AMERICANS CARMART INC - 10-K Annual Report

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the fiscal year ended: Commission file number:
APRIL 30, 2002 0-14939

AMERICA'S CAR-MART, INC.
(Exact name of registrant as specified in its charter)

TEXAS 63-0851141
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)

1501 SOUTHEAST WALTON BLVD., SUITE 213, BENTONVILLE, ARKANSAS
(Address of principal executive offices)

72712
(Zip Code)

(479) 464-9944
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, par
value $.01 par share

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

As of July 17, 2002 the aggregate market value of the voting stock held by
non-affiliates (all persons other than executive officers, directors and
holder's of 5% or more of the Registrant's common stock) of the Registrant
(4,713,441 shares) was $53,261,883.

As of July 17, 2002 there were 7,009,394 shares of the Registrant's common
stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:

Portions of the Registrant's definitive Proxy Statement for its Annual
Meeting of Stockholders to be held in 2002 are incorporated by reference into
Part III of this report, with the exception of information regarding executive
officers required under Item 10 of Part III, which information is included in
Part I, Item 1.

PART I

ITEM 1. BUSINESS

FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains numerous "forward-looking
statements" within the meaning of the Private Litigation Securities Reform Act
of 1995. These forward looking statements address our future objectives, plans
and goals, as well as our intent, beliefs and current expectations regarding
future operating performance, and can generally be identified by words such as
"may," "will," "should," "believe," "expect," "anticipate," "intend," "plan,"
"foresee," and other similar words or phrases. Specific events addressed by
these forward looking statements include, but are not limited to:

o opening new stores at the rate of 12% to 16% per year;

o financing growth from profits;

o continuation of Car-Mart's consistency in earnings and history
of growth;

o the Company's financial leverage ratio declining;

o same store revenue growth; and

o the Company's business and growth strategies.

These forward-looking statements are based on our current estimates and
assumptions and involve various risks and uncertainties. As a result, you are
cautioned that these forward looking statements are not guarantees of future
performance, and that actual results could differ materially from those
projected in these forward looking statements. Factors which may cause actual
results to differ materially from our projections include those risks described
elsewhere in this report, as well as:

o availability of lines of credit for the Company's business;

o the Company's ability to effectively underwrite and collect
installment loans;

o competition;

o dependence on existing management;

o changes in lending laws or regulations; and

o general economic conditions in the markets in which the
Company operates, including fluctuations in employment levels.

BUSINESS AND ORGANIZATION

America's Car-Mart, Inc., a Texas corporation formerly Crown Group, Inc.
("Corporate" or the "Company"), is a holding company that operates automotive
dealerships through its subsidiaries that focus 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 America's Car-Mart, Inc., an Arkansas
corporation, ("Car-Mart of Arkansas") and Colonial Auto Finance, Inc.
("Colonial") subsidiaries. Car-Mart of Arkansas and Colonial are collectively
referred to herein as "Car-Mart". As of April 30, 2002 the Company operated 55
stores located primarily in small cities and rural locations throughout the
South-Central United States. The Company provides financing for substantially
all of its customers, many of whom may not qualify for conventional financing as
a result of limited credit histories or past credit problems.

In addition, at April 30, 2002, the Company also owned (i) an 80% interest
in Concorde Acceptance Corporation ("Concorde"), a prime and sub-prime mortgage
lender, and (ii) a 50% interest in Precision IBC, Inc. ("Precision"), a firm
specializing in the sale and rental of intermediate bulk containers. In October
2001, the Company made the decision to sell all of its subsidiaries except
Car-Mart, and relocate its corporate headquarters to Bentonville, Arkansas where
Car-Mart is based. Accordingly, the operating results of Concorde and Precision,
as well as the operating results of (i) Smart Choice Automotive Group, Inc.
("Smart Choice"), the Company's 70% owned subsidiary that was written-off in
October 2001, and (ii) CG Incorporated, S.A. de C.V. ("Crown El Salvador") and
Home Stay Lodges I, Ltd. ("Home Stay") that were sold in a prior fiscal year,
are included in discontinued operations.

In May 2002 the Company sold its 50% interest in Precision for $3.8 million
in cash, and in July 2002 the Company sold its 80% interest in Concorde for $3.0
million in cash. In addition, at closing, Concorde repaid all of its $2.1
million in outstanding borrowings from the Company.

2

BUSINESS STRATEGY

In general, it is the Company's objective to continue to expand its Buy
Here/Pay Here used car operation using the same business model that has been
developed by Car-Mart over the last 21 years. This business strategy will focus
on:

o CONTROLLED ORGANIC GROWTH. The Company will continue to expand its
operation by increasing unit sales at existing dealerships and opening
new dealerships. The Company believes it can comfortably open new
stores at the rate of 12% to 16% per annum for the foreseeable future.
The Company plans to open seven new dealerships during fiscal 2003.
The Company has no plans or intentions to acquire existing dealerships
of other operators.

o SELLING BASIC TRANSPORTATION. The Company will continue to focus on
selling basic and affordable transportation to its customers. In
general, the Company does not sell luxury cars, sports cars or SUV's.
The average sales price of retail vehicles sold by the Company during
fiscal 2002 was about $5,900. By selling vehicles in this price range
the Company is able to keep the terms of its installment sales
contracts short (generally less than 24 months), and the customer is
more able to afford his or her payments.

o OPERATING IN SMALLER COMMUNITIES. The majority of the Company's
dealerships are located in cities and towns with a population of
50,000 or less (median of about 27,500). The Company believes that by
operating in these smaller communities it experiences better
collection results as its customers are more stable in their
employment and place of residence, and are easier to locate in the
event their loan becomes delinquent. Further, the Company believes
that operating costs (ie. salaries, rent, advertising) are lower in
smaller communities than in major metropolitan areas.

o MAINTAINING A DECENTRALIZED OPERATION. The Company's dealerships will
continue to operate on a decentralized basis. Each store is
responsible for buying and selling its own vehicles, making credit
decisions and collecting the loans it originates in accordance with
established policies and procedures. Most customers make their
payments in person at one of the Company's dealerships. This
decentralized structure is complemented by the oversight and
involvement of general office management (district and regional
managers, purchasing and accounts directors, accounting, MIS and
senior management), and the maintenance of centralized financial
controls.

o CULTIVATING CUSTOMER RELATIONSHIPS. The Company believes that
developing and maintaining a relationship with its customers is
critical to the success of the Company. Approximately 40% of its sales
at mature stores are made to repeat customers, and an additional 10%
to 15% of sales result from customer referrals. Furthermore, by
developing a personal relationship with its customers the Company
believes it is in a better position to assist a customer, and the
customer is more likely to cooperate with the Company, should the
customer experience financial difficulty during the term of his or her
installment loan with the Company. The Company is in a position to
cultivate these relationships as the majority of its customers make
their payments in person at one of the Company's dealerships on a
weekly or bi-weekly basis.

o COLLECTING CUSTOMER ACCOUNTS. Collecting customer accounts is perhaps
the single most important aspect of operating a Buy Here/Pay Here used
car business and is a focal point for store level and general office
personnel on a daily basis. Periodically, the Company measures and
monitors the collection results of its stores using internally
developed delinquency and repossession standards. Substantially all
associate incentive compensation is tied directly or indirectly to
collection results. Over the last seven years, Car-Mart's annual
credit losses as a percentage of sales have been relatively stable
ranging from a low of 17.0% to a high of 20.2%. The Company believes
that it can continue to be successful provided it maintains its credit
losses within or below its historical credit loss range.

o PROMOTING FROM WITHIN. It has been the Company's practice to hire
honest and hardworking individuals to fill entry level positions,
nurture and develop these associates, and attempt to fill all of its
managerial positions from within the Company. By hiring individuals at
the entry level, the Company believes it is better able to train its
associates in the Car-Mart way of doing business, and maintain the
Company's unique culture and the intense loyalty of its associates.

BUSINESS STRENGTHS

We believe Car-Mart possesses a number of strengths, or advantages, that
distinguish us from most of our competitors. These business strengths include:

o CONSISTENCY IN EARNINGS AND HISTORY OF GROWTH. Over the last seven
fiscal years Car-Mart has increased its revenues and profits at
compound annual growth rates of 19.6% and 21.7%, respectively. All of
Car-Mart's growth has been organic, that is through the opening of new
stores and increasing revenues and earnings at existing stores. Over
this seven year period Car-Mart's net income as a percentage of
revenue has been fairly consistent. In six of the last seven years,
net income as a percentage of revenue has ranged between 8.6% and
9.6%. We expect Car-Mart's consistency in earnings and history of
growth to continue.

o EXPERIENCED AND INCENTIVIZED MANAGEMENT. Car-Mart's senior management
team has an average tenure with the Company of 18 years. For stores
opened three or more years, the average store manager tenure is nine
years. Each store manager is compensated, at least in part (some
entirely), based upon the net income of his or her store. A
significant portion of the compensation of Car-Mart senior management
is incentive based.

3

o PROVEN BUSINESS PRACTICES. The Company's operations are highly
structured. While stores are operated on a decentralized basis, the
Company has established policies, procedures and business practices
for virtually every aspect of a store's operation. Detailed operating
manuals are available to assist the store manager, office and
collections personnel in performing their daily tasks. As a result,
each store is operated in a uniform manner. Above the store level,
general office district managers and regional managers monitor the
stores' operations through weekly visits and a number of daily, weekly
and monthly communications and reports. For the fiscal year ended
April 30, 2002, all of the Company's stores operated profitably.

o SIGNIFICANT EXPANSION OPPORTUNITIES. As of April 30, 2002, the Company
operated 55 stores in seven states, with 30 of these stores located in
Arkansas. The Company targets smaller communities to locate its
dealerships (ie. populations from 20,000 to 50,000), but has had
success in medium sized cities (ie. Tulsa, Oklahoma and Little Rock,
Arkansas). The Company believes there are numerous suitable
communities within the seven states in which the Company currently
operates to satisfy anticipated store growth for the next several
years, not to mention suitable locations outside the Company's current
market area.

o NO NEW CAPITAL REQUIRED / LOW LEVERAGE. The Company does not expect it
will need to raise any new capital in order to facilitate its expected
growth for the foreseeable future. The Company expects to fund
substantially all of its growth from net income generated from
operations. As of April 30, 2002, the Company's debt to equity ratio
was .8 to 1.0, which is substantially lower than a number of other
public auto retailers. The Company expects its financial leverage
ratio to decline for the next several years, as net income builds
equity and debt either decreases or remains relatively constant.

o LOW COST OPERATOR. The Company has structured its store and general
office operations to minimize operating costs. The number of
associates employed at the store level is dictated by the number of
active accounts each store services. Associate compensation is
standardized for each store position. Other operating costs are
closely monitored and scrutinized. Technology is utilized to maximize
efficiency. The Company believes its operating costs as a percentage
of revenue, or per unit sold, are among the lowest (or the lowest) in
the industry.

