Crown Group, Inc. Expects FY1999 Earnings to Fall Short of Analysts' Expectations
26 July 1999
Crown Group, Inc. Expects FY1999 Earnings to Fall Short of Analysts' Expectations
DALLAS--July 23, 1999--Crown Group, Inc. , today announced that it expects earnings for the fiscal year ended April 30, 1999, to fall short of analysts' expectations, due to certain accounting adjustments at its 80%-owned Paaco Automotive Group subsidiary.Published estimates by brokerage firm analysts have anticipated that the Company would report net income of approximately $1.80 per share for the fiscal year ended April 30, 1999, compared with net income of $0.04 per share in FY1998. During the course of its year-end closing process, the Company discovered certain accounting irregularities and errors at Paaco Automotive Group, some of which may pre-date Crown's initial purchase of a 53% equity interest in Paaco in February 1998. As a result, the Company's FY1999 earnings will be reduced by certain finance receivables and inventory writedowns, along with an increase in related reserves and other adjustments, at its Paaco subsidiary. While management anticipates that the Company will report record net income for its 1999 fiscal year, such net income will fall short of analysts' published estimates.
As a result of the accounting adjustments, Crown Group is renegotiating certain terms of the Company's acquisition of its ownership interest in Paaco. In addition, Crown is restructuring the management organization and implementing cost reductions at Paaco, while taking steps to assure the integrity of that subsidiary's accounting and reporting procedures in future periods.
Management of the Company is working very closely with its independent auditors to complete the fiscal 1999 audit in order that the Company may issue a press release on fiscal 1999 results and file the Company's annual report on Form 10-K, which report is due on July 29, 1999. The Company may be required to file for an extension of the deadline for filing its Form 10-K. In connection with the completion of the fiscal 1999 audit the Company and its auditors will also determine whether and to what extent the adjustments at Paaco may affect previously reported results of operation. The Company will provide further details and more definitive information as it becomes available.
Crown Group, Inc. seeks to enhance shareholder value through the acquisition, development and operation of small-cap companies with significant growth potential. Crown Group currently owns (i) 100% of America's Car-Mart, Inc. and 80% of PAACO Automotive Group, Inc., vertically integrated used car sales and finance companies; (ii) 100% of Precision IBC, a firm specializing in the sale and rental of intermediate bulk containers; (iii) 80% of Concorde Acceptance Corporation, a sub-prime mortgage lender; (iv) 49% of Casino Magic Neuquen, a casino operator in the Province of Neuquen, Argentina; (v) 50.1% of Crown El Salvador, which develops and operates casinos in El Salvador; (vi) 80% of Home Stay Lodges, a partnership which is involved in the development and operation of extended-stay lodging facilities; and (vii) 50% of Atlantic Castings, Inc, an investment castings manufacturer of turbine engine components.
Crown Group, Inc. is headquartered in Dallas, Texas, and its common stock is traded on the Nasdaq National Market under the symbol "CNGR."
This press release includes statements that may constitute "forward-looking" statements, usually containing the words "believe," "estimate," "project," "expect," or similar expressions. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those relating to the development of the Company's businesses, continued availability of lines of credit for the Company's businesses, changes in interest rates, changes in the industries in which the Company operates, competition, dependence on existing management, the stability of Argentina's and El Salvador's governments, currency exchange rate fluctuations, the repatriation of funds from Argentina and El Salvador, domestic or global economic conditions (particularly in the states of Texas and Arkansas), changes in foreign or domestic tax laws or the administration of such laws and changes in gaming or lending laws or regulations. By making these forward-looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this release.