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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)
December 2, 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)
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 December 2, 2004, the Company issued a press release announcing earnings
for the quarter and nine months ended October 31, 2004. 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 December 2, 2004
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: December 2, 2004 By: /s/ C. William Frank
----------------------------
C. William Frank
Executive Vice President and
Chief Financial Officer
EXHIBIT INDEX
-------------
Exhibit No. Description
- ----------- -----------
99.1 Press Release, dated December 2, 2004
Exhibit 99.1
Conn's, Inc. Reports Record Third Quarter 2005 Earnings
BEAUMONT, Texas--(BUSINESS WIRE)--Dec. 2, 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 quarter and nine months ended October 31, 2004.
Net income available for common stockholders for the third quarter
increased 33.3% to $6.3 million compared to $4.7 million for the third quarter
of last year. Diluted earnings per share available for common stockholders
decreased 3.6% to $0.27 from $0.28 in the prior year. On a pro forma basis, as
though all shares issued in the initial public offering were outstanding in both
periods for the full period and IPO proceeds were used to pay-off existing
balance sheet debt, diluted earnings per share increased 12.5% to $0.27 for the
quarter ended October 31, 2004 from $0.24 for the quarter ended October 31,
2003. Total revenues for the quarter ended October 31, 2004 increased 13.2% to
$132.9 million compared with $117.4 million for the quarter ended October 31,
2003. This increase in revenue included net sales increases of $12.1 million, or
11.8%, and increases from Finance charges and other of $3.4 million, or 23.4%.
Same store sales (revenues earned in stores operated for the entirety of both
periods) increased 1.5% for the third quarter of fiscal 2005. Increased sales in
bedding, computers and other new product categories included in the track
accounted for much of the increase in same store sales. Seven retail locations
that were not open for three consecutive months in each period, accounted for
substantially all of the remainder of the net sales increase.
Total revenues for the nine months ended October 31, 2004 increased 13.8%
to $404.4 million compared with $355.3 million for the nine months ended October
31, 2003. This increase in revenue included net sales increases of $40.1
million, or 12.8%, and increases from Finance charges and other of $9.0 million,
or 21.0%. Same store sales increased 4.0% for the first nine months of fiscal
2005. Net income available for common stockholders for the nine months ended
October 31, 2004 increased 47.3% to $20.9 million compared to $14.2 million for
the first nine months of last year. Diluted earnings per share available for the
common stockholder increased 3.5% to $0.88 from $0.85 in the prior year. On a
pro forma basis, as though all shares issued in the initial public offering were
outstanding in both periods for the full period and IPO proceeds were used to
pay-off existing balance sheet debt, diluted earnings per share increased 18.9%
to $0.88 for the nine months ended October 31, 2004 from $0.74 for the nine
months ended October 31, 2003.
"We continue to be pleased with our progress since becoming a public
company," said Thomas J. Frank, Conn's Chairman and Chief Executive Officer.
"Our strategy is to grow profitably by (1) increasing our market share in our
core categories (major appliances and home electronics) in existing markets; (2)
enhancing our assortment of new product categories (digital electronics and
portable electric appliances, bedding, and lawn and garden) to stimulate
increases in same store sales; and (3) opening new stores in selected markets.
Because of our execution of this strategy, we continue to enjoy revenue
increases, both from same store sales increases and new stores, over those
reported in the previous periods. New stores that were added this quarter
included our sixth store in the Dallas/Fort Worth Metroplex and our first store
in McAllen, Texas, in the south Texas Rio Grande Valley along the US/Mexican
border."
EPS Guidance
The Company also issued guidance for the fourth quarter ended January 31,
2005 of earnings per diluted share of approximately $0.36 to $0.38. Guidance
issued for the entire year continues to include earnings per diluted share of
approximately $1.24 to $1.26.
Conference Call Information
Conn's, Inc. will host a conference call and audio webcast today, December
2, 2004 at 10:00 AM, CST, to discuss financial results for the quarter and nine
months ended October 31, 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 (49) 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.
CONDENSED, CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except earnings per share)
Three Months Ended Nine Months Ended
October 31, October 31,
------------------- -------------------
2003 2004 2003 2004
--------- --------- --------- ---------
Revenues
Total net sales $102,977 $115,121 $312,419 $352,514
Finance charges and other 14,413 17,789 42,887 51,874
--------- --------- --------- ---------
Total revenues 117,390 132,910 355,306 404,388
Cost and Expenses
Cost of goods sold,
including warehousing
and occupancy costs 72,687 82,523 222,558 253,002
Cost of parts sold,
including warehousing
and occupancy costs 1,038 1,159 3,091 3,354
Selling, general and
administrative expense 33,405 37,738 97,559 110,121
Provision for bad debts 1,215 1,373 3,403 4,022
--------- --------- --------- ---------
Total cost and expenses 108,345 122,793 326,611 370,499
--------- --------- --------- ---------
Operating income 9,045 10,117 28,695 33,889
Interest expense 789 615 4,004 1,764
--------- --------- --------- ---------
Income before minority interest
and income taxes 8,256 9,502 24,691 32,125
Minority interest in limited
partnership - 113 - 359
--------- --------- --------- ---------
Income before income taxes 8,256 9,389 24,691 31,766
Total provision for income
taxes 2,933 3,074 8,761 10,888
--------- --------- --------- ---------
Net income 5,323 6,315 15,930 20,878
Less preferred dividends 587 - 1,759 -
--------- --------- --------- ---------
Net income available for common
shareholders $4,736 $6,315 $14,171 $20,878
========= ========= ========= =========
Earnings per share
Basic $0.28 $0.27 $0.85 $0.90
Diluted $0.28 $0.27 $0.85 $0.88
Average common shares
outstanding
Basic 16,720 23,206 16,720 23,175
Diluted 16,720 23,681 16,720 23,716
Conn's, Inc.
