SecProbe.io

CORRESP
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filename1.htm

                  Corporate
      Office

                  802
      SE Plaza Avenue, Suite 200

                  Bentonville,
      AR  72712

                  Phone:  (479)
      464-9944

    May 13,
2008

    H.
Christopher Owings

    Assistant
Director

    Securities
and Exchange Commission

    Mail Stop
3561

    Washington,
D.C. 20549

    RE:          America's
CAR-MART, Inc.

    Form 10-K for Fiscal Year Ended April
30, 2008

    Filed July 3, 2008

    Definitive Proxy Statement on Schedule
14A

    Filed August 28, 2008

    Form
10-Qs for the Quarterly Periods Ended July 31, 2008, October 31, 2008 and
January 31, 2009

    Filed
September 9, 2008, December 5, 2008 and March 9, 2009

    Form
8-K

    Filed
June 26, 2008

    File No.
000-14939

    Dear Mr.
Owings:

    Please find our response to your
comments dated April 16, 2009 related to the above filings.  Items in
italics represent
proposed changes/additions to the filing and section in question.

    Form 10-K for Fiscal Year
Ended April 30, 2008

    Management’s Discussion and
Analysis of Financial Condition and Results of Operations, page
18

    Liquidity and Capital
Resources, page 25

    1.           Please
expand this section to discuss known material trends and uncertainties that will
have, or are reasonably likely to have, a material impact on your revenues or
income or result in your liquidity decreasing or increasing in any material way.
For example, we

    note on
page 21 you discuss higher purchase costs due to the decrease in domestic new
car sales and on page 22 you reference credit losses due to your customers
having difficulty making payments under the terms of their loans. Discuss
whether you expect these trends to continue and how they may impact your plans
to expand, your available liquidity, or any other factors. Please provide
similar additional analysis concerning the quality and variability of your
earnings and cash flows so that investors can ascertain the likelihood or the
extent past performance is indicative of future performance. Please discuss
whether you expect levels to remain at this level or to increase or decrease.
Also, you should consider discussing the impact of any changes on your earnings.
Further, please discuss in reasonable detail:

        Economic
  or industry-wide factors relevant to your company, and

        Material
  opportunities, challenges, and risks in the short and long term and the
  actions you are taking to address them.

    See Item
303 of Regulation S-K and SEC Release No. 33-83 50.

    Response:

    The
following discussion is an example of the type of language to be added to future
filings:

    The
primary drivers of operating profits and cash flows include 1) top line sales 2)
interest rates on finance receivables 3) gross profit percentages on vehicle
sales and 4) credit losses.

    Cash
flows from operations in 2008 were positively impacted by 1) higher sales levels
with consistent gross margin percentages, 2) significantly lower credit losses,
3) improvements in current and deferred income taxes which resulted from the
effect of an increase in the allowance for credit losses combined with a
decrease in finance receivables during fiscal 2007, 4) increases in liabilities
for fiscal 2008 resulting from increased sales levels and deferred payment
protection plan revenue, offset by 5) other components of the change in finance
receivables including originations, collections, inventory acquired in both
repossessions and payment protections plan claims as well as the actual payment
protection plan claims. Finance receivables, net, increased by $24.2 million
during 2008.

    The
purchase price the Company pays for a vehicle has a significant effect on
liquidity and capital resources. Several external factors can negatively affect
the purchase cost of vehicles. Decreases in the overall volume of new car sales,
particularly domestic brands, leads to decreased supply in the used car market.
Also, the expansion of the customer base due in part to constrictions in
consumer credit, as well as general economic conditions, can have an overall
effect on the demand for the type of vehicle the Company purchases for sale.
Because the Company bases its selling price on the purchase cost for the
vehicle, increases in costs result in increased selling prices. As the selling
price increases it becomes more difficult to keep the gross profit percentage
and loan term in

        2

    line
with historical results, as the Company’s customers have limited incomes and
their car payment must remain affordable within their individual budgets. The
Company has seen increases in the cost of vehicles and resulting increases in
selling prices and terms over the last few years. Management does expect some
continuing increases in purchase costs on a going-forward basis but at a
decreasing rate. The Company has devoted significant efforts to improve its
purchasing processes to ensure adequate supply at appropriate prices. This is
expected to result in gross margin percentages and overall loan terms remaining
fairly consistent with recent experience.

