AMERICAS CARMART INC - 10-Q Quarterly Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

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

For the fiscal quarter ended: Commission file number:
JULY 31, 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)

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 the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

1

PART I

ITEM 1. FINANCIAL STATEMENTS AMERICA'S CAR-MART, INC.
CONSOLIDATED BALANCE SHEETS

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

2

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

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

3

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

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

4

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

A - ORGANIZATION AND BUSINESS

America's Car-Mart, Inc., a Texas corporation formerly known as 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 July 31, 2002 the Company operated 59
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.

During the prior fiscal year 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 its non Car-Mart subsidiaries which included (i) Concorde Acceptance
Corporation ("Concorde"), a prime and sub-prime mortgage lender and (ii)
Precision IBC, Inc., a firm specializing in the sale and rental of intermediate
bulk containers, for the three months ended July 31, 2002, and (i) Concorde,
(ii) Precision, and (iii) Smart Choice Automotive Group, Inc. ("Smart Choice"),
the Company's 70% owned subsidiary that was written-off in October 2001, for the
three months ended July 31, 2001, have been included in discontinued operations
(see Note K). 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.

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

General

The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by accounting principles generally accepted in the United States of
America for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three-month
period ended July 31, 2002 are not necessarily indicative of the results that
may be expected for the year ended April 30, 2003. For further information,
refer to the consolidated financial statements and footnotes thereto included in
the Company's annual report on Form 10-K for the year ended April 30, 2002.

Use of Estimates

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements, and the reported amounts of revenues and
expenses during the period. Actual results could differ from those estimates.

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.

Reclassifications

Certain prior year amounts in the accompanying financial statements have
been reclassified to conform to the fiscal 2003 presentation.

5

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 July 31, 2002 and April 30, 2002 are as follows:

Changes in the finance receivables allowance for credit losses for the
three months ended July 31, 2002 and 2001 are as follows:

D - PROPERTY AND EQUIPMENT

A summary of property and equipment as of July 31, 2002 and April 30, 2002
is as follows:

6

E - ACCRUED LIABILITIES

A summary of accrued liabilities as of July 31, 2002 and April 30, 2002 is
as follows:

F - DEBT

A summary of debt as of July 31, 2002 and April 30, 2002 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 July 31, 2002, the
Company could have drawn an additional $5.4 million under such facility.

7

G - WEIGHTED AVERAGE SHARES OUTSTANDING

Weighted average shares outstanding, which are used in the calculation of
basic and diluted earnings per share, are as follows for the periods ended July
31, 2002 and 2001:

H - COMMITMENTS AND 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, based on the advice of counsel, 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.

I - SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental cash flow disclosures for the three months ended July 31, 2002
and 2001 are as follows:

8

J - BUSINESS SEGMENTS

Operating results and other financial data are presented for the continuing
operations of the Company by business segment for the three months ended July
31, 2002 and 2001. The segments include Car-Mart and Corporate operations. The
Company's continuing operations and other financial data by business segment for
the three months ended July 31, 2002 and 2001 are as follows (in thousands):

9

K - 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 three months ended July 31, 2002 and 2001:

A summary of the Company's discontinued operations for the three months
ended July 31, 2002 and 2001 is as follows (in thousands):

10

ITEM 2. 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 and notes thereto appearing elsewhere in this
report.

FORWARD-LOOKING INFORMATION

The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for certain forward-looking statements. Certain information included in
this Quarterly Report on Form 10-Q contains, and other materials filed or to be
filed by the Company with the Securities and Exchange Commission (as well as
information included in oral statements or other written statements made or to
be made by the Company or its management) contain or will contain,
forward-looking statements within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933,
as amended. The words "believe," "expect," "anticipate," "estimate," "project"
and similar expressions identify forward-looking statements, which speak only as
of the date the statement was made. The Company undertakes no obligation to
publicly update or revise any forward-looking statements. Such forward-looking
statements are based upon management's current plans or expectations and are
subject to a number of uncertainties and risks that could significantly affect
current plans, anticipated actions and the Company's future financial condition
and results. As a consequence, actual results may differ materially from those
expressed in any forward-looking statements made by or on behalf of the Company
as a result of various factors. Uncertainties and risks related to such
forward-looking statements include, but are not limited to, those relating to
the continued availability of lines of credit for the Company's business, the
Company's ability to effectively underwrite and collect its installment loans,
changes in interest rates, competition, dependence on existing management,
adverse economic conditions (particularly in the State of Arkansas), changes in
tax laws or the administration of such laws and changes in lending laws or
regulations. Any forward-looking statements are made pursuant to the Private
Securities Litigation Reform Act of 1995 and, as such, speak only as of the date
made.

OVERVIEW

America's Car-Mart, Inc., a Texas corporation formerly known as 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 July 31, 2002 the Company operated 59
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.