CONDENSED, CONSOLIDATED BALANCE SHEETS
(in thousands)
January 31, October 31,
2004 2004
--------------------------
Assets (unaudited)
Current assets
Cash and cash equivalents $12,942 $10,374
Interests in securitized assets and
accounts receivable, net 93,940 117,366
Inventories 53,742 60,906
Deferred income taxes 4,148 4,859
Prepaid expenses and other assets 3,031 3,515
------------- ------------
Total current assets 167,803 197,020
Non-current deferred tax asset 3,945 4,386
Total property and equipment, net 54,825 62,363
Goodwill and other assets, net 8,187 8,209
------------- ------------
Total assets $234,760 $271,978
============= ============
Liabilities and Stockholders' Equity
Current Liabilities
Notes payable $- $2,584
Current portion of long-term debt 338 307
Accounts payable 26,412 29,936
Fair value of derivatives 1,121 439
Other current liabilities 22,866 24,053
------------- ------------
Total current liabilities 50,737 57,319
Long-term debt 14,174 21,207
Non-current deferred tax liability 477 650
Deferred gain on sale of property 811 686
Fair value of derivatives 202 -
Minority interest 1,769 2,053
Total stockholders' equity 166,590 190,063
------------- ------------
Total liabilities and stockholders'
equity $234,760 $271,978
============= ============
CONN'S, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
For the Nine Months
Ended October 31,
-----------------------
2003 2004
----------- -----------
(unaudited) (unaudited)
Net cash provided by operating activities $11,661 $881
Cash flows from investing activities
Purchase of property and equipment (6,260) (14,957)
Proceeds from sale of property 1,289 1,072
----------- -----------
Net cash used by investing activities (4,971) (13,885)
Cash flows from financing activities
Net borrowings (payments) under bank credit
facilities (5,192) 9,638
Net proceeds from stock issued under employee
benefit plans - 925
Debt issuance costs (203) (75)
Payment of promissory notes (1,457) (52)
----------- -----------
Net cash provided (used) by financing
activities (6,852) 10,436
----------- -----------
Net change in cash (162) (2,568)
Cash and cash equivalents
Beginning of the year 2,448 12,942
----------- -----------
End of the year $2,286 $10,374
=========== ===========
CONN'S, INC
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION
PRO FORMA EARNINGS PER SHARE
(in thousands, except earnings per share)
Three Months Ended Nine Months Ended
October 31, October 31,
------------------ -----------------
2003 2004 2003 2004
--------- -------- -------- --------
Net income available for common
stockholders $4,736 $6,315 $14,171 $20,878
Add interest savings, net of tax,
due to debt payoff 309 - 1,098 -
Add preferred dividends 587 - 1,759 -
--------- -------- -------- --------
Pro forma net income $5,632 $6,315 $17,028 $20,878
========= ======== ======== ========
Total shares outstanding pre-IPO 16,720 16,720 16,720 16,720
Shares issued in IPO, including
over-allotment 4,622 4,622 4,622 4,622
Conversion of preferred stock into
common 1,712 1,712 1,712 1,712
Weighted issuance of shares to
benefit plans - 152 - 121
Dilution due to outstanding
options - 475 - 541
--------- -------- -------- --------
Pro forma shares outstanding 23,054 23,681 23,054 23,716
========= ======== ======== ========
Pro forma diluted earnings per
share $0.24 $0.27 $0.74 $0.88
========= ======== ======== ========
Reconciliation of pro forma shares
outstanding to presentation
according to GAAP:
Pro forma shares outstanding 23,054 23,681 23,054 23,716
Adjustment since shares were
not outstanding for the full
year (6,334) - (6,334) -
--------- -------- -------- --------
Weighted diluted outstanding
shares according to GAAP 16,720 23,681 16,720 23,716
========= ======== ======== ========
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, the retirement of debt substantially reduced interest
expense, 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 February 1, 2003, interest
expense associated with the debt that would have been paid-off has
been reduced, 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 Nine Months Ended
October 31, October 31,
------------------- -------------------
2003 2004 2003 2004
--------- --------- --------- ---------
Total revenues $117,390 $132,910 $355,306 $404,388
Less cost of goods and parts
sold, including warehousing
and occupancy cost (73,725) (83,682) (225,649) (256,356)
--------- --------- --------- ---------
Gross margin dollars $43,665 $49,228 $129,657 $148,032
========= ========= ========= =========
Gross margin percentage 37.2% 37.0% 36.5% 36.6%
CONTACT: Conn's, Inc., Beaumont
Thomas J. Frank, 409-832-1696 Ext. 3218