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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)
June 7, 2004
----------------------------
CONN'S, INC.
(Exact name of registrant as specified in charter)
Delaware
(State or other Jurisdiction of Incorporation or Organization)
000-50421 06-1672840
(Commission File Number) (IRS Employer Identification No.)
3295 College Street
Beaumont, Texas 77701
(Address of Principal Executive
Offices and zip code)
(409) 832-1696
(Registrant's telephone
number, including area code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
Item 7. Exhibits.
Exhibit 99.1 Press Release, dated June 7, 2004
Item 12. Results of Operations and Financial Condition.
On June 7, 2004, the Company issued a press release announcing earnings
for the quarter ended April 30, 2004. A copy of the press release is furnished
herewith as Exhibit 99.1 and is incorporated herein by reference.
All of the information contained in Item 7 and Item 12 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.
Date: June 7, 2004 By: /s/ C. William Frank
--------------------------------------------
C. William Frank
Executive Vice President and Chief Financial
Officer
EXHIBIT INDEX
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Exhibit No. Description
- ----------- -----------
99.1 Press Release, dated June 7, 2004
Exhibit 99.1
Conn's, Inc. Reports Record First Quarter 2005 Earnings
BEAUMONT, Texas--(BUSINESS WIRE)--June 7, 2004--Conn's, Inc.
(NASDAQ/NM:CONN), a specialty retailer of home appliances, consumer
electronics, home office products, bedding and lawn and garden
products, today announced record results for the first quarter ended
April 30, 2004.
Net income available for common stockholders for the first quarter
increased 72.8% to $7.8 million compared to $4.5 million for the first
quarter of fiscal 2004. Diluted earnings per share available for
common stockholders increased 22.2% to $0.33 from $0.27 in the prior
year. Total revenues for the quarter ended April 30, 2004 increased
11.7% to $134.9 million compared with $120.8 million for the quarter
ended April 30, 2003. This increase in revenue included net sales
increases of $11.9 million, or 11.1%, and increases from "Finance
charges and other" of $2.2 million, or 15.8%. Same store sales
(revenues earned in stores operated for the entirety of both periods)
increased 3.5% for the first quarter of fiscal 2005. On a pro forma
basis, as though all shares issued in the initial public offering were
outstanding in both periods for the full period, diluted earnings per
share increased 50.0% to $0.33 for the quarter ended April 30, 2004
from $0.22 for the quarter ended April 30, 2003.
During the first quarter, the Company continued its growth in the
Dallas/Fort Worth metroplex with the opening of two additional stores
in February and April. The Company currently operates 47 store
locations in Texas and Louisiana, of which five are located in the
Dallas/Fort Worth metroplex. The Company expects to develop additional
sites in this market and others and projects the opening of two to
three new locations in the last two quarters of fiscal 2005.
"Our strong performance in this first quarter demonstrated our
ability to drive sales without the need to over utilize low margin
promotional programs as we did last year," said Thomas J. Frank,
Conn's chairman and chief executive officer. "Our gross margin
reflects the improvements that were made in how we approached our
grand opening celebration this year and demonstrated that we could
manage the sales discount function in a more appropriate manner. Our
emphasis on track sales and our ability to take advantage of new
product opportunities in bedding and lawn and garden categories
continues to provide positive results." The Company defines track
sales as sales of smaller electronic and appliance items and other
"carry out" products that are sold inside a track area located within
the interior of each store.
EPS Guidance
The Company also issued updated guidance for the second quarter
ended July 31, 2004 of earnings per diluted share of approximately
$0.26 to $0.28. Updated guidance issued for the entire year included
earnings per diluted share of approximately $1.21 to $1.25, with
comparable store sales increases in the low to mid single digit range.
Conference Call Information
Conn's, Inc. will host a conference call and audio webcast this
morning, June 7, 2004 at 11:00 a.m., EST, to discuss financial results
for the quarter ended April 30, 2004. The webcast will be available at
www.conns.com and will be archived for one year. The webcast is also
being distributed over CCBN's Investor Distribution Network to both
institutional and individual investors. Individual investors can
listen to the call through CCBN's individual investor center at
www.fulldisclosure.com. Institutional investors can access the call
via CCBN's password protected event management site at
www.streetevents.com.
About Conn's, Inc.
The Company is a specialty retailer currently operating 47 retail
locations in Texas and Louisiana. It sells major home appliances,
including refrigerators, freezers, washers, dryers and ranges, and a
variety of consumer electronics, including projection, plasma and LCD
televisions, camcorders, VCRs, DVD players and home theater products.
The Company also sells home office equipment, lawn and garden products
and bedding, and continues to introduce additional product categories
for the home to help increase same store sales and to respond to our
customers' product needs.
Unlike many of its competitors, the Company provides in-house
credit options for its customers. Historically, it has financed over
56% of retail sales. Customer receivables are financed substantially
through an asset-backed securitization facility, from which the
Company derives servicing fee income and interest income from these
assets. The Company transfers receivables, consisting of retail
installment contracts and revolving accounts extended to its
customers, to a qualifying special purpose entity, or the issuer, in
exchange for cash and subordinated securities represented by
asset-backed and variable funding notes issued to third parties.