OPERATIONS

o STORE ORGANIZATION. Stores are operated on a decentralized basis. Each
store is responsible for the buying and selling of vehicles, making
credit decisions, and servicing and collecting the installment loans
it originates. Stores also maintain their own records, write checks
and make daily deposits. Store level financial statements are prepared
by the general office on a monthly basis. Depending on the number of
active accounts, a store may have as little as two or as many as 20
associates employed at that location. Associate positions at a large
store may include a store manager, assistant store manager, manager
trainee, office manager, assistant office manager, service manager,
buyer, collections personnel, salesmen and lot attendants. Stores are
open Monday through Saturday from 9:00 a.m. to 6:00 p.m. The Company
has both regular and satellite stores. Satellite stores are similar to
regular stores, except that they tend to be smaller, sell fewer
vehicles and their financial performance is not captured in a stand
alone financial statement, but rather is included in the financial
results of the sponsoring regular store.

o STORE LOCATION AND FACILITIES. Below is a summary of stores opened
during the fiscal years ended April 30, 2002, 2001 and 2000:

Below is a summary of store locations by state as of April 30, 2002,
2001 and 2000:

4

Stores are typically located in smaller communities. As of April
30, 2002, approximately 70% of the Company's stores were located in
cities with populations of less than 50,000. Stores are located on
leased or owned property between one and three acres in size. When
opening a new store the Company will typically use an existing
structure on the property to conduct business, or lease a portable
facility while business at the new location develops. Once the store
is established, the Company often will construct its prototype store
facility of 4,500 square feet at an average cost of $250,000.
Recently, the Company purchased a few modular facilities at a much
lower cost per square foot than its prototype store facility, and may,
in the future, use modular facilities as its preferred permanent store
facility structure.

o PURCHASING. The Company purchases vehicles primarily through
wholesalers and new car dealers. Occasionally the Company will
purchase vehicles from auctions. The majority of vehicle purchasing is
performed by the Company's buyers, although certain store managers are
authorized to purchase vehicles. On average, a buyer will purchase
vehicles for three stores. Buyers report to the store manager, or
managers, for whom they buy. Buyers also report to a regional
purchasing director who monitors the quantity and quality of vehicles
purchased, and compares the cost of similar vehicles purchased among
buyers.

Generally, buyers purchase vehicles between four and ten years of
age with 60,000 to 120,000 miles, and pay between $2,000 and $5,000
per vehicle. The Company focuses on providing basic transportation to
its customers. The Company generally does not purchase sports or
luxury cars, or sport utility vehicles. Some of the more popular
vehicles the Company sells include the Ford Taurus and Escort,
Chevrolet Corsica and Lumina, Oldsmobile Cutlas and Achieva, and
Pontiac Grand Am. The Company also sells a number of trucks. Buyers
inspect and test-drive every vehicle they purchase. Buyers attempt to
purchase vehicles that require little or no repair as the Company has
limited facilities to repair or recondition vehicles.

o SELLING, MARKETING AND ADVERTISING. Each store maintains an inventory
of 15 to 75 vehicles depending on the maturity of the dealership. The
selling price of the Company's vehicles typically ranges between
$2,500 and $8,500, with an average of $5,900. Selling is done
principally by the store manager, assistant manager, manager trainee
or sales associate. Sales associates are paid a commission for sales
that they make in addition to an hourly wage. Sales are made on an "as
is" basis; however, customers are given an option to purchase a 4
month or 4,000 mile service contract which covers certain vehicle
components and assemblies. For covered components and assemblies, the
Company coordinates service with third party service centers with
which the Company typically has previously negotiated labor rates and
mark-up percentages on parts. The majority of the Company's customers
elect to purchase a service contract when purchasing a vehicle.

The Company's objective is to offer its customers basic
transportation at a fair price and treat each customer in such a
manner as to earn their repeat business. The Company attempts to build
a positive reputation in each community where it operates and generate
new business from such reputation as well as from customer referrals.
Approximately 10% to 15% of the Company's sales result from customer
referrals. The Company recognizes repeat customers with silver, gold
and platinum plaques representing the purchase of five, ten and
fifteen vehicles, respectively. Such certificates are prominently
displayed at the dealership where the vehicles were purchased. For
mature dealerships, approximately 40% of its sales are to repeat
customers.

The Company advertises in local newspapers, on billboards and on
the radio. In addition, periodically the Company conducts promotional
sales campaigns in order to increase sales.

o UNDERWRITING AND FINANCE. The Company provides financing for
substantially all of its customers who purchase a vehicle at one of
its stores. The Company does not provide financing to others, nor does
it purchase retail installment contracts originated by others. The
Company's installment sales contracts include down payments ranging
from 0% to 17% (average of 9%), terms ranging from 12 months to 30
months (average of 22 months), annual interest charges ranging from 6%
to 19% (average of 9%), and require that payments be made on a weekly,
bi-weekly, semi-monthly or monthly basis to coincide with the day the
customer is paid by his or her employer. Upon the customer and the
Company coming to a preliminary agreement as to financing terms, the
Company obtains a credit application from the customer which includes
information regarding employment, residence and credit history,
personal references and a detailed budget itemizing the customers'
monthly income and expenses. Certain information is then verified by
Company personnel. After the verification process, the store manager
makes the decision to accept, reject, or modify (perhaps obtain a
greater down payment or require an acceptable co-buyer) the proposed
transaction. In general, the store manager attempts to assess the
stability and character of the applicant. The store manager who makes
the credit decision is ultimately responsible for collecting the loan,
and his or her compensation is directly affected by the collection
results of his or her store.

o COLLECTIONS. All of the Company's retail installment contracts are
serviced by Company personnel at the store level. The majority of the
Company's customers make their payments in person at the store where
they purchased their vehicle, although some customers mail their
payments to the store. Each store closely monitors their customer
accounts using the Company's proprietary receivables and collections
software that stratifies past due accounts by the number of days past
due. The Company believes that the timely response to past due
accounts is critical to its collections success. Below is a summary of
accounts 30 days or more past due as a percentage of all accounts as
of April 30, 2002, 2001 and 2000:

5

The Company has established standards with respect to the
percentage of accounts one and two weeks past due, the percentage of
accounts three or more weeks past due (delinquency standards), and the
percentage of accounts where the vehicle was repossessed that month
(repossession standard). Store personnel (excluding the store manager)
are paid a monthly bonus based upon growth in receivables at their
store (similar to growth in same store revenues). This bonus is paid
only if the store has met its delinquency and repossession standards
for the month.

Accounts one day late are sent a notice in the mail. Accounts
three days late are contacted by phone. Notes from each phone contact
are electronically maintained in the Company's computer system. If a
customer becomes seriously delinquent in his or her payments, and
management determines that timely collection of future payments is not
probable, the Company will take steps to repossess the vehicle. While
the Company works very hard at keeping its delinquency percentages
low, the Company also works very hard not to repossess vehicles. The
Company goes to great lengths to amicably resolve payment
delinquencies prior to repossessing a vehicle. For those vehicles
repossessed, the majority are returned or surrendered by the customer
on a voluntary basis. Other repossessions are performed by Company
personnel or third party repossession agents. Depending on the
condition of a repossessed vehicle, it is either resold on a retail
basis through a Company store, or sold for cash to a wholesaler.

o NEW STORE OPENINGS. The Company plans to add stores at the rate of 12%
to 16% per year. For fiscal year 2003, the Company plans to open seven
new stores representing a 13% increase. Senior management, with the
assistance of the general office staff, makes decisions with respect
to the communities in which to locate a new store and the specific
sites within those communities. New stores are typically located in
the general proximity of existing stores to facilitate the general
office's oversight of the Company's stores.

The Company's approach with respect to new store openings is one
of gradual development. The manager in charge of a new store is
normally a recently promoted associate who was an assistant manager or
a manager trainee at a larger store. The facility may be of a portable
nature or an existing structure. New stores operate with a low level
of inventory and personnel. As a result of the modest staffing level,
the new store manager performs a variety of duties (ie. selling,
collecting, administrative tasks) during the early stages of his or
her store's operations. As the store develops and the customer base
grows, additional staff is hired.

Monthly sales levels at new stores are substantially less than
sales levels at mature stores. Over time new stores gain recognition
in their communities, and a combination of customer referrals and
repeat business generally facilitate strong sales growth. Sales growth
at new stores can exceed 20% per year for a number of years. Mature
stores typically experience annual sales growth, but at a much lower
level than new stores.

New stores utilize approximately $250,000 in capital during the
first six to eight months of operation. This cash is used principally
to fund receivables growth. After this six or eight month start-up
period, new stores typically become cash flow positive. New stores
tend to be profitable within a few months of opening.

o GENERAL OFFICE OVERSIGHT AND MANAGEMENT. The general office, based in
Bentonville, Arkansas, consists of district managers, regional
managers, purchasing, accounts and compliance directors, accounting
and management information systems personnel, administrative personnel
and senior management. The general office monitors and oversees store
operations. The Company's stores transmit and submit operating and
financial information and reports to the general office on a daily,
weekly and monthly basis. This information includes cash receipts and
disbursements, inventory and receivables levels, receivables agings
and sales and repossession data. The general office uses this
information to compile Company-wide reports, plan store visits and
prepare monthly financial statements.