During the prior fiscal year 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 its non Car-Mart subsidiaries which included (i) Concorde Acceptance
Corporation ("Concorde"), a prime and sub-prime mortgage lender and (ii)
Precision IBC, Inc., a firm specializing in the sale and rental of intermediate
bulk containers, for the three months ended July 31, 2002, and (i) Concorde,
(ii) Precision, and (iii) Smart Choice Automotive Group, Inc. ("Smart Choice"),
the Company's 70% owned subsidiary that was written-off in October 2001, for the
three months ended July 31, 2001, have been included in discontinued operations
(see Note K). 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.

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. From these proceeds, the Company
reduced other notes payable by $6.0 million.

11

RESULTS OF CONTINUING OPERATIONS

Operating results are presented for the continuing operations of the
Company by business segment for the three months ended July 31, 2002 and 2001.
The segments include Car-Mart and Corporate operations. A summary of the
Company's continuing operations by business segment for the three months ended
July 31, 2002 and 2001 is as follows:

CONSOLIDATED
(In Thousands)

THREE MONTHS ENDED JULY 31, 2002 VS. THREE MONTHS ENDED JULY 31, 2001

Revenues increased $5.6 million, or 18.2%, for the three months ended July
31, 2002 compared to the same period in the prior fiscal year. The increase was
principally the result of (i) revenue growth from stores that operated a full
three months in both periods ($3.9 million, or 14.5%), (ii) revenue growth from
stores opened during the three months ended July 31, 2001 or stores that added a
satellite location after April 30, 2001 ($.3 million), and (iii) revenues from
stores opened after July 31, 2001 ($1.5 million).

Pretax income increased $2.0 million, or 55.2%, for the three months ended
July 31, 2002 as compared to the same period in the prior fiscal year. The
increase was principally the result of (i) an increase in Car-Mart's pretax
income ($1.3 million) stemming from an 18.7% increase in revenues and lower
costs and expenses as a percentage of sales, and (ii) a reduction in Corporate's
pretax loss ($.7 million). The pretax loss at Corporate decreased as a result of
(i) lower operating expenses at its Irving, Texas office ($.3 million) as a
result of a smaller staff and lower compensation levels, (ii) lower interest
expense ($.1 million) as a result of a reduction in debt, and (iii) the prior
fiscal period including a write-down of equipment ($.4 million) with no similar
cost in the current fiscal period.

12

CAR-MART
(Dollars in Thousands)

THREE MONTHS ENDED JULY 31, 2002 VS. THREE MONTHS ENDED JULY 31, 2001

Revenues increased $5.7 million, or 18.7%, for the three months ended July
31, 2002 as compared to the same period in the prior fiscal year. The increase
was principally the result of (i) revenue growth from stores that operated a
full three months in both periods ($3.9 million, or 14.5%), (ii) revenue growth
from stores opened during the three months ended July 31, 2001 or stores that
added a satellite location after April 30, 2001 ($.3 million), and (iii)
revenues from stores opened after July 31, 2001 ($1.5 million).

Cost of sales as a percentage of sales decreased .9% to 52.5% for the three
months ended July 31, 2002 from 53.4% in the same period of the prior fiscal
year. 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 during the third quarter of the prior fiscal year after making
significant improvements in the price it pays when purchasing vehicles.

Selling, general and administrative expense as a percentage of sales
increased 2.9% to 17.5% for the three months ended July 31, 2002 from 14.6% in
the same period of the prior fiscal year. The increase was principally the
result of (i) changing the Company's store level augmentation policy such that
more associates are employed at a store for the same number of active customer
accounts, (ii) creating several new management positions at Car-Mart's general
office to assist in managing the Company's growing business, and (iii) higher
insurance costs.

Provision for credit losses as a percentage of sales decreased 2.9%, to
16.6% for the three months ended July 31, 2002 from 19.5% in the same period of
the prior fiscal year. The Company believes the decrease was principally the
result of increased staffing at the store and general office levels.
Specifically, individuals were hired to fill newly created regional accounts
director positions. These individuals are responsible for supervising and
managing store level collection personnel.

Interest expense as a percentage of sales decreased 1.4%, to 1.4% for the
three months ended July 31, 2002 from 2.8% in the same period of the prior
fiscal year. 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.

13

CORPORATE
(Dollars in Thousands)

NM - not meaningful

THREE MONTHS ENDED JULY 31, 2002 VS. THREE MONTHS ENDED JULY 31, 2001

Interest income decreased $.2 million to $.1 million for the three months
ended July 31, 2002 from $.3 million in the same period in the prior fiscal
year. The decrease was principally due to a lower level of notes receivable
outstanding during the three months ended July 31, 2002 as compared to the same
period in the prior fiscal year.

