outstanding options have a weighted-average remaining vesting period of
2.3 years.
The
Company received cash from options exercised during the first nine months of
fiscal 2008 and 2007 of $205,000 and $36,667, respectively. The
impact of these cash receipts is included in financing activities in the
accompanying Consolidated Statements of Cash Flows.
Warrants
As of
January 31, 2008, the Company had outstanding stock purchase warrants to
purchase 18,750 shares at prices ranging from $11.83 to $18.23 per share
(weighted average exercise price of $13.11). All of the warrants are
presently exercisable and expire between 2008 and 2009. The warrants
have a weighted average remaining contractual life of 6.8 months at January 31,
2008. There were no exercises of warrants during the nine months
ended January 31, 2008. There is no aggregate intrinsic value of all
outstanding warrants at January 31, 2008.
Stock
Incentive Plan
The
shareholders of the Company approved an amendment to the Stock Incentive Plan on
October 16, 2007. The amendment increased from 100,000 to 150,000 the number of
shares of common stock that may be issued under the Stock Incentive
Plan. For shares issued under the Stock Incentive Plan, the
associated compensation expense is generally recognized equally over the vesting
periods established at the award date and is subject to the employee’s continued
employment by the Company. During the first nine months of fiscal
2008, 65,000 restricted shares were granted with a fair value of $11.90 per
share, the market price of the Company’s stock on the grant
date. During the first nine months of fiscal 2007, 57,500 restricted
shares were granted with a fair value of $20.07 per share, the market price of
the Company’s stock on the grant date. Restricted shares issued under
the Stock Incentive Plan had an initial weighted average vesting period of 2.6
years and began vesting on April 30, 2007. A total of 24,380 shares remained
available for award at January 31, 2008.
The
Company recorded a pre-tax expense of $485,000 and $268,000 related to the Stock
Incentive Plan during the nine months ended January 31, 2008 and 2007,
respectively.
As of
January 31, 2008, the Company has $1,085,000 of total unrecognized compensation
cost related to unvested awards granted under the Stock Incentive Plan, which
the Company expects to recognize over a weighted-average remaining period of 1.4
years.
There
were no modifications to any of the Company’s outstanding share-based payment
awards during the first nine months of fiscal 2008.
Treasury
Stock
For the
nine month period ended January 31, 2008 and 2007, the Company purchased 186,967
and 30,000 shares of its outstanding common stock to be held as treasury stock
for a total cost of $2.2 million and $454,000, respectively. Treasury stock may
be used for issuances under the Company’s stock-based compensation plans or for
other general corporate purposes.
Recent
Accounting Pronouncements
From time
to time, new accounting pronouncements are issued by the Financial Accounting
Standards Board (“FASB”) or other standard setting bodies which the Company
adopts as of the specified effective date. Unless otherwise discussed, the
Company believes the impact of recently issued standards which are not yet
effective will not have a material impact on its consolidated financial
statements upon adoption.
The
Company adopted the provisions of FASB Interpretation 48,
Accounting for Uncertainty in Income
Taxes,
on May 1, 2007. Previously, the Company had accounted
for tax contingencies in accordance with Statement of Financial Accounting
Standards 5,
Accounting for
Contingencies.
As required by Interpretation 48, which
clarifies Statement 109,
Accounting for Income Taxes,
the Company recognizes the financial statement benefit of a tax position
only after determining that the relevant tax authority would more likely than
not sustain the position following an audit. For tax positions
meeting the more-likely-than-not threshold, the amount recognized in the
financial statements is the largest benefit that has a greater than 50 percent
likelihood of being realized upon ultimate settlement with the relevant tax
authority. At the adoption date, the Company applied Interpretation
48 to all tax positions for which the statute of limitations remained
open. The Company had no adjustments or unrecognized tax benefits as
a result of the implementation of Interpretation 48.
The
Company is subject to income taxes in the U.S. federal jurisdiction and various
state jurisdictions. Tax regulations within each jurisdiction are
subject to the interpretation of the related tax laws and regulations and
require significant judgment to apply. With few exceptions, the Company is no
longer subject to U.S. federal, state and local income tax examinations by tax
authorities for the fiscal years before 2004.
The
Company’s policy is to recognize accrued interest related to unrecognized tax
benefits in interest expense and penalties in operating expenses. The Company
had no accrued penalties and/or interest as of January 31, 2008 or
2007.
In
September 2006, the FASB issued Statement of Financial Accounting Standard
No. 157, “Fair Value Measurements” (“SFAS 157”), which defines fair value,
establishes a framework for measuring fair value in generally accepted
accounting principles, and expands disclosures about fair value measurements.
SFAS 157 does not require any new fair value measurements, but provides guidance
on how to measure fair value by providing a fair value hierarchy used to
classify the source of the information. The Company will be required to adopt
this standard in the first quarter of the fiscal year ending April 30,
2009. The Company is currently assessing the effect, if any, the adoption of
SFAS 157 will have on its consolidated financial statements and related
disclosures.