    Macro-economic
factors can have a significant effect on credit losses and resulting liquidity.
General inflation, particularly within staple items such as groceries and
gasoline, as well as overall unemployment levels can have a significant effect
on collection results and ultimately credit losses. The Company has made
improvements to its business processes within the last few years to strengthen
controls and provide stronger infrastructure to support its collection efforts.
With these improvements, the Company anticipates that credit losses on a
going-forward basis will be in the range of 21-23% of sales. Significant
negative macro-economic effects could cause actual results to differ from the
anticipated range.

    The Company believes it will have
adequate liquidity to continue to grow its revenues and to satisfy its capital
needs for the foreseeable future.

    Critical Accounting
Estimates, page 27

    2.           Please
note that the critical accounting policy section is intended to highlight those
areas that require significant estimates and management judgment as well as
those areas that involve a choice of accounting policy where different policies
could produce materially different results. In future filings, please revise the
discussion of your critical accounting policies to focus on the assumptions and
uncertainties that underlie your critical accounting estimates, rather than
duplicating the disclosure of significant accounting policies in the financial
statement footnotes. Please also quantify, where material, and provide an
analysis of the impact of critical accounting estimates on your financial
position and results of operations for the periods presented, including the
effects of and reasons for changes in critical accounting estimates between
periods. In addition, please include a qualitative and quantitative analysis of
the sensitivity of reported results to reasonably likely changes in your
assumptions, judgments, and estimates, including the likelihood of obtaining
materially different results if different assumptions were applied. For example,
please expand your allowance for credit loss disclosures to more specifically
discuss the significant estimates involved in your accounting and supplement
your discussion by providing quantitative analysis. Please consider disclosing
further information about your allowance for credit loss percentage, delinquency
levels, collateral values, and other significant estimates utilized, and
addressing in more detail how the current economic downturn has impacted these
assumptions and estimates. Please refer to SEC Release No. 33-8350.

        3

    Response:

    The
Company only has one Critical Accounting Estimate as over 80% of assets are in
Finance Receivables, net. There are no other estimates that we consider to be
significant or material and as such we have focused only on the one critical
accounting estimate.

    As to
additional information, we have considered additional disclosures but as
America’s Car-Mart is the only publicly traded company in the industry we serve
and since our primary competitors are smaller mom-and-pop or regional companies,
we would like to maintain our current disclosures relating to delinquencies and
to not provide specific information on collateral values, average per loan
charge-offs or other company specific factors. We do fully disclose 30+ and 90+
delinquent accounts. Additionally, we do provide information as to the value of
inventory involved in repossessions and fully disclose all components of our
credit losses. We have first hand knowledge that our competitors review our
filings and can gain competitive benefits. To provide specific information on
average charge-off losses and collateral values could cause us competitive harm.
We do disclose the ranges of purchase prices for the vehicles we sell and the
terms of our notes.

    Excerpt
from 10-K, page 27:

    The
Company maintains an allowance for credit losses on an aggregate basis at a
level it considers sufficient to cover estimated losses in the collection of its
finance receivables. At April
30, 2008, the weighted average total loan term was 27.2 months with 19.5 months
remaining. The reserve amount in the allowance for credit losses, $44.8 million,
was 22% of the principal balance in Finance Receivables of $208.2 million, less
unearned payment protection plan revenue of $4.6 million. The estimated reserve
amount is the Company’s anticipated future net charge-offs for losses incurred
through the balance sheet date. The allowance was established at a level that
takes into account historical credit loss experience (both timing and severity
of losses), with consideration given to recent credit loss trends and changes in
loan characteristics (i.e., average amount financed, months outstanding at loss
date, term and age of portfolio), delinquency levels, collateral values,
economic conditions and underwriting and collection practices. The allowance for
credit losses is reviewed at least quarterly by management with any changes
reflected in current operations.  The calculation of the allowance for
loan losses uses the following primary factors:

              ·

              The
      number of units repossessed or charged-off as a percentage of total units
      financed over specific historical periods of
  time.

