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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    Form 10-K
                  Annual Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of l934

For the fiscal year ended January 31, 2008      Commission File Number 000-50421

                                  CONN'S, INC.
             (Exact Name of Registrant as Specified in its Charter)

       A Delaware corporation                           06-1672840
  (State or other jurisdiction of                    (I.R.S. Employer
   incorporation or organization)                  Identification Number)

                               3295 College Street
                              Beaumont, Texas 77701
                    (Address of Principal Executive Offices)

                                 (409) 832-1696
              (Registrant's Telephone Number, Including Area Code)

           Securities registered pursuant to Section 12(b) of the Act:

          Title of Each Class               Name of Exchange on Which Registered
          -------------------               ------------------------------------

Common Stock, par value $0.01 per share    The NASDAQ Global Select Market, Inc.

           Securities registered pursuant to Section 12(g) of the Act:
                                      NONE

     Indicate by check mark if the registrant is a well-known seasoned issuer,
as defined in Rule 405 of the Securities Act. Yes [ ]  No [X]

     Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes [ ]  No [X]

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X]  No [ ]

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]

     Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
One):
Large accelerated filer [ ]  Accelerated filer [X]  Non-accelerated filer [ ]

     Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Act). Yes [ ]  No [X]

     The aggregate market value of the voting and non-voting common equity held
by non-affiliates as of July 31, 2007, was approximately $205.8 million based on
the closing price of the registrant's common stock as reported on the NASDAQ
Global Select Market, Inc.

     There were 22,374,966 shares of common stock, $0.01 par value per share,
outstanding on March 25, 2008.

                      DOCUMENTS INCORPORATED BY REFERENCE:

               Portions of the Definitive Proxy Statement for the Annual Meeting
of Stockholders to be held June 3, 2008 (incorporated herein by reference in
Part III).

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<PAGE>
                                TABLE OF CONTENTS

                                                                          Page
                                                                          ----

                                     PART I
                                     ------


ITEM 1.  BUSINESS..............................................................3


ITEM 1A. RISK FACTORS.........................................................18


ITEM 1B. UNRESOLVED STAFF COMMENTS............................................27


ITEM 2.  PROPERTIES...........................................................27


ITEM 3.  LEGAL PROCEEDINGS....................................................28


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..................28



                                     PART II
                                     -------


ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY, AND RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.............................28


ITEM 6.  SELECTED FINANCIAL DATA..............................................30


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.........................................................31


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK...........57


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA..........................58


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE..........................................................83


ITEM 9A. CONTROLS AND PROCEDURES..............................................83


ITEM 9B. OTHER INFORMATION....................................................84



                                    PART III
                                    --------


ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE...............85


ITEM 11. EXECUTIVE COMPENSATION...............................................85


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS...................................................85


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE..................................................................85


ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES...............................85



                                     PART IV
                                     -------


ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES...........................86

SIGNATURES....................................................................87

EXHIBIT INDEX.................................................................88


                                       2

<PAGE>

PART I


ITEM 1. BUSINESS.

       Unless the context  indicates  otherwise,  references  to "we," "us," and
"our" refer to the consolidated  business  operations of Conn's, Inc. and all of
its direct and indirect  subsidiaries,  limited liability  companies and limited
partnerships.

Overview

       We are a specialty retailer of home appliances and consumer  electronics.
We sell home appliances  including  refrigerators,  freezers,  washers,  dryers,
dishwashers  and ranges,  and a variety of consumer  electronics  including LCD,
plasma and DLP televisions, camcorders, digital cameras, DVD players, video game
equipment,  MP3  players  and home  theater  products.  We also sell home office
equipment,  lawn and garden equipment,  mattresses and furniture and we continue
to  introduce  additional  product  categories  for the  home  and for  consumer
entertainment,  such as GPS devices,  to help  increase  same store sales and to
respond to our customers'  product needs.  We offer over 2,800 product items, or
SKUs, at  good-better-best  price points  representing  such national  brands as
General Electric,  Whirlpool,  Electrolux,  Frigidaire,  Maytag, LG, Mitsubishi,
Samsung, Sony, Toshiba,  Hitachi, Serta, Simmons, Ashley, Lane, Hewlett Packard,
Compaq,  Poulan,  Husqvarna and Toro.  Based on revenue in 2006, we were the 9th
largest  retailer of home  appliances and the 37th largest  retailer of consumer
electronics in the United States.

