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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)
September 8, 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))
Item 2.02 Results of Operations and Financial Condition.
On September 8, 2004, the Company issued a press release to clarify and
provide supplemental information regarding its earnings release for the quarter
ended July 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 September 8, 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.
2
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: September 9, 2004 By: /s/ C. William Frank
-----------------------------------------
C. William Frank
Executive Vice President and Chief
Financial Officer
3
EXHIBIT INDEX
-------------
Exhibit No. Description
- ----------- -----------
99.1 Press Release, dated September 8, 2004
4
Exhibit 99.1
Conn's, Inc. Provides Supplemental Information Regarding Quarter 2005 Earnings
BEAUMONT, Texas--(BUSINESS WIRE)--Sept. 8, 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 provided supplemental information recording its recent
earnings release for the quarter and six months ended July 31, 2004.
Subsequent to the earnings conference call, several potential
investors requested additional information regarding the Company's
extended term promotional credit programs that helped drive same store
sales increases of 7.2% for the quarter ended July 31, 2004 and 5.3%
for the six months ended July 31, 2004. In accordance with Company
policy and the Securities and Exchange Commission's Regulation FD, the
Company has elected to respond to such questions in a manner that will
afford all investors an opportunity to access the same information at
the same time.
The following reflects supplemental information that the Company
believes will be helpful in understanding the impact of these
promotional programs on its operations:
- -0-
*T
1. As the Company has previously announced, in the quarter ended April
30, 2004, the Company extended beyond one year its promotional
credit programs, which provides for a reversal of accrued interest
in the event that the customer timely pays their account within a
pre-determined time period. The Company does not accrue interest
on those accounts that are expected to make all payments in a
timely manner. In addition to the Company's traditional 90 day,
six month and one year programs, these new promotional programs
extend credit on a "same as cash" basis for 18 and 24 months if
the customer timely pays off their account through equal monthly
payments as originally agreed. In addition, the Company also began
selectively offering a 36-month "interest free" program whereby
interest is only assessed prospectively if the customer does not
honor the monthly payment terms under which the account is
established.
2. Since these promotional programs extended payment beyond one year,
the Company implemented the provisions of APB 21, Interest on
Receivables and Payables, whereby it discounts the initial sale to
its present value and accretes this discount as interest income
over the expected life of the note.
As of, and for the quarter and six months ended July 31, 2004, the
following results and data are noted on these extended term
promotional credit programs (dollars in thousands):
Three Month Six Months
Period Period
Total product sales generated $8,501 $10,697
Total service maintenance/insurance
premium financed (a) 1,815 2,392
-------------- -------------
Amount of extended term promotional
credit $10,316 $13,089
============== =============
Impact of initial discount on recorded
sale $(716) $(929)
Recorded accretion of interest income in
current period 143 173
As of
July 31, 2004
Balance of extended term promotional
credit portfolio $13,089
Percent extended term promotional credit
portfolio to total credit portfolio 3.4%
Scheduled additional accretion of
interest income on existing extended
promotional credit accounts through the
end of fiscal year 2005 $458
(a) A portion of the Company's customers purchase service maintenance
agreements or credit insurance at the time of the purchase of the
product. The premium on both policies is also eligible to be
financed through the extended promotional credit program. The
amount above represents the gross premium financed; only
commissions earned on the sale of these products is recorded as
income to the Company.
The Company has determined that approximately 57% of these
extended promotional credit sales represented sales to new
customers that had not previously financed their purchase through
the Company.
3. Based on the stricter underwriting standards associated with these
new programs, the Company, generally, has attracted a higher rated
credit customer that the Company believes will have an even higher
on-time payment rate than the Company's average credit customer
and actually improve the performance of the overall credit
portfolio. The design of this new program is intended to offer
these programs only to those customers whose credit scores are
generally above the average credit score of our existing customer.
*T
Chairman and Chief Executive Officer, Thomas J. Frank, commented
as follows on the new credit programs, "We are seeing an entirely new
customer as a result of these programs, one that traditionally was not
interested in our credit. We believe the fact that we can offer these
new credit programs allows us to sell additional product at a fair
margin, generate additional ancillary business and enhance the quality
of our portfolio by reducing the overall delinquency and write-off
rate. We view this program as a very positive approach to increasing
our top and bottom line performance."
About Conn's, Inc.
The Company is a specialty retailer currently operating 48 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: changes in interest rates, 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.
CONTACT: Conn's, Inc., Beaumont
Thomas J. Frank, 409-832-1696 Ext. 3218