Periodically, district managers, regional managers, accounts and
compliance directors visit the Company's stores to inspect, review and
comment on operations. Oftentimes the general office assists in
training new managers and other store level associates. In addition to
financial results, the general office uses standards (delinquency and
repossession) and a point system to evaluate a store's performance.

On a monthly basis the Company's store managers meet either on a
district, regional or Company-wide basis. At these meetings general
office personnel provide training and recognize achievements of store
managers. Near the end of every fiscal year the respective district
manager, regional manager and senior management conduct "projection"
meetings with each store manager. At these meetings the year's results
are reviewed and ranked relative to other stores, and both
quantitative and qualitative goals are established for the upcoming
year. The qualitative goals may focus on staff development, effective
delegation, organization skills and sometimes personal matters.
Quantitatively, the Company always establishes a receivables growth
target (which is similar to a revenue growth target) and, depending on
the circumstances, may establish delinquency, repossession, or expense
goals.

The general office is also responsible for establishing policy,
maintaining the Company's management information system, conducting
compliance audits, orchestrating new store openings and setting the
direction for the Company.

INDUSTRY

USED CAR SALES. The market for used car sales in the United States is
significant and has steadily increased over the past five

6

years. For calendar 2000, used vehicle sales in the United States were
approximately $367 billion, with the sub-prime segment of used vehicle
sales contributing approximately $147 billion. Management believes the
factors that have led to growth in this industry include (i)
substantial increases in new car prices, which have made new cars less
affordable to the average consumer, (ii) the greater reliability and
durability of used cars resulting from the production of higher
quality cars, and (iii) the increasing number of vehicles coming off
lease programs in recent years. Many industry analysts expect these
trends to continue, leading to further expansion of the used car sales
market.

Used car retail sales typically occur through franchised new car
dealerships that sell used cars or independent used car dealerships.
The Company is in the sub-prime segment of the independent used car
sales and finance market. This segment is serviced primarily by
numerous small independent used car dealerships that sell and finance
the sale of used cars to individuals with limited or damaged credit
histories ("Buy Here/Pay Here" dealers). Buy Here/Pay Here dealers
typically offer their customers certain advantages over more
traditional financing sources, such as broader and more flexible
underwriting guidelines, flexible payment terms (including prorating
customer payments due within one month into several smaller payments
and scheduling payments to coincide with a customer's pay days), and
the ability to make payments in person, an important feature to
individuals who may not have a checking account or are otherwise
unable to make payments by the due date through the mail because of
the timing of paychecks.

USED CAR FINANCING. The automobile financing industry is the
third-largest consumer finance market in the country, after mortgage
debt and revolving credit card debt. Growth in automobile financing
has been fueled by increasing prices of both new and used cars, which
has forced more buyers to seek financing when purchasing a car. This
industry is served by traditional lending sources such as banks,
savings and loans, and captive finance subsidiaries of automobile
manufacturers, as well as by independent finance companies and Buy
Here/Pay Here dealers. In general, the industry is categorized
according to the type of car sold (new versus used) and the credit
characteristics of the borrower.

Despite significant opportunities, many of the traditional
lending sources do not consistently provide financing to the sub-prime
consumer finance market. Management believes traditional lenders avoid
this market because of its high credit risk and the associated
collection efforts. Many of the estimated 54,000 independent used car
dealers are not able to obtain debt financing from traditional lending
sources such as banks, credit unions, or major finance companies. Many
of these dealers typically finance their operations through the sale
of contract receivables at a discount.

COMPETITION

The used automotive retailing industry is highly competitive and
fragmented. Presently there are an estimated 22,000 franchised automobile
dealers and 54,000 independent used vehicle dealers. Although there are a number
of large public companies that sell used (as well as new) vehicles, such as Car
Max and AutoNation, Inc., management believes these operators do not provide
significant competition for the Company as they tend to sell higher priced
vehicles to consumers with stronger credit histories. The Company competes
principally with other independent Buy Here/Pay Here dealers, and to a lesser
degree with (i) the used vehicle retail operations of franchised automobile
dealerships, (ii) independent used vehicle dealers, and (iii) individual
consumers who sell used vehicles in private transactions. The Company competes
for both the supply and resale of used vehicles.

Management believes the principal competitive factors in the sale of its
used vehicles include (i) the availability of financing to consumers with
limited or damaged credit histories, (ii) the breadth and quality of vehicle
selection, (iii) pricing, (iv) the convenience of a dealership's location, and
(v) customer service. Management believes that its dealerships are competitive
in each of these areas.

REGULATION AND LICENSING

The Company's operations are subject to various federal, state, and local
laws, ordinances and regulations pertaining to the sale and financing of
vehicles. Under various state laws, the Company's dealerships must obtain a
license in order to operate or relocate. These laws also regulate advertising
and sales practices. The Company's financing activities are subject to federal
truth-in-lending and equal credit opportunity regulations as well as state and
local motor vehicle finance laws, installment finance laws, usury laws and other
installment sales laws. Among other things, these laws require that the Company
limit or prescribe terms of the contracts it originates, require specified
disclosures to customers, restrict collection practices, limit the Company's
right to repossess and sell collateral, and prohibit discrimination against
customers on the basis of certain characteristics including age, race, gender
and marital status.

The states in which the Company operates impose limits on interest rates
the Company can charge on its loans. These limits are generally based on either
(i) a specified margin above the federal discount rate, (ii) the age of the
vehicle, or (iii) statute. Management believes the Company is in compliance in
all material respects with all applicable federal, state, and local laws,
ordinances and regulations. However, the adoption of additional laws, changes in
the interpretation of existing laws, or the Company's entrance into
jurisdictions with more stringent regulatory requirements could have a material
adverse effect on the Company's used vehicle sales and finance business.

7

DISCONTINUED OPERATIONS

In October 2001, the Company made the decision to sell all of its
subsidiaries except Car-Mart, and relocate its corporate headquarters to
Bentonville, Arkansas where Car-Mart is based. Accordingly, the operating
results of Concorde (a prime and sub-prime mortgage lender) and Precision (a
firm specializing in the sale and rental of intermediate bulk containers), as
well as the operating results of (i) Smart Choice (used vehicle sales and
finance), the Company's 70% subsidiary that was written-off in October 2001, and
(ii) Crown El Salvador (gaming) and Home Stay (lodging) that were sold in a
prior fiscal year, are included in discontinued operations. See Note R of the
accompanying consolidated financial statements.

At April 30, 2002 the Company owned an 80% interest in Concorde and a 50%
interest in Precision. In May 2002 the Company sold its 50% interest in
Precision for $3.8 million in cash, and in July 2002 the Company sold its 80%
interest in Concorde for $3.0 million in cash. In addition, at closing, Concorde
repaid all of its $2.1 million in outstanding borrowings from the Company.

EMPLOYEES

As of April 30, 2002 the Company, including its consolidated subsidiaries,
employed approximately 450 persons full time. None of the Company's employees
are covered by a collective bargaining agreement and the Company believes that
its relations with its employees are good.

EXECUTIVE OFFICERS

The executive officers of the Company are as follows:

EDWARD R. MCMURPHY, has served as Chairman of the Board of the Company since its
inception in 1983. From 1984 until May 2002 Mr. McMurphy has served as the
Company's Chief Executive Officer and President. From 1979 to June 1986, Mr.
McMurphy served as President of Marion Properties, Inc., a real estate
development company and former parent of the Company from July 1984 to June
1986.

NAN R. SMITH, has served as Vice Chairman of the Board of the Company since May
2002 and as a director since January 2002. From 1999 until May 2002, Ms. Smith
served as President of Car-Mart (the Company's wholly-owned operating
subsidiary). From 1981 through 1998, Ms. Smith served as Chief Operating Officer
of Car-Mart.

TILMAN J. FALGOUT, III, has served as Chief Executive Officer of the Company
since May 2002, General Counsel since 1995 and a director of the Company since
1992. From 1995 until May 2002, Mr. Falgout also served as Executive Vice
President of the Company. From 1978 through June 1995, Mr. Falgout was a partner
in the law firm of Stumpf & Falgout, Houston, Texas.

WILLIAM H. HENDERSON, has served as President of the Company since May 2002.
From 1999 until May 2002, Mr. Henderson served as Chief Operating Officer of
Car-Mart (the Company's wholly-owned operating subsidiary). From 1987 through
1998, Mr. Henderson held a number of positions at Car-Mart including Store
Manager and Regional Manager.

MARK D. SLUSSER, has served as Chief Financial Officer of the Company since 1989
and as Secretary since 1990. From 1981 until joining the Company, Mr. Slusser
held various positions with Ernst & Young LLP including Senior Manager.

EDDIE L. HIGHT, has served as Chief Operating Officer of the Company since May
2002. From 1984 until May 2002, Mr. Hight held a number of positions at Car-Mart
(the Company's wholly-owned operating subsidiary) including Store Manager and
Regional Manager.

8

ITEM 2. PROPERTIES

As of April 30, 2002 the Company leased substantially all of its
facilities, including dealerships and the Company's general offices. These
facilities are located principally in the states of Arkansas, Oklahoma, Kentucky
and Missouri. The Company's general administrative offices are located in
approximately 6,000 square feet of leased space in Bentonville, Arkansas.

ITEM 3. LEGAL PROCEEDINGS

In the ordinary course of business, the Company has become a defendant in
various types of legal proceedings. Although the Company cannot determine at
this time the amount of exposure from these ordinary course of business
lawsuits, if any, management does not expect the final outcome of any of these
actions, individually or in the aggregate, to have a material adverse effect on
the Company's financial position, results of operations or cash flows.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders of the Company
during the fourth quarter ended April 30, 2002.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company's common stock is authorized for quotation on the NASDAQ
National Market under the NASDAQ symbol CRMT. The following table sets forth, by
fiscal quarter, the high and low closing sale prices reported by NASDAQ for the
Company's common stock for the periods indicated.