       We began as a small  plumbing  and  heating  business  in 1890.  We began
selling home  appliances  to the retail market in 1937 through one store located
in Beaumont,  Texas.  We opened our second store in 1959 and have since grown to
69 stores.

       We have been known for providing  excellent customer service for over 115
years.  We believe  that our  customer-focused  business  strategies  make us an
attractive  alternative  to appliance and  electronics  superstores,  department
stores and other national,  regional and local  retailers.  We strive to provide
our customers with:

       o      a high level of customer service;

       o      highly trained and knowledgeable sales personnel;

       o      a broad range of competitively priced, customer-driven, brand name
              products;

       o      flexible  financing  alternatives  through our proprietary  credit
              programs;

       o      next day delivery capabilities; and

       o      outstanding product repair service.

       We believe that these  strategies drive repeat purchases and enable us to
generate substantial brand name recognition and customer loyalty.  During fiscal
2008, approximately 63% of our credit customers, based on the number of invoices
written, were repeat customers.

       In 1994,  we realigned  and added to our  management  team,  enhanced our
infrastructure  and refined our  operating  strategy to position  ourselves  for
future growth.  From fiscal 1994 to fiscal 1999, we  selectively  grew our store
base from 21 to 26 stores while improving  operating  margins from 5.2% to 8.7%.
Since fiscal 1999, we have generated significant growth in our number of stores,
revenue and profitability. Specifically:

       o      we have  grown from 26 stores to 69 stores,  an  increase  of over
              165%, with several more stores currently under development;

       o      total  revenues  have grown 251%,  at a compounded  annual rate of
              15.0%,  from $234.5  million in fiscal 1999, to $824.1  million in
              fiscal 2008;

                                       3

<PAGE>
       o      net  income  from  continuing  operations  has  grown  351%,  at a
              compounded  annual  rate of 18.5%,  from $8.8  million in fiscal
              1999 to $39.7 million in fiscal 2008; and

       o      our same store sales growth from fiscal 1999  through  fiscal 2008
              has averaged  8.1%; it was 3.2% for fiscal 2008.  See additional
              discussion  about same store sales under  Management's  Discussion
              and Analysis of Financial Condition and Results of Operations.

       Our  principal  executives  offices are located at 3295  College  Street,
Beaumont, Texas 77701. Our telephone number is (409) 832-1696, and our corporate
website is  www.conns.com.  We do not intend for  information  contained  on our
website to be part of this Form 10-K.

Corporate Reorganization

       We were formed as a Delaware  corporation in January 2003 with an initial
capitalization of $1,000 to become the holding company of Conn Appliances, Inc.,
a Texas corporation. Prior to the completion of our initial public offering (the
IPO) in  November  2003,  we had no  operations.  As a result  of the IPO,  Conn
Appliances, Inc. became our wholly-owned subsidiary and the common and preferred
stockholders of Conn Appliances, Inc. exchanged their common and preferred stock
on a  one-for-one  basis for the common  and  preferred  stock of  Conn's,  Inc.
Immediately  after the IPO, all preferred stock and  accumulated  dividends were
redeemed,  either  through  the  payment of cash or through  the  conversion  of
preferred stock to common stock.

Industry Overview

       The home appliance and consumer  electronics industry includes major home
appliances,  small appliances,  home office equipment and software,  LCD, plasma
and DLP televisions, and audio, video and portable electronics.  Sellers of home
appliances  and consumer  electronics  include large  appliance and  electronics
superstores,  national chains,  small regional chains,  single-store  operators,
appliance  and  consumer  electronics  departments  of selected  department  and
discount stores and home improvement centers.

