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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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 25, 2006
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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)
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 Securities Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) 12 under the
Securities Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) 12 under the
Securities Act (17 CFR 240.13e-2(c))
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Item 2.02 Results of Operations and Financial Condition.
On August 25, 2006, the Company issued a press release announcing its
estimate of diluted earnings per share for the quarter and the six months ended
July 31, 2006, in lieu of its normal earnings release as it conducts an internal
review of its accounting for its interest in securitized assets. The press
release further announced the adoption of a stock repurchase program by the
Company's Board of Directors. The press release also contains the announcement
of the postponement of the Company's earnings conference call.
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 25, 2006
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.
Date: August 25, 2006 By: /s/ David L. Rogers
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David L. Rogers
Chief Financial Officer
EXHIBIT INDEX
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Exhibit No. Description
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99.1 Press Release, August 25, 2006
Exhibit 99.1
Conn's, Inc. Reports Preliminary Earnings for the Quarter and Six Months
Ended July 31, 2006 and Announces Adoption of Stock Repurchase Program
BEAUMONT, Texas--(BUSINESS WIRE)--Aug. 25, 2006--Conn's, Inc.
(NASDAQ/NM:CONN), a specialty retailer of home appliances, consumer
electronics, computers, mattresses, furniture and lawn and garden
products, today announced preliminary earnings estimates for the
quarter and six months ended July 31, 2006, pending an internal review
of its accounting for its interest in securitized assets. The Company
believes that such assets may be understated by as much as $15
million, and after completion of its review may be required to restate
its financial statements for prior years and the first quarter of this
year. In light of this ongoing review, the Company will withhold the
usual presentation of financial statements in this press release and
instead offer its insight into its estimate and expectation of
earnings per diluted share for the quarter and six months ended July
31, 2006. Additionally, the Company will reschedule its conference
call until after its final earnings are released, which is expected to
be on or before September 8, 2006.
In its regularly scheduled board meeting on August 24, 2006, the
Company's Board of Directors authorized the Company to repurchase up
to $50 million of the Company's common stock citing the current
valuation of the stock in the marketplace. Such repurchases may be
effected at the discretion of the Company's management from time to
time by open market or privately-negotiated transactions, consistent
with the applicable regulatory and contractual requirements, including
applicable debt covenants and will be dependent on market conditions
and price.
Diluted earnings per share available for common stockholders are
expected to be in the range of $0.35 to $0.36 for the quarter ending
July 31, 2006. Total revenues for the quarter ended July 31, 2006, are
expected to be in the range of $183.1 million to $183.2 million,
including net sales of $163.6 million and "Finance charges and other"
of between $19.5 million and $19.6 million. Same store sales (revenues
earned in stores operated for the entirety of both periods) increased
7.2% for the second quarter of fiscal 2007.
Diluted earnings per share available for common stockholders are
expected to be in the range of $0.82 to $0.85 for the six months ended
July 31, 2006. Total revenues for the six months ended July 31, 2006,
are expected to be in the range of $375.2 million to $376.4 million
including net sales of $335.3 million and "Finance charges and other"
of between $39.9 million and $41.1 million. Same store sales (revenues
earned in stores operated for the entirety of both periods) increased
11.7% for the first six months of fiscal 2007.
As previously disclosed, during the third quarter of fiscal 2006
Hurricane Rita impacted a portion of the Company's retail market area
and the staffing levels of its credit collection operations. This
resulted in higher delinquencies for receivables in the credit
portfolio serviced by the Company and directly affected the Company's
ability to collect delinquent receivables. Delinquencies continue at
higher than expected levels and have produced loan losses greater than
had been previously estimated. The losses affect securitization income
received from the Company's credit subsidiary which are reflected in
"Finance charges and other." In a press release on August 8, 2006, and
a conference call on August 9, 2006, the Company discussed the impact
in more detail and described the operational steps being taken to
address the issue.
"We have found it necessary to refocus our attention on
fundamentals as we face considerable 'headwinds' in our business, many
of which have resulted from the catastrophic storms of last year,"
said Thomas J. Frank, Conn's Chairman and Chief Executive Officer. "We
have faced similar difficulties in the past and we are up to the
challenge of dealing with them successfully. While our attention may
be focused on the challenges, the business continues to thrive with
positive comps and earnings growth for the year taken as a whole."
During the first half of the year, the Company opened two new
stores in its Houston market bringing the total store count to 58. By
the end of January 2007, the Company expects to operate approximately
61 to 62 stores.
The Company expects to have its review and any resulting
restatements completed within the timeframe required by the Securities
and Exchange Commission for the filing of the Company's quarterly
statements. The Company will release its earnings for the quarter and
six months ended July 31, 2006, prior to its filing of Form 10-Q.
EPS Guidance
On August 8, 2006, the Company reduced its guidance for fiscal
year 2007 (the year ending January 31, 2007) of earnings per diluted
share from a range of $1.85 to $1.90 to a range of $1.60 to $1.75. The
Company cited changes in its operating environment, most notably
higher loan losses on the finance subsidiary's credit portfolio, for
the reduction in its estimate. The earnings guidance includes the
effect for changes resulting from the required adoption of Statement
of Financial Accounting Standards No. 123R, Share-Based Payment, on
February 1, 2006.
About Conn's, Inc.
The Company is a specialty retailer currently operating 58 retail
locations in Texas and Louisiana: twenty stores in the Houston area,
twelve in the Dallas/Fort Worth Metroplex, eight in San Antonio, five
in Austin, four in Southeast Texas, one in Corpus Christi, two in
South Texas and six stores in Louisiana. It sells major home
appliances, including refrigerators, freezers, washers, dryers and
ranges, and a variety of consumer electronics, including projection,
plasma, DLP and LCD televisions, camcorders, computers and computer
peripherals, DVD players, portable audio 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. Historically, it has
financed, on average, approximately 57% 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. The Company transfers receivables,
consisting of retail installment contracts and revolving accounts for
credit extended to its customers, to a qualifying special purpose
entity 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 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: the completion of internal review of
its accounting for its interest in securitized assets; 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 annual report on Form 10-K filed
on March 30, 2006 and the current report on Form 8-K filed in
connection with this press release. 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.
CONTACT: Conn's, Inc.
Thomas J. Frank, 409-832-1696 Ext. 3218
David L. Rogers, 409-832-1696 Ext. 3341