As of July 15, 2002, there were approximately 1,275 stockholders of record.
This number excludes individual stockholders holding stock under nominee
security position listings.

Since its inception the Company has paid no dividends on its common stock.
The Company currently intends to follow a policy of retaining earnings to
finance future growth. Payment of dividends in the future will be determined by
the Company's Board of Directors and will depend upon, among other things, the
Company's future earnings, operations, capital requirements and surplus, general
financial condition, contractual restrictions that may exist, and such other
factors as the Board of Directors may deem relevant.

In March 2002, the Company acquired all of the remaining shares of Car-Mart
common stock it did not previously own from the Car-Mart minority shareholders
by issuing 146,518 shares of the Company's common stock (valued at approximately
$1.4 million) and paying approximately $1.6 million in cash. The Company is
relying upon an exemption from registration as specified in Section 4 (2) of the
Securities Act of 1933.

9

ITEM 6. SELECTED FINANCIAL DATA

The financial data set forth below was derived from the audited
consolidated financial statements of the Company and should be read in
conjunction with the consolidated financial statements and related notes
thereto, and Management's Discussion and Analysis of Financial Condition and
Results of Operations contained elsewhere herein. (In thousands, except per
share amounts.)

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following discussion should be read in conjunction with the Company's
consolidated financial statements appearing elsewhere in this annual report.

OVERVIEW

America's Car-Mart, Inc., a Texas corporation formerly Crown Group, Inc.
("Corporate" or the "Company"), is a holding company that operates automotive
dealerships through its subsidiaries that focus 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 America's Car-Mart, Inc., an Arkansas
corporation, ("Car-Mart of Arkansas") and Colonial Auto Finance, Inc.
("Colonial") subsidiaries. Car-Mart of Arkansas and Colonial are collectively
referred to herein as "Car-Mart". As of April 30, 2002 the Company operated 55
stores located primarily in small cities and rural locations throughout the
South-Central United States. The Company provides financing for substantially
all of its customers, many of whom have limited credit histories or past credit
problems.

In addition, at April 30, 2002, the Company also owned (i) an 80% interest
in Concorde Acceptance Corporation ("Concorde"), a prime and sub-prime mortgage
lender, and (ii) a 50% interest in Precision IBC, Inc. ("Precision"), a firm
specializing in the sale and rental of intermediate bulk containers. In October
2001, the Company made the decision to sell all of its subsidiaries except
Car-Mart, and relocate its corporate headquarters to Bentonville, Arkansas where
Car-Mart is based. Accordingly, the operating results of Concorde and Precision,
as well as the operating results of (i) Smart Choice Automotive Group, Inc.
("Smart Choice"), the Company's 70% owned subsidiary that was written-off in
October 2001, and (ii) CG Incorporated, S.A. de C.V. ("Crown El Salvador") and
Home Stay Lodges I, Ltd. ("Home Stay") that were sold in a prior fiscal year,
are included in discontinued operations (see Note R to the accompanying
consolidated financial statements).

In May 2002 the Company sold its 50% interest in Precision for $3.8 million
in cash, and in July 2002 the Company sold its 80% interest in Concorde for $3.0
million in cash. In addition, at closing Concorde repaid all of its $2.1 million
in outstanding borrowings from the Company.

10

RESULTS OF CONTINUING OPERATIONS

Operating results are presented for the continuing operations of the
Company by business segment for the years ended April 30, 2002, 2001 and 2000.
The segments include Car-Mart and Corporate operations. A summary of the
Company's continuing operations by business segment for the years ended April
30, 2002, 2001 and 2000 is as follows:

CONSOLIDATED
(IN THOUSANDS)

2002 VS. 2001

Revenues increased $21.2 million, or 19.8%, in fiscal 2002 versus fiscal
2001 principally as a result of (i) revenue growth from stores that operated a
full 12 months in both periods ($12.5 million, or 14.1%), (ii) revenue growth
from stores opened during fiscal 2001 or stores that added a satellite location
during fiscal 2002 or fiscal 2001 ($5.0 million), and (iii) revenues from stores
opened during fiscal 2002 ($4.1 million). Pretax income decreased by $10.7
million, or 82.9%, principally as a result of fiscal 2002 including (i) a $7.3
million non-cash stock option based compensation charge, a $2.7 million
restructuring charge and a $3.9 million write-down of investments and equipment
at Corporate, with no comparable charge or write-down in fiscal 2001, partially
offset by (ii) higher pretax earnings at Car-Mart ($3.0 million).

During fiscal 2002 the Company recorded a $7.3 million non-cash charge
related to stock option based compensation. The charge pertains to the Company's
1997 stock option plan which contained a "cashless" exercise feature. Due to
such cashless feature, options granted under the plan were characterized under
generally accepted accounting principles as variable options. This resulted in
compensation charges to reflect changes in the market value of the Company's
common stock. In order to avoid future stock option based compensation charges
or credits, effective May 1, 2002 the Company rescinded the cashless exercise
provision of its 1997 Plan. Also during fiscal 2002, the Company recorded a $2.7
million restructuring charge (severance and office closing costs) in connection
with the decision to relocate its corporate headquarters to Bentonville,
Arkansas and wrote-down the carrying value of two emerging technology/Internet
investments and certain equipment by $3.9 million that were deemed to be
impaired.

2001 VS. 2000

Revenues increased $15.8 million, or 17.4%, in fiscal 2001 versus fiscal
2000 principally as a result of (i) revenue growth from stores that operated a
full 12 months in both periods ($7.5 million, or 12.7%), (ii) revenue growth
from stores opened during fiscal 2000 or stores that added a satellite location
during fiscal 2001 or fiscal 2000 ($5.1 million), and (iii) revenues from stores
opened during fiscal 2001 ($3.7 million). Pretax income decreased by $8.4
million, or 39.6%, principally as a result of (i) fiscal 2000 including a $10.7
million gain on the sale of Casino Magic Neuquen with no similar gain in fiscal
2001, partially offset by (ii) higher pretax earnings at Car-Mart ($2.8
million).

11

CAR-MART
(INCOME STATEMENT DOLLARS IN THOUSANDS)

2002 VS. 2001

Revenues increased $21.7 million, or 20.5%, in fiscal 2002 versus fiscal
2001 principally as a result of (i) revenue growth from stores that operated a
full 12 months in both periods ($12.5 million, or 14.1%), (ii) revenue growth
from stores opened during fiscal 2001 or stores that added a satellite location
during fiscal 2002 or fiscal 2001 ($5.0 million), and (iii) revenues from stores
opened during fiscal 2002 ($4.1 million).

Cost of sales as a percentage of sales decreased 1.5% to 53.1% in fiscal
2002 from 54.6% in fiscal 2001. The decrease was principally the result of the
Company's decision to raise vehicle prices, thereby improving gross margins. The
Company made the decision to raise prices after making significant improvements
in the price it pays when purchasing vehicles. During fiscal 2002 the Company
created and filled two Regional Purchasing Director positions. These individuals
used the Company's purchasing database to standardize the price paid for similar
vehicles, and have been actively involved with each buyer to improve their
vehicle purchases.

Selling, general and administrative expense as a percentage of sales
increased 1.0% to 16.3% in fiscal 2002 from 15.3% in fiscal 2001. The increase
was principally the result of (i) creating several new positions at the general
office level to assist in managing the Company's business, and (ii) higher
personnel costs at the store level.

Provision for credit loss as a percentage of sales increased 1.8%, to 19.4%
in fiscal 2002 from 17.6% in fiscal 2001. The Company believes the increase was
principally the result of (i) a general slowdown in the economy during fiscal
2002 as compared to fiscal 2001, and (ii) a failure to timely add sufficient
staff to enable the general office to adequately address the more difficult
collection environment during the first nine months of fiscal 2002. In response
to the need for additional general office staff, in mid-fiscal 2002 six new
positions were created and filled at the general office (Regional Accounts
Directors, Regional Purchasing Directors and Regional Compliance Directors) to
assist in managing the Company's growing business.

Interest expense as a percentage of sales decreased 1.5%, to 2.2% in fiscal
2002 from 3.7% in fiscal 2001. The decrease was principally the result of (i) a
decrease in the prime interest rate (ie. interest charged on the Company's
revolving credit facility fluctuates with the prime interest rate), and (ii) a
lower level of borrowings relative to the sales volume of the Company.

2001 VS. 2000

Revenues increased $16.3 million, or 18.3%, in fiscal 2001 versus fiscal
2000 principally as a result of (i) revenue growth from stores that operated a
full 12 months in both periods ($7.5 million, or 12.7%), (ii) revenue growth
from stores opened during fiscal

12

2001 or stores that added a satellite location during fiscal 2001 or fiscal 2000
($5.1 million), and (iii) revenues from stores opened during fiscal 2001 ($3.7
million).

Cost of sales as a percentage of sales was virtually unchanged between
fiscal 2001 (54.6%) and fiscal 2000 (54.7%).

Selling, general and administrative expense as a percentage of sales
decreased .3% to 15.3% in fiscal 2001 from 15.6% in fiscal 2000. The decrease
was principally the result of (i) lower personnel costs as a percentage of sales
in fiscal 2001 as compared to fiscal 2000, as sales growth at mature stores
outpaced growth in payroll costs at those stores, and (ii) lower rent as a
percentage of sales in fiscal 2001 as compared to fiscal 2000, as sales at
existing stores grew while rent at those stores is fixed.

Provision for credit loss as a percentage of sales increased .6%, to 17.6%
in fiscal 2001 from 17.0% in fiscal 2000. The Company cannot identify with
certainty any specific reason for the increase. The increase may have been
caused by a slightly more difficult economic environment, or a slight shift in
emphasis by store managers towards sales growth and away from credit quality and
collections.

Interest expense as a percentage of sales decreased .2%, to 3.7% in fiscal
2001 from 3.9% in fiscal 2000. The decrease was principally the result of (i) a
decrease in the prime interest rate (ie. interest charged on the Company's
revolving credit facility fluctuates with the prime interest rate), and (ii) a
lower level of borrowings relative to the sales volume of the Company.