       Based on data published in Twice,  This Week in Consumer  Electronics,  a
weekly  magazine  dedicated  to the home  appliances  and  consumer  electronics
industry in the United States,  the top 100 major appliance  retailers  reported
sales of  approximately  $24.0  billion  in 2006,  up  approximately  5.3%  from
reported  sales in 2005 of  approximately  $22.8 billion.  The retail  appliance
market is large and concentrated  among a few major dealers.  Sears has been the
leader  in the  retail  appliance  market,  with a  market  share of the top 100
retailers of  approximately  37% in 2006 and 39% in 2005.  Lowe's and Home Depot
held the second and third place  positions,  respectively,  in  national  market
share in 2006.  Based on revenue in 2006,  we were the 9th  largest  retailer of
home appliances in the United States.

       As measured by Twice, the top 100 consumer  electronics  retailers in the
United States reported equipment and software sales of $113.1 billion in 2006, a
4.2%  increase  from the  $108.5  billion  reported  in 2005.  According  to the
Consumer Electronics  Association,  or CEA, total industry manufacturer sales of
consumer  electronics  products in the United  States,  are  projected to exceed
$171.6  billion  in 2008,  up 6.1% from  $161.7  billion in 2007.  The  consumer
electronics market is highly fragmented.  We estimate, based on data provided in
Twice,  that the two largest  consumer  electronics  superstore  chains together
accounted for approximately  35% of the total electronics sales  attributable to
the 100 largest  retailers in 2006.  Based on revenue in 2006,  we were the 37th
largest retailer of consumer  electronics in the United States.  New entrants in
both  the  home  appliances  and  consumer  electronics   industries  have  been
successful in gaining  market share by offering  similar  product  selections at
lower prices.

       In the home  appliance  market,  many  factors  drive  growth,  including
consumer confidence, household formations and new product introductions. Product
design and innovation is rapidly becoming a key driver of growth in this market.
Products  recently  introduced  include high efficiency,  front-loading  laundry
appliances  and three door  refrigerators,  and  variations  on these  products,
including new features.  Additionally,  product appearance,  including new color
options and stainless steel appliances, is stimulating consumer interest.

                                       4

<PAGE>
       Technological  advancements  and the  introduction  of new products  have
largely driven growth in the consumer  electronics  market.  Recently,  industry
growth  has  been  fueled   primarily  by  the  introduction  of  products  that
incorporate  digital  technology,  such as portable and traditional DVD players,
digital cameras and camcorders,  digital stereo receivers, satellite technology,
MP3 products and high definition flat-panel and projection televisions.  Digital
products offer significant advantages over their analog counterparts,  including
better  clarity  and quality of video and audio,  durability  of  recording  and
compatibility with computers.  Due to these advantages,  we believe that digital
technology  will continue to drive  industry  growth as consumers  replace their
analog  products  with  digital  products.  We  believe  the  following  product
advancements will continue to fuel growth in the consumer  electronics  industry
and that they offer us the potential for significant sales growth:

       o      Digital  Television  (DTV and High  Definition  TV).  The  Federal
              Communications Commission has set a date of February 17, 2009, for
              all commercial television stations to transition from broadcasting
              analog   signals  to  digital   signals.   The  Yankee  Group,   a
              communications  and  networking   research  and  consulting  firm,
              estimates that by the year 2010, HDTV signals will be in nearly 80
              million   homes  in  the   United   States.   To  view  a  digital
              transmission, consumers will need either a digital television or a
              set-top box converter  capable of converting the digital broadcast
              for viewing on an analog set. We believe the high clarity  digital
              flat-panel  televisions  in  both  LCD,  and  plasma  formats  has
              increased the quality and  sophistication  of these  entertainment
              products and will be a key driver of digital  television growth as
              more digital and high definition  content is made available either
              through  traditional  distribution  methods  or  through  emerging
              content  delivery  systems.  As  prices  continue  to drop on such
              products,  they become increasingly  attractive to larger and more
              diverse groups of consumers.

       o      Digital Versatile Disc (DVD). According to the CEA, the DVD player
              has been the  fastest  growing  consumer  electronics  product  in
              history. First introduced in March 1997, DVD players are currently
              in 85% of U.S. homes. We believe newer technology, such as Blu-ray
              high definition  DVD, and portable  players will continue to drive
              consumer  interest  in this  entertainment  category.

       o      Portable  electronics.  GPS devices are growing in popularity with
              consumers.  With  only 10% of U. S.  drivers  currently  using GPS
              devices,  we believe this type of product represents a significant
              consumer electronics growth opportunity.