In
February 2007, the FASB issued Statement 159, “The Fair Value Option for
Financial Assets and Financial Liabilities – Including an Amendment of FASB
Statement 115” (“SFAS 159.”) The statement permits entities to choose
to measure certain financial instruments and other items at fair value. The
objective is to improve financial reporting by providing entities with the
opportunity to mitigate volatility in reported earnings caused by measuring
related assets and liabilities differently without having to apply complex hedge
accounting provisions. Unrealized gains and losses on any items for which
Car-Mart elects the fair value measurement option would be reported in earnings.
Statement 159 is effective for fiscal years beginning after November 15,
2007. However, early adoption is permitted for fiscal years beginning on or
before November 15, 2007, provided Car-Mart also elects to apply the
provisions of Statement 157, “Fair Value Measurements,” at the same time.
Car-Mart is currently assessing the effect, if any, the adoption of Statement
159 will have on its consolidated financial statements and related
disclosures.
Reclassifications
Certain
prior year amounts in the accompanying financial statements have been
reclassified to conform to the fiscal 2008 presentation. Excess tax
benefits related to equity instruments and cash overdrafts have been classified
as financing cash flows. Proceeds from and repayments of the
revolving credit facility have been presented on a gross basis in the financing
activities section of the statements of cash flows.
C
– Finance Receivables
The
Company originates installment sale contracts from the sale of used vehicles at
its dealerships. These installment sale contracts typically include
interest rates ranging from 8% to 19% per annum, are collateralized by the
vehicle sold and provide for payments over periods generally ranging from 12 to
36 months. The components of finance receivables are as
follows:
|
|
January
31,
|
|
|
April
30,
|
|
(In
thousands)
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
Gross
contract amount
|
|
$
|
219,956
|
|
|
$
|
199,677
|
|
Unearned
finance charges
|
|
|
(22,108
|
)
|
|
|
(21,158
|
)
|
Principal
balance
|
|
|
197,848
|
|
|
|
178,519
|
|
Less
allowance for credit losses
|
|
|
(42,657
|
)
|
|
|
(39,325
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
155,191
|
|
|
$
|
139,194
|
|
Changes
in the finance receivables, net balance for the nine months ended January 31,
2008 and 2007 are as follows:
|
Nine
Months Ended January 31,
|
|
((In
thousands)
|
2008
|
|
2007
|
|
|
|
|
|
|
Balance
at beginning of period
|
|
$
|
139,194
|
|
|
$
|
149,379
|
|
Finance
receivable originations
|
|
|
166,886
|
|
|
|
149,020
|
|
Finance
receivables acquisition of business
|
|
|
-
|
|
|
|
353
|
|
Finance
receivables due to location closure
|
|
|
(523
|
)
|
|
|
-
|
|
Finance
receivable collections
|
|
|
(93,932
|
)
|
|
|
(91,247
|
)
|
Provision
for credit losses
|
|
|
(40,948
|
)
|
|
|
(48,846
|
)
|
Payment
protection plan claims, gross
|
|
|
(944
|
)
|
|
|
-
|
|
Inventory
acquired in repossession
|
|
|
(14,542
|
)
|
|
|
(14,625
|
)
|
|
|
|
|
|
|
|
|
|
Balance
at end of period
|
|
$
|
155,191
|
|
|
$
|
144,034
|
|
Changes
in the finance receivables allowance for credit losses for the nine months ended
January 31, 2008 and 2007 are as follows:
|
|
Nine
Months Ended
|
|
|
|
January
31,
|
|
((In
thousands)
|
|
2008
|
|
|
2007
|
|
Balance
at beginning of period
|
|
$
|
39,325
|
|
|
$
|
35,864
|
|
Provision
for credit losses
|
|
|
40,948
|
|
|
|
48,846
|
|
Net
charge-offs
|
|
|
(37,391
|
)
|
|
|
(43,804
|
)
|
Allowance
related to business acquisition, location closure, net
change
|
|
|
(225
|
)
|
|
|
204
|
|
|
|
|
|
|
|
|
|
|
Balance
at end of period
|
|
$
|
42,657
|
|
|
$
|
41,110
|
|
D
– Property and Equipment
A summary
of property and equipment is as follows:
|
|
January
31,
|
|
|
April
30,
|
|
(In
thousands)
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
Land
|
|
$
|
5,740
|
|
|
$
|
5,221
|
|
Buildings
and improvements
|
|
|
6,750
|
|
|
|
5,890
|
|
Furniture,
fixtures and equipment
|
|
|
4,211
|
|
|
|
4,000
|
|
Leasehold
improvements
|
|
|
4,891
|
|
|
|
4,588
|
|
Less
accumulated depreciation and amortization
|
|
|
(3,621
|
)
|
|
|
(2,816
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
17,971
|
|
|
$
|
16,883
|
|
E
– Accrued Liabilities
A summary
of accrued liabilities is as follows:
|
|
January
31,
|
|
|
April
30,
|
|
(In