Selling, general and administrative expense decreased $.3 million to $.6
million for the three months ended July 31, 2002 from $.9 million in the same
period in the prior fiscal year, a decrease of 29.8%. The decrease was
principally the result of (i) lower compensation expense at its Irving, Texas
office resulting from reductions in staff, (ii) reduced transportation expenses,
and (iii) lower director compensation. The staff was reduced in connection with
the relocation of the Company's principal headquarters from Irving, Texas to
Bentonville, Arkansas (where Car-Mart is based) in July 2002. The Company
expects selling, general and administrative expenses at Corporate to continue to
decline in future quarters as more administrative duties are transferred to
Car-Mart.

Interest expense decreased $.1 million as a result of Corporate
substantially reducing its debt.

14

RESULTS OF DISCONTINUED OPERATIONS

Operating results are presented below for the discontinued operations of
the Company for the three months ended July 31, 2002 and 2001. These
discontinued operations include the following subsidiaries for the periods
indicated.

THREE MONTHS ENDED JULY 31, 2002 VS. THREE MONTHS ENDED JULY 31, 2001

Revenues decreased $46.8 million, or 93.9%, for the three months ended July
31, 2002 as compared to the same period in the prior fiscal year. The decrease
was principally the result of the removal of Smart Choice/Paaco from the
Company's discontinued operations. Effective October 31, 2001, the Company
wrote-off its investment in Smart Choice/Paaco and thereafter the Company ceased
to include Smart Choice/Paaco's operating results in its discontinued
operations. In March 2002, the Company sold its investment in Smart Choice/Paaco
for a nominal sum.

Pretax income for the Company's discontinued operations was $.8 million for
the three months ended July 31, 2002 as compared to a $1.9 million pretax loss
for the same period in the prior fiscal year. The $2.7 million improvement was
principally the result of not including Smart Choice/Paaco in the Company's
discontinued operations during the three months ended July 31, 2002 ($2.6
million), and an increase in Concorde's pretax earnings ($.2 million).

15

LIQUIDITY AND CAPITAL RESOURCES

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

At July 31, 2002 the Company had (i) $1.0 million of cash on hand and had
an additional $5.4 million of availability on its $37.0 million revolving credit
facility, (ii) a $7.3 million federal income tax refund receivable stemming
principally from the Company's loss on Smart Choice, and (iii) $1.7 million of
other receivables.

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) a federal income tax refund receivable, and (iv) 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. In addition, from time to time the Company may use cash to
repurchase its common stock.

The Company expects to fund the majority 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 of the Company's consolidated financial
statements which are included in its annual report on Form 10-K for the year
ended April 30, 2002.

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

16

finance receivables 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.
Further, the Company has experienced seasonal fluctuations in its credit losses.
The Company's first and fourth fiscal quarters tend to have lower credit losses,
and its second and third fiscal quarters tend to have higher credit losses.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to market risk on its financial instruments from
changes in interest rates. In particular, the Company has exposure to changes in
the federal discount rate and the prime interest rate of its lender. 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, the rate charged on the Company's revolving credit facility
fluctuates with the prime interest rate of its lender). However, interest rates
charged on finance receivables originated in the State of Arkansas are limited
to the federal discount rate (1.25% at July 31, 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 July 31, 2002
approximately 69% 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.

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 ($98.6 million) and variable interest rate borrowings ($31.6
million), and the percentage of Arkansas originated finance receivables (69%),
remain constant during the periods, and (iv) the Company's historical collection
and charge-off experience continues throughout the periods.

A similar calculation and table was prepared as of April 30, 2002. That
calculation and table was materially consistent with the information provided
above.

17

ITEM 4. CONTROLS AND PROCEDURES

During the fiscal quarter ended July 31, 2002 there were not any
significant changes in the Company's internal controls.

PART II

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits:

99.1 Form of Certification Pursuant to Section 906 of
Sarbanes-Oxley Act of 2002.

(b) Reports on Form 8-K:

During the fiscal quarter ended July 31, 2002 the Company did
not file any reports on Form 8-K.

18

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities and
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.

By: \s\ Tilman J. Falgout, III
-------------------------------------
Tilman J. Falgout, III
Chief Executive Officer
(Principal Executive Officer)

By: \s\ Mark D. Slusser
-------------------------------------
Mark D. Slusser
Chief Financial Officer, Vice
President Finance and Secretary
(Principal Financial and Accounting
Officer)

Dated: September 10, 2002

19

CERTIFICATION

I, Tilman J. Falgout III, Chief Executive Officer of America's
Car-Mart, Inc., certify that:

1. I have reviewed this quarterly report on Form 10-Q of America's
Car-Mart, Inc.;

2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report.

\s\ Tilman J. Falgout, III
------------------------------------
Tilman J. Falgout, III
Chief Executive Officer

CERTIFICATION

I, Mark D. Slusser, Chief Financial Officer, Vice President Finance and
Secretary of America's Car-Mart, Inc., certify that:

1. I have reviewed this quarterly report on Form 10-Q of America's
Car-Mart, Inc.;

2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report.

September 10, 2002 \s\ Mark D. Slusser
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Mark D. Slusser
Chief Financial Officer, Vice President
Finance and Secretary

20

INDEX TO EXHIBITS