CORPORATE
(IN THOUSANDS)

2002 VS. 2001

Interest income decreased $.7 million to $.8 million in fiscal 2002 versus
$1.5 million in fiscal 2001. The decrease was principally due to a lower level
of notes receivable outstanding during fiscal 2002 as compared to fiscal 2001.
Selling, general and administrative expense decreased $.8 million to $3.0
million in fiscal 2002 from $3.8 million in fiscal 2001, a decrease of 21.5%.
The decrease was principally the result of lower compensation expense resulting
from reductions in corporate office bonuses and the size of the corporate office
staff. The staff was reduced in anticipation of the planned relocation of the
Company's corporate headquarters from Irving, Texas to Bentonville, Arkansas
where Car-Mart is based. The Company's corporate headquarter relocation was
completed in July 2002.

During fiscal 2002 the Company recorded a $7.3 million non-cash charge
related to stock option based compensation. The charge pertains to the Company's
1997 stock option plan which contained a "cashless" exercise feature. Due to
such cashless feature, options granted under the plan were characterized under
generally accepted accounting principles as variable options. This resulted in
compensation charges to reflect changes in the market value of the Company's
common stock. In order to avoid future stock option based compensation charges
or credits, effective May 1, 2002 the Company rescinded the cashless exercise
provision of its 1997 Plan. Also during fiscal 2002, the Company recorded a $2.7
million restructuring charge (severance and office closing costs) in connection
with the decision to relocate its corporate headquarters to Bentonville,
Arkansas and wrote-down the carrying value of two emerging technology/Internet
investments and certain equipment by $3.9 million that were deemed to be
impaired.

13

2001 VS. 2000

Interest income decreased $.8 million to $1.5 million in fiscal 2001 versus
$2.3 million in fiscal 2000. The decrease was principally due to a lower level
of notes receivable outstanding during fiscal 2001 as compared to fiscal 2000.
Selling, general and administrative expense decreased $.9 million to $3.8
million in fiscal 2001 from $4.7 million in fiscal 2000, a decrease of 19.1%.
The decrease was principally the result of lower compensation expense resulting
from lower earnings of the Company. The Company's executive bonus plan was tied
directly to the profitability of the Company, which decreased during fiscal
2001. The decrease in earnings was principally the result of fiscal 2000
including (i) a $10.7 million gain on the sale of Casino Magic Neuquen ("CMN")
with no similar gain in fiscal 2001, and (ii) equity in earnings of
unconsolidated subsidiaries being eliminated in connection with the sale of CMN
in fiscal 2000.

RESULTS OF DISCONTINUED OPERATIONS

Operating results are presented below for the discontinued operations of
the Company for the fiscal years ended April 30, 2002, 2001 and 2000. These
discontinued operations include the following subsidiaries for the periods
indicated.

(1) In connection with the Company's purchase of a 70% interest in Smart Choice
in December 1999, the Company contributed Paaco into Smart Choice and at
that point Paaco became a wholly-owned subsidiary of Smart Choice.
References to Smart Choice typically include Paaco.

2002 VS. 2001

Revenues decreased $132.8 million, or 56.1%, in fiscal 2002 compared with
fiscal 2001 principally as a result of only including six months of Smart Choice
and Paaco operating results in fiscal 2002 compared to twelve months in fiscal
2001. Effective October 31, 2001 the Company's investment in Smart Choice/Paaco
was reduced to zero and thereafter the Company ceased to include Smart
Choice/Paaco's operating results in its discontinued operations.

Pretax loss for the Company's discontinued operations was $23.4 million for
fiscal 2002 compared with a $2.0 million pretax loss for fiscal 2001. The $21.4
million increase in loss was principally the result of a $39.3 million
write-down of Smart Choice assets, partially offset by a $19.3 million credit
which represents losses at Smart Choice in excess of the Company's basis in its
Smart Choice/Paaco investment.

Once the Company's investment in Smart Choice was reduced to zero, no
additional losses were recorded by the Company to reflect losses at Smart
Choice. The $39.3 million write-down pertains to certain Smart Choice assets
(finance receivables, property and equipment, deferred tax assets and goodwill)
that were deemed to be impaired in connection with the foreclosure by Finova
(Smart Choice's senior lender) of certain Florida Finance Group (Smart Choice's
principal Florida-based operating subsidiary) assets and the winding-down of the
Florida Finance Group's operations (see Note R to the accompanying consolidated
financial statements). In addition, the Florida Finance Group's provision for
credit loss and selling, general and administrative expenses did not decrease
proportionately with its decrease in revenues.

14

2001 VS. 2000

Revenues increased $88.8 million, or 60.0%, in fiscal 2001 compared with
fiscal 2000 principally as a result of (i) including Smart Choice in the
Company's operations for twelve months in fiscal 2001 versus only five months
during fiscal 2000 ($61.0 million), and (ii) growth in Paaco's revenues ($28.3)
stemming largely from the opening of additional stores.

Pretax loss for the Company's discontinued operations was $2.0 million for
fiscal 2001 compared with $4.2 million pretax income for fiscal 2000, a decrease
of $6.2 million. The decrease was principally the result of lower pretax
earnings at Smart Choice ($8.4 million), partially offset by an increase in
pretax earnings at Paaco ($2.8 million). Smart Choice's $8.4 million decrease
was principally the result of (i) the provision for credit loss increasing to
37.8% of sales in fiscal 2001 from 31.0% in fiscal 2000 ($5.3 million), (ii)
cost of sales increasing to 59.5% of sales in fiscal 2001 from 57.5% in fiscal
2000 ($1.5 million), and (iii) a decrease in the average interest rate charged
on Smart Choice finance receivables. Paaco's $2.8 million increase in pretax
earnings was principally the result of (i) increased revenues and (ii) a lower
provision for credit loss as a percentage of sales (13.4% in fiscal 2001 versus
15.9% in fiscal 2000), which is believed to be attributable to (a) selling a
higher quality vehicle, and (b) providing a greater level of service.

LIQUIDITY AND CAPITAL RESOURCES

The following table sets forth certain historical information with respect
to the Company's statements of cash flows (in thousands):

At April 30, 2002 the Company had (i) $1.2 million of cash on hand and had
an additional $4.7 million of availability on its $37.0 million revolving credit
facility, (ii) a $7.6 million federal income tax refund receivable stemming
principally from the Company's loss on Smart Choice, and (iii) $1.5 million of
other receivables. In May 2002 the Company sold its 50% interest in Precision
for $3.8 million in cash and in July 2002 the Company sold its 80% interest in
Concorde for $3.0 million in cash. In addition, at closing, Concorde repaid all
of its $2.1 million in outstanding borrowings from the Company. The majority of
this cash was used to reduce debt.

On a short-term basis, the Company's principal sources of liquidity include
(i) income from continuing operations, (ii) borrowings from its revolving credit
facility, (iii) the sale of discontinued subsidiaries, (iv) a federal income tax
refund receivable, and (v) other receivables. On a longer-term basis, the
Company expects its principal sources of liquidity to include (i) income from
continuing operations, and (ii) borrowings from a revolving credit facility.
Further, while the Company has no present plans to issue debt or equity
securities, the Company believes, if necessary, it could raise additional
capital through the issuance of such securities.

The Company expects to use cash to (i) grow its finance receivables
portfolio in direct proportion with the expected growth in its sales levels,
(ii) purchase property and equipment in connection with opening new stores and
refurbishing existing stores, and, to the extent excess cash is available, (iii)
reduce debt. Over the last three fiscal years the Company used approximately $12
million in cash to purchase its common stock. Going forward, the Company does
not expect to purchase its common stock at this level.

15

The Company expects to fund substantially all of its growth from income
generated from operations. Further, the Company expects its financial leverage
ratio to decline for the next several years, as net income builds equity and
debt either decreases or remains relatively constant.

The Company's revolving credit facility matures in December 2003. The
Company expects that it will be able to renew or refinance its revolving credit
facility on or before the scheduled maturity date. The Company believes it will
have adequate liquidity to satisfy its capital needs for the foreseeable future.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with generally
accepted accounting principles in the United States of America requires the
Company to make estimates and assumptions in determining 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 reported period. Actual results could differ from the
Company's estimates. The Company believes the most significant estimate made in
the preparation of the accompanying consolidated financial statements relates to
the determination of its allowance for credit losses. Below is a discussion of
the Company's accounting policy concerning such allowance. Other accounting
policies are disclosed in Note B in the accompanying consolidated financial
statements.

The Company maintains an allowance for credit losses at a level it
considers sufficient to cover anticipated losses in the collection of its
finance receivables. The allowance for credit losses is determined based upon a
review of (i) historical and recent credit losses and (ii) the finance
receivable portfolio, and takes into consideration (iii) economic conditions and
trends, and collateral values. The allowance for credit losses is periodically
reviewed by management with any changes reflected in current operations. It is
at least reasonably possible that actual credit losses may be materially
different from the recorded allowance for credit losses.

SEASONALITY

The Company's automobile sales and finance business is seasonal in nature.
In such business, the Company's third fiscal quarter (November through January)
is historically the slowest period for car and truck sales. Many of the
Company's operating expenses such as administrative personnel, rent and
insurance are fixed and cannot be reduced during periods of decreased sales.
Conversely, the Company's fourth fiscal quarter (February through April) is
historically the busiest time for car and truck sales as many of the Company's
customers use income tax refunds as a down payment on the purchase of a vehicle.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to market risk on its financial instruments from
changes in interest rates. The Company does not use financial instruments for
trading purposes or to manage interest rate risk. The Company's earnings are
impacted by its net interest income, which is the difference between the income
earned on interest-bearing assets and the interest paid on interest bearing
notes payable. Decreases in market interest rates could eventually have an
adverse effect on profitability.

