UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date of Report:
(Date of earliest event reported)
August 26, 2010
CONN'S, INC.
(Exact name
of registrant as specified in charter)
Delaware
(State
or other Jurisdiction of Incorporation or Organization)
000-50421
(Commission File Number) |
06-1672840 (IRS Employer Identification No.) |
|
3295 College Street
(Address of Principal Executive |
(409) 832-1696
(Registrant’s telephone
number,
including area code)
NA
(Former Name or Former Address, If Changed since Last
Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 |
Results of Operations and Financial Condition. |
On August 26, 2010, the Company issued a press release announcing its earnings for the quarter ended July 31, 2010. A copy of the press release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.
Item 9.01(c) |
Exhibits. |
Exhibit 99.1 | Press Release, dated August 26, 2010. |
All of the information contained in Item 2.02 and Item 9.01(c) in this Form 8-K and the accompanying exhibit shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be incorporated by reference in any filing under the Securities Act of 1933, as amended.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
CONN'S, INC. |
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Date: |
August 26, 2010 |
By: |
/s/ Michael J. Poppe |
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Michael J. Poppe |
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Executive Vice President and |
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Chief Financial Officer |
EXHIBIT INDEX
Exhibit No. |
Description |
99.1 | Press Release, dated August 26, 2010, for July 31, 2010 |
Earnings |
4
Exhibit 99.1
Conn’s, Inc. Reports Results for the Quarter Ended July 31, 2010
BEAUMONT, Texas--(BUSINESS WIRE)--August 26, 2010--Conn’s, Inc. (NASDAQ/NM: CONN), a specialty retailer of consumer electronics, home appliances, furniture, mattresses, computers and lawn and garden products today announced its operating results for the quarter ended July 31, 2010.
Significant items for the quarter include:
The change in total revenues was comprised of a total net sales decline of 6.0% to $178.9 million, and a decrease in finance charges and other of 13.4% to $34.8 million, as compared to the same quarter in the prior fiscal year. Same store sales (revenues earned in stores operated for the entirety of both periods) decreased 6.4% during the second quarter of fiscal 2011, as compared to the 5.2% decrease in the same quarter in the prior fiscal year. This represents the second consecutive quarter of a decrease in the same store sales decline, after declines of 31.7% in the fourth quarter of the prior fiscal year and 19.7% in the first quarter of the current fiscal year. Additionally, same store sales were positive in the month of July 2010. The sales results were impacted primarily by:
The key credit portfolio performance metrics reported for the quarter included:
More information on the credit portfolio and its performance may be found in the table included with this press release and in the Company’s filing with the Securities and Exchange Commission on Form 10-Q which will be filed later today.
The Company reported Net income of $1.7 million, or diluted earnings per share of $0.07, for the second quarter of fiscal 2011, compared to Net income of $5.2 million, or diluted earnings per share of $0.23, for the second quarter of fiscal 2010. The decline in net income was driven by reduced income before income taxes from the Company’s credit segment. The decline in earnings from the credit segment was due to the reduction in the credit portfolio balance and increased delinquencies. The portfolio balance decline and increase in delinquencies resulted in lower interest income and fees, increased selling, general and administrative expenses and a higher provision for bad debts.
Retail segment income before income taxes increased $3.2 million to $3.3 million, due primarily to expense reductions, as an increase in the gross margin percentage offset the decline in sales.
During the quarter ended July 31, 2010, the Company increased its debt balances by $9.9 million to fund growth in the credit portfolio and support the improved sales trends. The total amount immediately available for borrowing under all of the Company’s borrowing agreements at July 31, 2010, was $67.1 million.
Conference Call Information
Conn’s, Inc. will host a conference call and audio webcast today, August 26, 2010, at 10:00 AM, CDT, to discuss its financial results for the quarter ended July 31, 2010. The webcast will be available live at www.conns.com and will be archived for one year. Participants can join the call by dialing 877-754-5302 or 678-894-3020.