thousands)
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
Compensation
|
|
$
|
2,369
|
|
|
$
|
1,970
|
|
Deferred
service contract revenue
|
|
|
2,156
|
|
|
|
1,812
|
|
Cash
overdraft
|
|
|
2,157
|
|
|
|
-
|
|
Deferred
sales tax
|
|
|
949
|
|
|
|
928
|
|
Subsidiary
redeemable preferred stock
|
|
|
500
|
|
|
|
500
|
|
Interest
|
|
|
243
|
|
|
|
286
|
|
Other
|
|
|
1,099
|
|
|
|
737
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
9,473
|
|
|
$
|
6,233
|
|
F
– Debt Facilities
The
Company’s debt consists of two revolving credit facilities totaling $50 million
and two term loans as follows:
Revolving
Credit Facilities
|
Lender
|
|
Total
Facility
Amount
|
|
Interest
Rate
|
|
Maturity
|
|
Balance
at
January
31, 2008
|
|
Balance
at
April
30, 2007
|
Bank
of Oklahoma
|
|
$50.0
million
|
|
Prime
+/-
|
|
April
2009
|
|
$30,524,045
|
|
$30,311,142
|
On April
28, 2006, Car-Mart and its lenders amended the credit facilities. The
amended facilities set total borrowings allowed on the revolving credit
facilities at $50 million and established a new $10 million term
loan. The term loan was funded in May 2006 and called for 120
consecutive and substantially equal installments beginning June 1,
2006. The interest rate on the term loan is fixed at
7.33%. The principal balance on the term loan was $8.9 million at
January 31, 2008. The combined total for the Company’s credit
facility is $60 million. On March 12, 2007 (effective December 31,
2006) Car-Mart and its lenders again amended the credit
facilities. The March 12, 2007 amendments served to change the
Company’s financial covenant requirements and to adjust the Company’s interest
rate pricing grid on its revolving credit facilities. The pricing
grid is based on funded debt to EBITDA, as defined, and the interest rate on the
revolving credit facilities can range from prime minus .25 or LIBOR plus 2.75 to
prime plus 1.00 or LIBOR plus 4.00.
The
facilities are collateralized by substantially all the assets of Car-Mart,
including finance receivables and inventory. Interest is payable
monthly under the revolving credit facilities at the bank’s prime lending rate
per annum of 6.0% at January 31, 2008 and 8.25% at January 31,
2007. The facilities contain various reporting and performance
covenants including (i) maintenance of certain financial ratios and tests, (ii)
limitations on borrowings from other sources, (iii) restrictions on certain
operating activities, and (iv) limitations on the payment of dividends or
distributions to the Company. The Company was in compliance with the
covenants at January 31, 2008. The amount available to be drawn under
the facilities is a function of eligible finance receivables and inventory.
Based upon eligible finance receivables and inventory at January 31, 2008,
Car-Mart could have drawn an additional $19.3 million under its
facilities.
The
Company also has a $1.2 million term loan secured by the corporate
aircraft. The term loan is payable over ten years and has a fixed
interest rate of 6.87%. The principal balance on this loan was $1.1
million at January 31, 2008.
G
– Weighted Average Shares Outstanding
Weighted
average shares outstanding, which are used in the calculation of basic and
diluted earnings per share, are as follows:
|
|
Three
Months Ended
|
|
|
Nine
Months Ended
|
|
|
|
January
31,
|
|
|
January
31,
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding-basic
|
|
|
11,850,841
|
|
|
|
11,852,875
|
|
|
|
11,868,310
|
|
|
|
11,849,257
|
|
Dilutive
options and warrants
|
|
|
70,853
|
|
|
|
-
|
|
|
|
82,043
|
|
|
|
109,358
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding-diluted
|
|
|
11,921,694
|
|
|
|
11,852,875
|
|
|
|
11,950,353
|
|
|
|
11,958,615
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Antidilutive
securities not included:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
and warrants
|
|
|
482,250
|
|
|
|
122,250
|
|
|
|
253,779
|
|
|
|
106,000
|
|
Restricted
stock
|
|
|
39,667
|
|
|
|
57,500
|
|
|
|
43,435
|
|
|
|
57,500
|
|
H
– Supplemental Cash Flow Information
Supplemental
cash flow disclosures are as follows:
|
|
Nine
Months Ended
|
|
|
|
January
31,
|
|
(In
thousands)
|
|
2008
|
|
|
2007
|
|
Supplemental
disclosures:
|
|
|
|
|
|
|
Interest
paid
|
|
$
|
2,432
|
|
|
$
|
2,800
|
|
Income
taxes paid, net
|
|
|
4,135
|
|
|
|
4,890
|
|
|
|
|
|
|
|
|
|
|
Non-cash
transactions:
|
|
|
|
|
|
|
|
|
Inventory
acquired in repossession
|
|
|
14,542
|
|
|
|
14,625
|
|
|
|
|
|
|
|
|
|
|