Financial instruments consist of fixed rate finance receivables and fixed
and variable rate notes payable. The Company's finance receivables generally
bear interest at fixed rates ranging from 6% to 19%. These finance receivables
have remaining maturities from one to 30 months. A majority of the Company's
borrowings contain variable interest rates that fluctuate with market interest
rates (ie. revolving credit facility). However, interest rates charged on
finance receivables originated in the State of Arkansas are limited to the
federal discount rate (1.25% at April 30, 2002) plus 5.0%. Typically, the
Company charges interest on its Arkansas loans at or near the maximum rate
allowed by law. Thus, while the interest rates charged on the Company's loans do
not fluctuate once established, new loans originated in Arkansas are set at a
spread above the federal discount rate which fluctuates. At April 30, 2002
approximately 72% of the Company's finance receivables were originated in
Arkansas. Assuming that this percentage is held constant for future loan
originations, the long-term effect of decreases in the federal discount rate
could have a negative effect on profitability of the Company. This is the case
because the amount of interest income lost on Arkansas originated loans would
likely exceed the amount of interest expense saved on the Company's variable
rate borrowings. The initial impact on profitability resulting from a decrease
in the federal discount rate is positive, as the immediate interest expense
savings outweighs the loss of interest income on new loan originations. However,
as the amount of new loans originated at the lower interest rate exceeds the
amount of variable interest rate borrowings, the effect on profitability becomes
negative.

16

The table below illustrates the impact which hypothetical changes in the
federal discount rate could have on the Company's continuing pretax earnings.
The calculations assume (i) the increase or decrease in the federal discount
rate remains in effect for two years, (ii) the increase or decrease in the
federal discount rate results in a like increase or decrease in the rate charged
on the Company's variable rate borrowings, (iii) the principal amount of finance
receivables ($92.1 million) and variable interest rate borrowings ($32.3
million), and the percentage of Arkansas originated finance receivables (72%),
remain constant during the periods, and (iv) the Company's historical collection
and charge-off experience continues throughout the periods.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The following financial statements and accountant's report are included in Item
8 of this report:

Report of Independent Certified Public Accountants

Consolidated Balance Sheets as of April 30, 2002 and 2001

Consolidated Statements of Operations for the fiscal years ended April
30, 2002, 2001 and 2000

Consolidated Statements of Cash Flows for the fiscal years ended April
30, 2002, 2001 and 2000

Consolidated Statements of Stockholders' Equity for the fiscal years
ended April 30, 2002, 2001 and 2000

Notes to Consolidated Financial Statements

17

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Stockholders and Board of Directors
America's Car-Mart, Inc.

We have audited the accompanying consolidated balance sheets of America's
Car-Mart, Inc., as of April 30, 2002 and 2001, and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
three years in the period ended April 30, 2002. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of America's
Car-Mart, Inc. as of April 30, 2002 and 2001, and the consolidated results of
its operations and its consolidated cash flows for each of the three years in
the period ended April 30, 2002 in conformity with accounting principles
generally accepted in the United States of America.

Grant Thornton LLP

Dallas, Texas
June 21, 2002, except the third paragraph of Note A as to which the date is July
17, 2002.

18

CONSOLIDATED BALANCE SHEETS AMERICA'S CAR-MART, INC.

The accompanying notes are an integral part of these consolidated financial
statements.

19

CONSOLIDATED STATEMENTS OF OPERATIONS AMERICA'S CAR-MART, INC.

The accompanying notes are an integral part of these consolidated financial
statements.

20

CONSOLIDATED STATEMENTS OF CASH FLOWS AMERICA'S CAR-MART, INC.

The accompanying notes are an integral part of these consolidated financial
statements.

21

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AMERICA'S CAR-MART, INC.

The accompanying notes are an integral part of these consolidated financial
statements.

22

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AMERICA'S CAR-MART, INC.

A - ORGANIZATION AND BUSINESS

America's Car-Mart, Inc., a Texas corporation formerly Crown Group, Inc.
("Corporate" or the "Company"), is a holding company that operates automotive
dealerships through its subsidiaries that focus 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 America's Car-Mart, Inc., an Arkansas
corporation, ("Car-Mart of Arkansas") and Colonial Auto Finance, Inc.
("Colonial") subsidiaries. Car-Mart of Arkansas and Colonial are collectively
referred to herein as "Car-Mart". As of April 30, 2002 the Company operated 55
stores located primarily in small cities and rural locations throughout the
South-Central United States. The Company provides financing for substantially
all of its customers, many of whom may not qualify for conventional financing as
a result of limited credit histories or past credit problems.

In addition, at April 30, 2002, the Company also owned (i) an 80% interest
in Concorde Acceptance Corporation ("Concorde"), a prime and sub-prime mortgage
lender, and (ii) a 50% interest in Precision IBC, Inc. ("Precision"), a firm
specializing in the sale and rental of intermediate bulk containers. In October
2001, the Company made the decision to sell all of its subsidiaries except
Car-Mart, and relocate its corporate headquarters to Bentonville, Arkansas where
Car-Mart is based. Accordingly, the operating results of Concorde and Precision,
as well as the operating results of (i) Smart Choice Automotive Group, Inc.
("Smart Choice"), the Company's 70% owned subsidiary that was written-off in
October 2001, and (ii) CG Incorporated, S.A. de C.V. ("Crown El Salvador") and
Home Stay Lodges I, Ltd. ("Home Stay") that were sold in a prior fiscal year,
are included in discontinued operations (see Note R). Similarly, the assets and
liabilities of Concorde and Precision are included in "Assets of subsidiaries
held for sale" and "Liabilities of subsidiaries held for sale", respectively, in
the accompanying consolidated balance sheet at April 30, 2002 (Concorde,
Precision and Smart Choice at April 30, 2001).

In May 2002 the Company sold its 50% interest in Precision for $3.8 million
in cash, and in July 2002 the Company sold its 80% interest in Concorde for $3.0
million in cash. In addition, at closing Concorde repaid all of its $2.1 million
in outstanding borrowings from the Company.

B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of America's
Car-Mart, Inc. and all of its subsidiaries. All significant intercompany
accounts and transactions have been eliminated.

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 amount 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 and Kentucky. Periodically, the Company maintains cash in
financial institutions in excess of the amounts insured by the federal
government.

Cash Equivalents

The Company considers all highly liquid debt instruments purchased with
maturities of three months or less to be cash equivalents. Cash equivalents
generally consist of interest-bearing money market accounts.

Finance Receivables and Allowance for Credit Losses

The Company originates installment sale contracts from the sale of used
vehicles at its dealerships. Finance receivables 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 capitalization of the total
interest to be earned over the term of the related installment contract.

The Company maintains an allowance for credit losses at a level it
considers sufficient to cover anticipated losses in the collection of its
finance receivables. The allowance for credit losses is based upon historical
and recent credit loss experience, a periodic analysis of the portfolio,
economic conditions and trends and collateral values. The allowance for credit
losses is periodically reviewed by management with any changes reflected in
current operations. It is at least reasonably possible that actual credit losses
may be materially different from the recorded allowance for credit losses.

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
the lower of cost or market, which approximates wholesale value. The cost of
used vehicles sold is determined using the specific identification method.

23

Investments

Investments are carried at the lower of cost or market. At April 30, 2002,
investments consisted of a 7% ownership interest in Monarch Venture Partners'
Fund I, L.P. ("Monarch"), a private venture capital fund focusing on the
investment in Internet related or emerging technology companies. At April 30,
2001 investments consisted of (i) a 7% ownership interest in Monarch, and (ii)
an 8% ownership interest in Mariah Vision(3), Inc., a software developer
specializing in three-dimensional graphic design. As discussed in Note M, the
carrying values of these investments were written-down during the fiscal year
ended April 30, 2002 (see Note M).

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. Depreciation is computed principally using the
straight-line method over the following estimated useful lives:

Furniture, fixtures and equipment 3 to 10 years
Leasehold improvements 5 to 39 years
Buildings 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 amount of the assets exceed the fair value of the assets. Assets to be
disposed of are reported at the lower of the carrying amount or fair value less
costs to sell.

Income Taxes

Income taxes are accounted for under the liability method. Under this
method, deferred tax assets and liabilities are determined based on 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.

Revenue Recognition

Interest income on finance receivables is recognized using the interest
method. Revenue from the sale of used vehicles is recognized when the sales
contract is signed and the customer has taken possession of the vehicle.

Advertising Costs

Advertising costs are expensed as incurred and principally include radio
and print media marketing costs. Advertising costs amounted to $964,000,
$788,000 and $640,000 for the years ended April 30, 2002, 2001 and 2000,
respectively.

Stock Option Plan

The Company accounts for its stock option plan in accordance with the
provisions of Accounting Principles Board ("APB") Opinion No. 25, "Accounting
for Stock Issued to Employees", and related interpretations. Prior to May 1,
2002, certain of the Company's options were subject to variable option
accounting as a result of containing a "cashless" exercise feature. Under
variable option accounting, changes in the market value of the Company's common
stock generally result in charges or credits to stock-based compensation with an
offsetting entry to additional paid-in capital. Effective May 1, 2002, the
Company rescinded the cashless exercise feature of its stock options (see Note
J).

Earnings (Loss) Per Share

Basic earnings (loss) per share is computed by dividing net income (loss)
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.

Recent Accounting Pronouncements

In July 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 141 ("SFAS 141"), "Business
Combinations", which eliminates the pooling method of accounting for business
combinations initiated after June 30, 2001. In addition, SFAS 141 addresses the
accounting for intangible assets and goodwill acquired in a business
combination. The Company adopted SFAS 141 effective May 1, 2001. Such adoption
did not have any impact on the Company's financial position or results of
operations.

In July 2001, the FASB issued Statement of Financial Accounting Standards
No. 142 ("SFAS 142"), "Goodwill and Intangible Assets", which revises the
accounting for purchased goodwill and intangible assets. Under SFAS 142,
goodwill and intangible assets with indefinite lives will no longer be
amortized, but will be tested for impairment annually, and in the event of an
impairment indicator. SFAS 142 is effective for fiscal years beginning after
December 15, 2001, with earlier adoption permitted. The Company adopted SFAS 142
effective May 1, 2001. Such adoption did not have any impact on the continuing
operations of the Company.