About Conn’s, Inc.
The Company is a specialty retailer currently operating 76 retail locations in Texas, Louisiana and Oklahoma: with 23 stores in the Houston area, 20 in the Dallas/Fort Worth Metroplex, nine in San Antonio, five in Austin, five in Southeast Texas, one in Corpus Christi, four in South Texas, six in Louisiana and three in Oklahoma. It sells home appliances, including refrigerators, freezers, washers, dryers, dishwashers and ranges, and a variety of consumer electronics, including LCD, LED, 3-D, plasma and DLP televisions, camcorders, digital cameras, computers and computer accessories, Blu-ray and DVD players, video game equipment, portable audio, MP3 players, GPS devices and home theater products. The Company also sells lawn and garden products, furniture and mattresses, and continues to introduce additional product categories for the home to help respond to its customers' product needs and to increase same store sales. Unlike many of its competitors, the Company provides flexible in-house credit options for its customers. In the last three years, the Company financed, on average, approximately 61% of its retail sales.
This press release contains forward-looking statements that involve risks and uncertainties. Such forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will," "expect," "intend," "could," "estimate," "should," "anticipate," or "believe," or the negative thereof or variations thereon or similar terminology. Although the Company believes that the expectations reflected in such forward-looking statements will prove to be correct, the Company can give no assurance that such expectations will prove to be correct. The actual future performance of the Company could differ materially from such statements. Factors that could cause or contribute to such differences include, but are not limited to:
Further information on these risks is included in the Company's filings with the Securities and Exchange Commission, including the Company's annual report on Form 10-K/A filed on April 12, 2010 and the Company's quarterly report on Form 10-Q/A filed on July 7, 2010. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except as required by law, the Company is not obligated to publicly release any revisions to these forward-looking statements to reflect the events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.
Conn's, Inc. CONDENSED, CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (in thousands, except earnings per share) |
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Three Months Ended
July 31, |
Six Months Ended
July 31, |
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2009 | 2010 | 2009 | 2010 | ||||||||||||
Revenues | |||||||||||||||
Total net sales | $ | 190,300 | $ | 178,902 | $ | 390,451 | $ | 341,941 | |||||||
Finance charges and other | 40,128 | 34,763 | 79,828 | 69,243 | |||||||||||
Total revenues | 230,428 | 213,665 | 470,279 | 411,184 | |||||||||||
Cost and expenses | |||||||||||||||
Cost of goods sold, including warehousing | |||||||||||||||
and occupancy costs | 140,761 | 130,276 | 286,631 | 244,433 | |||||||||||
Cost of parts sold, including warehousing | |||||||||||||||
and occupancy costs | 2,797 | 2,120 | 5,384 | 4,492 | |||||||||||
Selling, general and administrative expense | 64,979 | 63,478 | 127,717 | 124,221 | |||||||||||
Provision for bad debts | 8,026 | 9,048 | 13,670 | 15,322 | |||||||||||