Business Strategy

       Our objective is to be the leading specialty  retailer of home appliances
and  consumer  electronics  in each of our  markets.  We strive to achieve  this
objective  through a continuing  focus on superior  execution in five key areas:
merchandising,  consumer  credit,  distribution,  product  service and training.
Successful execution in each area relies on the following strategies:

       o      Offering a broad range of customer-driven, brand name products. We
              offer  a  comprehensive  selection  of  high-quality,  brand  name
              merchandise to our customers at guaranteed low prices.  Consistent
              with our good-better-best  merchandising strategy, we offer a wide
              range  of  product  selections  from  entry-level  models  through
              high-end  models.  We  maintain  strong   relationships  with  the
              approximately 100 manufacturers and distributors that enable us to
              offer over 2,800 SKUs to our  customers.  Our principal  suppliers
              include  General  Electric,  Whirlpool,  Frigidaire,  Maytag,  LG,
              Mitsubishi,  Samsung,  Sony,  Toshiba,  Hitachi,  Serta,  Simmons,
              Ashley, Lane, Hewlett Packard, Compaq, Poulan, Husqvarna and Toro.
              To facilitate our  responsiveness  to customer demand, we test the
              sales process of all new products and obtain customers'  reactions
              to new display  formats  before  introducing  these  products  and
              display formats to all of our stores.

       o      Offering flexible financing  alternatives  through our proprietary
              credit programs. In the last three years, we financed, on average,
              approximately  59% of our retail sales through our internal credit
              programs.  We believe  our credit  programs  expand our  potential
              customer  base,  increase our sales  revenue and enhance  customer
              loyalty by providing our customers  immediate  access to financing
              alternatives  that our  competitors  typically  do not offer.  Our
              credit department makes all credit decisions internally,  entirely
              independent   of  our  sales   personnel.   We   provide   special
              consideration  to customers  with credit  history with us.  Before
              extending credit, we match our loss experience by product category
              with the  customer's  credit  worthiness to determine down payment
              amounts and other credit  terms.  This  facilitates  product sales
              while  keeping our o credit risk within an  acceptable  range.  We
              provide a full range of credit products,  including  interest-free
              programs  for  the  highest  credit  quality   customers  and  our
              secondary  portfolio  for our  credit  challenged  customers.  The
              secondary  portfolio,  which has generally  lower  average  credit
              scores than our primary portfolio, undergoes more intense internal
              underwriting  scrutiny to mitigate the  inherently  greater  risk.
              Approximately  56% of customers  who have active  credit  accounts
              with us take advantage of our in-store  payment option and come to
              our stores  each month to make  their  payments,  which we believe
              results  in  additional  sales  to  these  customers.  We  contact
              customers  with past due  accounts  daily and attempt to work with
              them to  collect  payments  in times of  financial  difficulty  or
              periods  of   economic   downturn.   Our   experience   in  credit
              underwriting and the collections process has enabled us to achieve
              an average net loss ratio of 2.9% over the past three years on the
              credit portfolio that we service for a Qualifying  Special Purpose
              Entity or QSPE.