              ·

              The
      average net repossession and charge-off loss per unit during the last
      eighteen months, segregated by the number of months since the loan
      origination date, and adjusted for the expected future average net
      charge-off loss per unit.  About 50% of the charge-offs that
      will ultimately occur in the portfolio are expected to occur within 10-11
      months following the balance sheet date.  The average age of an
      account at charge-off date is 11.5
months.

        4

                ·

              The
      timing of repossession and charge-off losses relative to the date of sale
      (i.e., how long it takes for a repossession or charge-off to occur) for
      repossessions and charge-offs occurring during the last eighteen
      months.

    A
point estimate is produced by this analysis which is then supplemented by any
positive or negative subjective factors to arrive at an overall reserve amount
that management considers to be a reasonable estimate of incurred losses that
will be realized via actual charge-offs.

    Although
it is at least reasonably possible that events or circumstances could occur in
the future that are not presently foreseen which could cause actual credit
losses to be materially different from the recorded allowance for credit losses,
the Company believes that it has given appropriate consideration to all relevant
factors and has made reasonable assumptions in determining the allowance for
credit losses. Periods of
economic downturn do not necessarily lead to increased credit losses as the
Company provides basic affordable transportation to customers that, for the most
part, do not have access to public transportation.  The effectiveness
of the execution of internal policies and procedures within the collections area
has historically had a more significant effect on collection results than
macro-economic issues. A 1% change, as a percentage of
finance receivables, in the allowance for credit losses would equate to an
approximate pre-tax charge of $2 million.

    Financial Statements for the
Fiscal Year Ended April 30, 2008

    Statements of Operations,
page 33

    3.           Based
on your disclosures, we assume that your presentation of cost of sales excludes
any charges for depreciation and amortization. If our understanding is correct,
please revise the caption for cost of sales consistent with the guidance in SAB
Topic 11:B.  Additionally, please briefly describe the types of
expenses that you classify as cost of sales, either in the footnotes to your
financial statements or in MD&A, as we believe this assists your readers
when comparing you to other companies.

    Response:

    In future
filings we will revise the caption for Cost of Sales to “Cost of Sales-excluding depreciation
shown below”. Additionally, we will describe the types of expenses that
are classified as cost of sales in the footnotes to the financial statements.
These items include costs incurred to ready the vehicle for sale such as license
and title costs, gasoline, transport services, repairs, etc.

    Note B – Summary of
Significant Accounting Policies, page 36

    4.           We
assume by the lack of segment disclosures that you have one reportable segment.
Please tell us if you aggregate any operating segments into your single
reportable segment. If so, please tell us how your operating segments are
structured and how they meet the aggregation criteria of paragraph 17 of SFAS
131, including how you

        5

    determined the aggregated operating
segments have similar long-term average gross margins, and disclose that
operating segments have been aggregated in accordance with paragraph 26.(a.) of
SFAS 131. If you only have one operating and reportable segment under SFAS 131,
please explain to us how you reached this conclusion, and consider clearly
disclosing this fact as we believe this provides useful information to your
investors about how management views your company.

    Response:

    The
following discussion will be added to all future filings in accordance with SFAS
131:

    The
Company has one operating and reportable segment under SFAS 131. The Company
operates in the Buy Here/Pay Here segment of the used car market, also referred
to as the Integrated Auto Sales and Finance industry.  In this
industry, the nature of the sale and the financing of the transaction, financing
processes, the type of customer and the methods used to distribute the Company’s
products and services, including the actual servicing of the loans as well as
the regulatory environment in which the Company operates all have similar
characteristics.  Each of our individual lots are similar in nature
and only engage in the selling and financing of used vehicles. All individual
lots have similar operating characteristics.  As such, individual lots
have been aggregated into one operating segment.

    Finance Receivables,
Repossessions and Charge-offs and Allowance for Credit Losses, page
37

    5.           We
have reviewed your disclosures regarding your finance receivable and allowance
for credit losses and have the following comments:

              ·

              Tell
      us and revise future filings to describe in further detail how you
      determine your allowance for credit losses. Please cite the accounting
      guidance you utilize in recording your allowance and