Total cost and expenses | 216,563 | 204,922 | 433,402 | 388,468 | |||||||||||
Operating income | 13,865 | 8,743 | 36,877 | 22,716 | |||||||||||
Interest expense, net | 5,342 | 5,875 | 10,346 | 10,660 | |||||||||||
Other (income) expense, net | (13 | ) | 12 | (21 | ) | 183 | |||||||||
Income before income taxes | 8,536 | 2,856 | 26,552 | 11,873 | |||||||||||
Provision for income taxes | 3,312 | 1,171 | 9,972 | 4,641 | |||||||||||
Net income | $ | 5,224 | $ | 1,685 | $ | 16,580 | $ | 7,232 | |||||||
Earnings per share | |||||||||||||||
Basic | $ | 0.23 | $ | 0.07 | $ | 0.74 | $ | 0.32 | |||||||
Diluted | $ | 0.23 | $ | 0.07 | $ | 0.73 | $ | 0.32 | |||||||
Average common shares outstanding | |||||||||||||||
Basic | 22,454 | 22,484 | 22,450 | 22,479 | |||||||||||
Diluted | 22,660 | 22,488 | 22,675 | 22,483 |
Conn's, Inc. - Retail Segment CONDENSED FINANCIAL INFORMATION (unaudited) (in thousands) |
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Three Months Ended
July 31, |
Six Months Ended
July 31, |
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2009 | 2010 | 2009 | 2010 | ||||||||||||
Total revenues | $ | 193,005 | $ | 182,311 | $ | 395,568 | $ | 348,607 | |||||||
Cost and expenses | |||||||||||||||
Cost of goods and parts sold, including | |||||||||||||||
warehousing and occupancy costs | 143,558 | 132,396 | 292,015 | 248,925 | |||||||||||
Selling, general and administrative expense | 49,407 | 46,407 | 96,303 | 89,604 | |||||||||||
Provision for bad debts | 7 | 207 | 66 | 293 | |||||||||||
Total cost and expenses | 192,972 | 179,010 | 388,384 | 338,822 | |||||||||||
Operating income | 33 | 3,301 | 7,184 | 9,785 | |||||||||||
Other (income) expense, net | (13 | ) | 12 | (21 | ) | 183 | |||||||||
Segment income before income taxes | $ | 46 | $ | 3,289 | $ | 7,205 | $ | 9,602 |
Conn's, Inc. - Credit Segment CONDENSED FINANCIAL INFORMATION (unaudited) (in thousands) |
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Three Months Ended
July 31, |
Six Months Ended
July 31, |
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2009 | 2010 | 2009 | 2010 | |||||||||||
Total revenues | $ | 37,423 | $ | 31,354 | $ | 74,711 | $ | 62,577 | ||||||
Cost and expenses | ||||||||||||||
Selling, general and administrative expense | 15,572 | 17,071 | 31,414 | 34,617 | ||||||||||
Provision for bad debts | 8,019 | 8,841 | 13,604 | 15,029 | ||||||||||
Total cost and expenses | 23,591 | 25,912 | 45,018 | 49,646 | ||||||||||
Operating income | 13,832 | 5,442 | 29,693 | 12,931 | ||||||||||
Interest expense, net | 5,342 | 5,875 | 10,346 | 10,660 | ||||||||||
Segment income (loss) before income taxes | $ | 8,490 | $ | (433 | ) | $ | 19,347 | $ | 2,271 |
Conn's, Inc. CONDENSED, CONSOLIDATED BALANCE SHEETS (in thousands) |
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January 31, | July 31, | |||||||
2010 | 2010 | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 12,247 | $ | 8,466 | ||||
Other accounts receivable, net | 23,254 | 28,753 | ||||||
Customer accounts receivable, net | 368,304 | 355,861 | ||||||
Inventories | 63,499 | 99,106 | ||||||
Deferred income taxes | 15,237 | 13,830 | ||||||
Prepaid expenses and other assets | 16,198 | 7,785 | ||||||
Total current assets | 498,739 | 513,801 | ||||||
Non-current deferred income tax asset | 5,485 | 6,364 | ||||||
Long-term customer accounts receivable, net | 318,341 | 305,584 | ||||||
Total property and equipment, net | 59,703 | 54,070 | ||||||