In August 2001, the FASB issued Statement of Financial Accounting Standards
No. 144 ("SFAS 144"), "Accounting for the Impairment of Long-Lived Assets",
which requires a single accounting model to be used for long-lived assets to be
sold and broadens the presentation of discontinued operations to include a
"component of an entity" (rather than a segment of a business). A component of
an entity comprises operations and cash flows that can be clearly distinguished,
operationally and for financial reporting purposes,

24

from the rest of the entity. A component of an entity that is classified as held
for sale, or has been disposed of, is presented as a discontinued operation if
the operations and cash flows of the component will be (or have been) eliminated
from the ongoing operations of the entity and the entity will not have any
significant continuing involvement in the operations of the component.

The Company adopted SFAS 144 effective August 1, 2001. Consequently, the
operating results of Concorde and Precision, which were held for sale at April
30, 2002 (and sold after year end), as well as the operating results of Smart
Choice, which was written-off in October 2001, are included in discontinued
operations. Assets and liabilities of Concorde and Precision are included in
"Assets of subsidiaries held for sale" and "Liabilities of subsidiaries held for
sale", respectively, at April 30, 2002 (Concorde, Precision and Smart Choice at
April 30, 2001) (see Note R).

Reclassifications

Certain prior year amounts in the accompanying financial statements have
been reclassified to conform to the fiscal 2002 presentation. In particular, the
operating results of Crown El Salvador, which was sold in April 2001, and Home
Stay, which was sold in December 1999, were not included in discontinued
operations in the prior fiscal periods due to the relatively insignificant size
of their operations. However, in the current fiscal period, as the Company has
other discontinued operations, the operating results of Crown El Salvador and
Home Stay have been reclassified to discontinued operations for all periods
presented.

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 6% to 19% per annum and provide for payments over
periods ranging from 12 to 30 months. The components of finance receivables as
of April 30, 2002 and 2001 are as follows:

Changes in the finance receivables allowance for credit losses for the years
ended April 30, 2002, 2001 and 2000 are as follows:

D - PROPERTY AND EQUIPMENT

A summary of property and equipment as of April 30, 2002 and 2001 is as
follows:

25

E - ACCRUED LIABILITIES

A summary of accrued liabilities as of April 30, 2002 and 2001 is as
follows:

F - DEBT

A summary of debt as of April 30, 2002 and 2001 is as follows:

The Company's revolving credit facility is primarily collateralized by
finance receivables and inventory. Interest is payable monthly or quarterly on
all of the Company's debt and the principal balances are due at the maturity of
the facilities. The Company's revolving credit facility contains 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) restrictions on the
payment of dividends or distributions. The amount available to be drawn under
the Company's revolving credit facility is a function of eligible finance
receivables. Based upon eligible finance receivables at April 30, 2002, the
Company could have drawn an additional $4.7 million under such facility.

26

G - INCOME TAXES

The provision (benefit) for income taxes for the fiscal years ended April
30, 2002, 2001 and 2000 was as follows:

The provision for income taxes is different from the amount computed by
applying the statutory federal income tax rate to income before income taxes for
the following reasons:

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets and liabilities as of April 30, 2002 and 2001
were as follows:

27

H - CAPITAL STOCK

In March 2002 the Company acquired all of the remaining shares of Car-Mart
common stock it did not previously own from the Car-Mart minority shareholders
by issuing 146,518 shares of the Company's common stock (valued at approximately
$1.4 million) and paying approximately $1.6 million in cash.

The Company is authorized to issue up to one million shares of $.01 par
value preferred stock in one or more series having such respective terms, rights
and preferences as are designated by the Board of Directors. No preferred stock
has been issued.

I - WEIGHTED AVERAGE SHARES OUTSTANDING

Weighed average shares outstanding, which is used in the calculation of
basic and diluted earnings (loss) per share, was as follows for the years ended
April 30, 2002, 2001 and 2000:

J - STOCK OPTIONS AND WARRANTS

Stock Options

Since inception, the shareholders of the Company have 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"). While previously granted options remain outstanding, no
additional option grants may be made under the 1986 and 1991 Plans. The 1997
Plan sets aside 1,000,000 shares of the Company's common stock to be granted 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. At April 30, 2002
and 2001 there were 138,320 and 157,500 shares of common stock available for
grant under the 1997 Plan, respectively. Options granted under the Company's
stock option Plans expire in the years 2003 through 2012. The following is an
aggregate summary of the activity in the Company's stock option plans from April
30, 1999 to April 30, 2002:

28

As of April 30, 2002, all stock options were exercisable. A summary of
stock options outstanding as of April 30, 2002 is as follows:

The Company applies the provisions of APB Opinion No. 25 in accounting for
the issuance of stock options. The estimated weighted average fair value of
options granted was $3.00, $1.50 and $1.50 per share for the fiscal years ended
April 30, 2002, 2001 and 2000, respectively. Had the Company determined
compensation cost on the date of grant based upon the fair value of its stock
options under SFAS No. 123, the Company's pro forma income (loss) and earnings
(loss) per share would be as follows using the Black Scholes valuation model
with the assumptions detailed below:

Warrants

In January 2002, the Company issued a warrant to purchase 40,000 shares of
the Company's common stock at $5.00 per share in connection with engaging a new
investor relations firm. As of April 30, 2002 the Company had stock purchase
warrants outstanding to purchase 57,500 shares at prices ranging from $3.75 to
$5.00 per share. All of the warrants are presently exercisable and expire
between 2006 and 2007.

Stock Option Based Compensation

Prior to May 1, 2002, the Company's 1997 Plan contained a "cashless"
exercise feature which allowed option holders to use the "in-the-money" value of
the option as payment for a portion or all of the exercise price of the option.
Accordingly, the options granted under the 1997 Plan have been accounted for as
variable options. Under variable option accounting, changes in the market value
of the Company's common stock generally result in charges or credits to
stock-based compensation with an offsetting entry to additional paid-in capital.
For the fiscal year ended April 30, 2002, the Company recorded $7.3 million of
stock option based compensation expense. Other periods did not have significant
stock-based compensation charges or credits.

In order to avoid future stock option based compensation charges or credits
(which can result in volatile earnings fluctuations), effective May 1, 2002 the
Company rescinded the cashless exercise provision of its 1997 Plan.

29

K - COMMITMENTS AND CONTINGENCIES

Facility Leases

The Company leases used car sales and office facilities and equipment under
various operating leases. As of April 30, 2002 the aggregate rentals due under
such non-cancelable operating leases with remaining lease terms in excess of one
year were as follows:

For the years ended April 30, 2002, 2001 and 2000 rent expense for all
operating leases amounted to approximately $1,581,000, $1,427,000 and
$1,266,000, respectively.

Other Contingencies

In the ordinary course of business, the Company has become a defendant in
various types of legal proceedings. Although the Company cannot determine at
this time the amount of the ultimate exposure from these ordinary course of
business lawsuits, if any, management does not expect the final outcome of any
of these actions, individually or in the aggregate, to have a material adverse
effect on the Company's financial position, results of operations or cash flows.

L - RESTRUCTURING CHARGE

As discussed in Note R, in October 2001, the Company made the decision to
sell all of its subsidiaries except Car-Mart and relocate its corporate
headquarters to Bentonville, Arkansas where Car-Mart is based. As a result, the
Company recorded severance ($2.6 million) and office closing costs ($.1 million)
totaling $2.7 million during the fiscal year ended April 30, 2002. As of April
30, 2002, $212,500 of severance costs had been paid.

M - WRITE-DOWN OF INVESTMENTS AND EQUIPMENT

During the fiscal year ended April 30, 2002, financing for early-stage
emerging technology/Internet investments, such as the Company's investment in
Monarch Venture Partners' Fund I, L.P. ("Monarch") and Mariah Vision 3, Inc.
("Mariah"), became increasingly difficult to obtain. The adverse conditions in
the capital markets, combined with poor operating results and prospects of
Mariah and some of Monarch's portfolio companies, caused the Company to consider
whether its carrying values of Mariah and Monarch were impaired. After review
and analysis, the Company wrote-down the carrying value of Mariah and Monarch
and certain equipment as follows:

The Company's remaining investment in Monarch and Mariah at April 30, 2002
was $252,456 and $0, respectively, and is included in "Investments" in the
accompanying consolidated balance sheet.

30

N - FAIR VALUE OF FINANCIAL INSTRUMENTS

The table below summarizes information about the fair value of financial
instruments included in the Company's financial statements at April 30, 2002 and
2001:

Because no market exists for certain of the Company's financial
instruments, fair value estimates are based on judgments and estimates regarding
yield expectations of investors, credit risk, normal costs of administration of
finance receivables and other risk characteristics, including interest rate and
prepayment risk. These estimates are subjective in nature and involve
uncertainties and matters of judgment and therefore cannot be determined with
precision. Changes in assumptions could significantly affect these estimates.
The methodology and assumptions utilized to estimate the fair value of the
Company's financial instruments are as follows:

O - RELATED PARTY TRANSACTIONS

During fiscal 2002, 2001 and 2000, the Company paid an outside director
$16,719, $81,140 and $30,000, respectively, as a fee in connection with certain
consulting services related to its used car sales and finance business.

During fiscal 2002, 2001 and 2000, the Company paid Dynamic Enterprises,
Inc. ("Dynamic") approximately $225,000 per year for the lease of six dealership
locations. A director of the Company is also an officer of Dynamic.

