Crown Group Anticipated FY1999 Diluted Earnings
29 July 1999
Crown Group, Inc. Anticipates Reporting FY1999 Diluted Earnings Per Share of $1.60-$1.70 After Writedowns Associated With Paaco Automotive Group
DALLAS--July 28, 1999--Crown Group, Inc. (Nasdaq National Market: "CNGR"), today announced that it expects to report earnings per diluted share of $1.60-$1.70 for the fiscal year ended April 30, 1999, after taking into account certain accounting adjustments at its 80%-owned Paaco Automotive Group subsidiary ("Paaco").During the course of its year-end closing process, the Company discovered certain accounting irregularities and errors at Paaco Automotive Group, some of which pre-dated 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. On a preliminary basis, Crown estimates that its FY1999 net income (after adjustments) should range between $16.5-$17.5 million ($1.60-$1.70 per diluted share on an estimated 10.4 million diluted shares outstanding).
In addition, Crown also announced that it is in the process of finalizing negotiations with the minority shareholders of Paaco (from whom Crown purchased its majority interest in Paaco), to receive a return of shares of Crown stock and certain other receivables currently valued at approximately $4 million.
The Company also announced the resignation of Daniel Chu, former president of Paaco Automotive Group, Inc. Crown is working with Paaco's remaining senior management to implement cost reductions and improve future operating results, 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 expects to file for a fifteen-day extension of the deadline for filing its Form 10-K and expects to complete the filing of its Form 10-K within that period.
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.
For further information, please contact Edward R. McMurphy or Ed Preuss, Jr. at (972) 717-3423 or R. Jerry Falkner, CFA, Investor Relations Counsel at (800) 377-9893 or www.rjfalkner.com