Other assets, net | 10,198 | 12,518 | ||||||
Total assets | $ | 892,466 | $ | 892,337 | ||||
Liabilities and Stockholders' Equity | ||||||||
Current Liabilities | ||||||||
Current portion of long-term debt | $ | 64,055 | $ | 122,664 | ||||
Accounts payable | 39,944 | 62,115 | ||||||
Accrued compensation and related expenses | 5,697 | 5,245 | ||||||
Accrued expenses | 31,685 | 26,726 | ||||||
Other current liabilities | 17,236 | 14,822 | ||||||
Total current liabilities | 158,617 | 231,572 | ||||||
Long-term debt | 388,249 | 307,073 | ||||||
Other long-term liabilities | 6,437 | 5,995 | ||||||
Total stockholders' equity | 339,163 | 347,697 | ||||||
Total liabilities and stockholders' equity | $ | 892,466 | $ | 892,337 |
CALCULATION OF GROSS MARGIN PERCENTAGES (dollars in thousands) |
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Three Months Ended | Six Months Ended | |||||||||||||||||
July 31, | July 31, | |||||||||||||||||
2009 | 2010 | 2009 | 2010 | |||||||||||||||
A | Product sales | $ | 175,389 | $ | 166,378 | $ | 360,206 | $ | 316,743 | |||||||||
B | Repair service agreement commissions, net | 8,859 | 8,341 | 18,649 | 16,258 | |||||||||||||
C | Service revenues | 6,052 | 4,183 | 11,596 | 8,940 | |||||||||||||
D | Total net sales | 190,300 | 178,902 | 390,451 | 341,941 | |||||||||||||
E | Finance charges and other | 40,128 | 34,763 | 79,828 | 69,243 | |||||||||||||
F | Total revenues | 230,428 | 213,665 | 470,279 | 411,184 | |||||||||||||
G | Cost of goods sold, including warehousing | |||||||||||||||||
and occupancy cost | (140,761 | ) | (130,276 | ) | (286,631 | ) | (244,433 | ) | ||||||||||
H | Cost of parts sold, including warehousing | |||||||||||||||||
and occupancy cost | (2,797 | ) | (2,120 | ) | (5,384 | ) | (4,492 | ) | ||||||||||
I | Gross margin dollars (F+G+H) | $ | 86,870 | $ | 81,269 | $ | 178,264 | $ | 162,259 | |||||||||
Gross margin percentage (I/F) | 37.7 | % | 38.0 | % | 37.9 | % | 39.5 | % | ||||||||||
J | Retail margin dollars (A+B+G) | $ | 43,487 | $ | 44,443 | $ | 92,224 | $ | 88,568 | |||||||||
Retail margin percentage (J/(A+B)) | 23.6 | % | 25.4 | % | 24.3 | % | 26.6 | % |
MANAGED PORTFOLIO STATISTICS For the periods ended January 31, 2007, 2008, 2009 and 2010 and July 31, 2009 and 2010 (dollars in thousands, except average outstanding balance per account) |
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January 31, | July 31, | ||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2009 | 2010 | ||||||||||||||||||||
Total accounts | 459,065 | 510,922 | 537,957 | 551,312 | 537,261 | 533,044 | |||||||||||||||||||
Total outstanding balance | $ | 569,551 | $ | 654,867 | $ | 753,513 | $ | 736,041 | $ | 745,878 | $ | 706,339 | |||||||||||||
Average outstanding balance per account | $ | 1,241 | $ | 1,282 | $ | 1,401 | $ | 1,335 | $ | 1,388 | $ | 1,325 | |||||||||||||
60+ day delinquency | $ | 37,662 | $ | 49,778 | $ | 55,141 | $ | 73,391 | $ | 57,042 | $ | 63,644 | |||||||||||||
Percent delinquency | 6.6 | % | 7.6 | % | 7.3 | % | 10.0 | % | 7.6 | % | 9.0 | % | |||||||||||||
Percent of portfolio reaged | 17.8 | % | 16.6 | % | 18.7 | % | 19.6 | % | 18.9 | % | 18.4 | % | |||||||||||||
Net charge-off ratio (YTD annualized) | 3.3 | % | 2.9 | % | 3.2 | % | 3.9 | % | 3.2 | % | 4.6 | % | |||||||||||||
CONN-F
CONTACT:
Conn’s, Inc., Beaumont
Chief Financial Officer
Michael
J. Poppe, (409) 832-1696 Ext. 3294