31

P - BUSINESS SEGMENTS

Operating results and other financial data are presented for the continuing
operations of the Company by business segment for the years ended April 30,
2002, 2001 and 2000. The segments include Car-Mart and Corporate operations. The
Company's continuing operations and other financial data by business segment for
the years ended April 30, 2002, 2001 and 2000 are as follows (in thousands):

Q - SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental cash flow disclosures for the fiscal years ended April 30,
2002, 2001 and 2000 are as follows:

33

R - DISCONTINUED OPERATIONS

In October 2001 the Company made the decision to sell all its subsidiaries
except Car-Mart, and relocate its corporate headquarters to Bentonville,
Arkansas where Car-Mart is based. This decision was based on management's desire
to separate the highly profitable and modestly leveraged operations of Car-Mart
from the operating losses or lower level of profitability and highly leveraged
operations of the Company's other subsidiaries. In addition, it is management's
belief that the Company's ownership of businesses in a variety of different
industries may have created confusion within the investment community, possibly
making it difficult for investors to analyze and properly value the Company's
common stock. In May 2002 the Company sold its remaining 50% interest in
Precision for $3.8 million in cash. In July 2002 the Company sold its 80%
interest in Concorde for $3.0 million in cash. In addition, at closing, Concorde
repaid all of its $2.1 million in outstanding borrowings from the Company.

As a result of the Company's decision, operating results from its non
Car-Mart subsidiaries have been reclassified to discontinued operations for all
periods presented. Below is a summary of the number of months each of these
subsidiaries operating results are included in discontinued operations of the
Company for the years ended April 30, 2002, 2001 and 2000:

1 - Paaco became a wholly-owned subsidiary of Smart Choice in December 1999
when the Company exchanged its 85% interest in Paaco and certain other
consideration for a 70% interest in Smart Choice. In January 2001 certain
Florida-based subsidiaries of Smart Choice (the "Florida Finance Group") became
over-advanced on their revolving credit facility with Finova Capital Corporation
("Finova"). In November 2001 this loan default culminated in certain Florida
Finance Group assets being sold in a foreclosure sale conducted by Finova. As a
result of the foreclosure and concurrent cessation of the Florida Finance
Group's operations, Smart Choice wrote-down its assets by approximately $39
million rendering it insolvent. Separately, the Company entered into a
settlement agreement with Finova that resulted in the Company paying Finova $1
million in exchange for Finova unconditionally releasing the Company from its $5
million guaranty of the Florida Finance Group's and Paaco's obligations to
Finova. As a result of these transactions and operating losses at Smart Choice,
the Company's investment in Smart Choice, which totaled $17.6 million at April
30, 2001, was written off as of October 31, 2001. In addition, as a result of
revised subordination language that requires Finova to be paid in full prior to
the Company receiving any note payments from Paaco, the Company fully reserved
its $1.6 million receivable from Paaco as of October 31, 2001. The write-off of
the Company's investment in Smart Choice and the loss resulting from the $1
million guaranty payment to Finova and related tax benefits, are included in
discontinued operations. In March 2002 the Company sold its 70% interest in
Smart Choice for a nominal sum.

A summary of the Company's discontinued operations for the years ended
April 30, 2002, 2001 and 2000 is as follows (in thousands):

34

A summary of assets and liabilities of subsidiaries held for sale as of
April 30, 2002 and 2001 is as follows (in thousands):

As of April 30, 2002 and 2001 the Company's equity investment in businesses
held for sale was as follows (in thousands):

35

S - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

A summary of the Company's quarterly results of operations for the years
ended April 30, 2002 and 2001 is as follows (in thousands):

(1) In the second quarter of fiscal 2002 the Company recorded a $2.3
million after tax charge related to the write-down of certain
investments and equipment, and a $1.8 million after tax charge related
to the relocation of the Company's corporate headquarters and
severance pay.

(2) In the third and fourth quarter of fiscal 2002 the Company recorded
non-recurring and non-cash after tax charges of $2.0 million and $4.3
million, respectively, related to stock option based compensation.

36

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None

PART III

Except as to information with respect to executive officers which is
contained in a separate heading under Item 1 to this Form 10-K, the information
required by Part III of Form 10-K is, pursuant to General Instruction G(3) of
Form 10-K, incorporated by reference from the Company's definitive proxy
statement to be filed pursuant to Regulation 14A for the Company's Annual
Meeting of Stockholders to be held in 2002. The Company will, within 120 days of
the end of its fiscal year, file with the Securities and Exchange Commission a
definitive proxy statement pursuant to Regulation 14A.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information concerning directors and executive officers of the
registrant is set forth in the Proxy Statement to be delivered to stockholders
in connection with the Company's Annual Meeting of Stockholders to be held in
2002 (the "Proxy Statement") under the headings "Election of Directors" and
"Compliance with Section 16(a) of the Securities Exchange Act of 1934," which
information is incorporated herein by reference. The name, age and position of
each executive officer of the Company is set forth under the heading "Executive
Officers" in Item 1 of this report.

ITEM 11. EXECUTIVE COMPENSATION

The information concerning executive compensation is set forth in the 2002
Proxy Statement under the heading "Executive Compensation," which information is
incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

The information concerning security ownership of certain beneficial owners
and management is set forth in the 2002 Proxy Statement under the heading
"Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters," which information is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information concerning certain relationships and related transactions
is set forth in the 2002 Proxy Statement under the heading "Certain
Transactions," which information is incorporated herein by reference.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)(1). FINANCIAL STATEMENTS AND ACCOUNTANT'S REPORT

The following financial statements and accountant's report are included
in Item 8 of this report:

Report of Independent Certified Public Accountants

Consolidated Balance Sheets as of April 30, 2002 and 2001

Consolidated Statements of Operations for the fiscal years
ended April 30, 2002, 2001 and 2000

Consolidated Statements of Cash Flows for the fiscal years
ended April 30, 2002, 2001 and 2000

Consolidated Statements of Stockholders' Equity for the fiscal
years ended April 30, 2002, 2001 and 2000

Notes to Consolidated Financial Statements

37

(a)(2). FINANCIAL STATEMENT SCHEDULES

Schedule I - Condensed Financial Information of America's Car-Mart,
Inc. (Parent Company Only)

The other financial statement schedules are omitted since the required
information is not present, or is not present in amounts sufficient to
require submission of the schedules, or because the information
required is included in the consolidated financial statements and notes
thereto.

(a)(3). EXHIBITS

38

- ----------

(1) Filed herewith.

(2) Previously filed as an Exhibit to the Company's Registration Statement
on Form 10, as amended, (No. 0-14939) and incorporated herein by
reference.

(3) Previously filed as an Exhibit to the Company's Quarterly Report on
Form 10-Q for the quarter ended October 31, 1989 and incorporated
herein by reference.

(4) Previously filed as an Exhibit to the Company's Annual Report on Form
10-K for the year ended April 30, 1990 and incorporated herein by
reference.

(5) Previously filed as an Exhibit to the Company's Annual Report on Form
10-K for the year ended April 30, 1991 and incorporated herein by
reference.

(6) Previously filed as an Exhibit to the Company's Annual Report on Form
10-K for the year ended April 30, 1992 and incorporated herein by
reference.

(7) Previously filed as an Exhibit to the Company's Quarterly Report on
Form 10-Q for the quarter ended July 31, 1993 and incorporated herein
by reference.

(8) Previously filed as an Exhibit to the Company's Registration Statement
on Form S-1, as amended, initially filed with the Securities and
Exchange Commission on May 31, 1994 (No. 33-79484) and incorporated
herein by reference.

(9) Previously filed as an Exhibit to the Company's Annual Report on Form
10-K for the year ended April 30, 1994 and incorporated herein by
reference.

(10) Previously filed as an Exhibit to the Company's Quarterly Report on
Form 10-Q for the quarter ended January 31, 1997 and incorporated
herein by reference.

(11) Previously filed as an Exhibit to the Company's Registration Statement
on Form S-8, as amended, initially filed with the Securities and
Exchange Commission on October 20, 1997 (No. 333-38475) and
incorporated herein by reference.

(12) Previously filed as an Exhibit to the Company's Annual Report on Form
10-K for the year ended April 30, 1998 and incorporated herein by
reference.

(13) Previously filed as an Exhibit to the Company's Quarterly Report on
Form 10-Q for the quarter ended January 31, 2002 and incorporated
herein by reference.

(b) REPORTS ON FORM 8-K

During the fiscal quarter ended April 30, 2002 the Company did not file any
reports on Form 8-K.

39

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

AMERICA'S CAR-MART, INC.

Dated: July 18, 2002 By: /s/ Tilman J. Falgout, III
----------------------------------------
Tilman J. Falgout, III
Chief Executive Officer
(principal executive officer)

Dated: July 18, 2002 By: /s/ Mark D. Slusser
----------------------------------------
Mark D. Slusser
Vice President Finance and Chief
Financial Officer
(principal financial and accounting
officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons in the capacities and on the dates
indicated.

40

SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF AMERICA'S CAR-MART, INC.
(PARENT COMPANY ONLY)

CONDENSED BALANCE SHEETS

CONDENSED STATEMENTS OF OPERATIONS

The accompanying notes are an integral part of this condensed financial
information.

41

SCHEDULE I (CONTINUED)
AMERICA'S CAR-MART, INC. (PARENT COMPANY ONLY)
CONDENSED STATEMENTS OF CASH FLOWS

The accompanying notes are an integral part of this condensed financial
information.

42

SCHEDULE I (CONTINUED)
AMERICA'S CAR-MART, INC. (PARENT COMPANY ONLY)
NOTES TO CONDENSED FINANCIAL STATEMENTS

A - GUARANTY

America's Car-Mart, Inc. (the "Company") has made the following guaranty
with respect to its subsidiaries:

B - ELIMINATION OF BALANCES AND TRANSACTIONS WITH SUBSIDIARIES

As of April 30, 2002 and 2001 the following balances were eliminated in the
consolidated financial statements of the Company:

For the years ended April 30, 2002, 2001 and 2000 interest income in the
amounts of $330,579, $475,651 and $702,472, respectively, was eliminated in
the consolidated financial statements of the Company.

C - DEBT

A summary of debt as of April 30, 2002 and 2001 is as follows:

A summary of future minimum principal payments required under the
aforementioned debt as of April 30, 2002 is as follows:

D - RECLASSIFICATIONS

Certain prior year amounts in the accompanying financial statements have
been reclassified to conform to the fiscal 2002 presentation.

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