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 have been 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: the Company's growth strategy and
plans regarding opening new stores and entering new markets; the
Company's intention to update or expand existing stores; the Company's
estimated capital expenditures and costs related to the opening of new
stores or the update or expansion of existing stores; the Company's
cash flow from operations, borrowings from its revolving line of
credit and proceeds from securitizations to fund operations, debt
repayment and expansion; growth trends and projected sales in the home
appliance and consumer electronics industry and the Company's ability
to capitalize on such growth; relationships with the Company's key
suppliers; the results of the Company's litigation; interest rates;
weather conditions in the Company's markets; changes in the Company's
stock price; and the actual number of shares of common stock
outstanding. Further information on these risk factors is included in
the Company's filings with the Securities and Exchange Commission,
including the Company's Form 10-K filed on April 16, 2004. 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. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
Three Months Ended
April 30,
-------------------
2003 2004
--------- ---------
Revenues
Total net sales $106,687 $118,542
Finance charges and other 14,104 16,336
--------- ---------
Total revenues 120,791 134,878
Cost and Expenses
Cost of goods sold, including warehousing and
occupancy costs 77,189 84,774
Cost of parts sold, including warehousing and
occupancy costs 1,046 1,104
Selling, general and administrative expense 31,755 34,862
Provision for bad debts 1,368 1,422
--------- ---------
Total cost and expenses 111,358 122,162
--------- ---------
Operating income 9,433 12,716
Operating income as a percentage of total revenues 7.8% 9.4%
Interest expense 1,546 582
--------- ---------
Income before minority interest and income taxes 7,887 12,134
Minority interest in limited partnership - 115
--------- ---------
Income before income taxes 7,887 12,019
Total provision for income taxes 2,802 4,246
--------- ---------
Net income 5,085 7,773
Less preferred dividends (586) -
--------- ---------
Net income available for common stockholders $4,499 $7,773
========= =========
Earnings per share:
Basic $0.27 $0.34
Diluted $0.27 $0.33
Average common shares outstanding:
Basic 16,720 23,145
Diluted 16,720 23,749
CONN'S, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
Jan. 31, April 30,
2004 2004
--------- ---------
Assets
Current Assets
Cash and cash equivalents $12,942 $9,661
Interest in securitized assets and accounts
receivable, net 93,940 100,179
Inventories 53,742 57,099
Deferred income taxes 4,148 4,316
Prepaid expenses and other assets 3,031 2,338
--------- ---------
Total current assets 167,803 173,593
Non-current deferred tax assets and other costs 4,195 4,229
Total property and equipment, net 54,825 58,159
Goodwill and other 7,937 7,998
--------- ---------
Total assets $234,760 $243,979
========= =========
Liabilities and Stockholders' Equity
Current Liabilities
Notes payable $- $630
Current portion of long-term debt 338 328
Accounts payable 26,412 27,012
Fair value of derivatives 1,121 1,018
Other current liabilities 22,866 22,131
--------- ---------
Total current liabilities 50,737 51,119
Long-term debt 14,174 14,079
Non-current deferred tax liability and other 1,288 1,303
Fair value of derivatives 202 -
Minority interest in SRDS 1,769 1,829
Total stockholders' equity 166,590 175,649
--------- ---------
Total liabilities and stockholders' equity $234,760 $243,979
========= =========
CONN'S, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in thousands)
For the Three
Months Ended
April 30,
---------------
2003 2004
------- -------
Net cash provided by operating activities $3,839 $541
------- -------
Cash flows from investing activities
Purchase of property and equipment (1,709) (4,346)
Proceeds from sale of property 167 2
------- -------
Net cash used by investing activities (1,542) (4,344)
------- -------
Cash flows from financing activities
Net proceeds from exercise of stock options - 588
Net payments under bank credit facilities (1,690) (17)
Increase in debt issuance costs (270) -
Payment of promissory notes (482) -
------- -------
Net cash provided (used) by financing activities (2,442) 571
------- -------
Impact on cash of consolidation of SRDS - (49)
------- -------
Net change in cash (145) (3,281)
Cash and cash equivalents
Beginning of the year 2,448 12,942
------- -------
End of the year $2,303 $9,661
======= =======
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION
PRO FORMA EARNINGS PER SHARE
(in thousands, except earnings per share)
Three Months
Ended
April 30,
---------------
2003 2004
------- -------
Net income available for common stockholders $4,499 $7,773
Add preferred dividends 586 -
------- -------
Pro forma net income $5,085 $7,773
======= =======
Total shares outstanding pre-IPO 16,720 16,720
Shares issued in IPO, including over-allotment 4,622 4,622
Conversion of preferred stock into common 1,712 1,712
Weighted exercise of options - 91
Dilution due to outstanding options - 604
------- -------
Pro forma shares outstanding 23,054 23,749
======= =======
Pro forma diluted earnings per share $0.22 $0.33
======= =======
Reconciliation of pro forma shares outstanding to
presentation according to GAAP:
Pro forma shares outstanding 23,054 23,749
Adjustment since shares were not outstanding for
the full year (6,334) -
------- -------
Weighted diluted outstanding shares according to
GAAP 16,720 23,749
======= =======
The use of pro forma information is considered necessary to provide
the reader with more comparable earnings per share information year
over year. As a result of the IPO transaction, the additional shares
issued were significant relative to the shares outstanding in the
prior year and preferred dividends are no longer accrued or paid.
Consequently, the shares outstanding have been adjusted to reflect the
IPO transaction as though it took place on Feb. 1, 2003 and preferred
dividends have been eliminated in all periods in order to compute
earnings per share on a more comparable basis.
CALCULATION OF GROSS MARGIN PERCENTAGE
(dollars in thousands)
Three Months Ended
April 30,
-------------------
2003 2004
--------- ---------
Total revenues $120,791 $134,878
Less cost of goods and parts sold, including
warehousing and occupancy cost (78,235) (85,878)
--------- ---------
Gross margin dollars $42,556 $49,000
========= =========
Gross margin percentage 35.2% 36.3%
CONTACT: Conn's, Inc., Beaumont
Thomas J. Frank, 409-832-1696 Ext. 3218