                                       5

<PAGE>
       o      Maintaining next day distribution  capabilities.  We maintain five
              regional  distribution  centers and three other related facilities
              that  cover all of the major  markets in which we  operate.  These
              facilities are part of a sophisticated inventory management system
              that also  includes  a fleet of  approximately  105  transfer  and
              delivery   vehicles   that  service  all  of  our   markets.   Our
              distribution  operations  enable us to deliver products on the day
              after  the  sale  for  approximately  93%  of  our  customers  who
              scheduled delivery during that timeframe.

       o      Providing  outstanding  product repair  service.  We service every
              product that we sell,  and we service  only the  products  that we
              sell.  In this way,  we can  assure our  customers  that they will
              receive  our service  technicians'  exclusive  attention  to their
              product  repair needs.  All of our service  centers are authorized
              factory service  facilities  that provide  trained  technicians to
              offer in-home  diagnostic and repair service  utilizing a fleet of
              approximately  130 service vehicles as well as on-site service and
              repairs for  products  that  cannot be repaired in the  customer's
              home.

       o      Developing and retaining  highly trained and  knowledgeable  sales
              personnel.  We require all sales  personnel to  specialize in home
              appliances or consumer  electronics.  Some of our sales associates
              qualify  in more than one  specialty.  This  specialized  approach
              allows the sales  person to focus on specific  product  categories
              and  become an  expert in  selling  and  using  products  in those
              categories.   New  sales  personnel  must  complete  an  intensive
              classroom  training  program and an additional  week of on-the-job
              training riding in a delivery truck and a service truck to observe
              how we serve our customers after the sale is made.

       o      Providing  a high  level  of  customer  service.  We  endeavor  to
              maintain a very high level of customer  service as a key component
              of  our   culture,   which  has   resulted  in  average   customer
              satisfaction  levels  of  approximately  91% over  the past  three
              years. We measure customer satisfaction on the sales floor, in our
              delivery operation and in our service department by sending survey
              cards to all  customers  to whom we have  delivered or installed a
              product or made a service call.  Our customer  service  resolution
              department  attempts to address all customer  complaints within 48
              hours of receipt.

Store Development and Growth Strategy

       In addition to executing our business strategy,  we intend to continue to
achieve  profitable,  controlled growth by increasing same store sales,  opening
new stores and updating, expanding or relocating our existing stores.

       o      Increasing  same store sales.  We plan to continue to increase our
              same store sales by:

              o      continuing to offer quality products at competitive prices;

              o      re-merchandising  our  product  offerings  in  response  to
                     changes in consumer interest and demand;

              o      adding new merchandise to our existing product lines;

              o      training  our sales  personnel  to increase  sales  closing
                     rates;

              o      updating our stores as needed;

              o      continuing  to  promote  sales  of  computers  and  smaller
                     electronics,  such as video game equipment and GPS devices,
                     including the expansion of high margin accessory items;

                                       6

<PAGE>
              o      continuing  to provide a high level of customer  service in
                     sales, delivery and servicing of our products; and

              o      increasing  sales  of our  merchandise,  finance  products,
                     service maintenance agreements and credit insurance through
                     direct mail and in-store credit promotion programs.

       o      Opening new stores.  We intend to take  advantage  of our reliable
              infrastructure  and proven store model to continue the pace of our
              new store  openings  by opening  seven to ten new stores in fiscal
              2009.  This  infrastructure  includes our  proprietary  management
              information systems,  training processes,  distribution o network,
              merchandising   capabilities,   supplier  relationships,   product
              service   capabilities   and   centralized   credit  approval  and
              collection  management  processes.  We intend to expand  our store
              base in existing, adjacent and new markets, as follows:

              o      Existing  and adjacent  markets.  We intend to increase our
                     market  presence  by  opening  new  stores in our  existing
                     markets and in adjacent markets as we identify the need and
                     opportunity.  New store  openings in these  locations  will
                     allow  us to  maximize  opportunity  in those  markets  and
                     leverage our  existing  distribution  network,  advertising
                     presence, brand name recognition and reputation.  In fiscal
                     2008, we opened new stores in Houston,  Dallas, San Antonio
                     and Brownsville.

              o      New markets.  During fiscal 2008, we opened our first store
                     in Oklahoma City,  Oklahoma and have identified several new
                     markets  that  meet our  criteria  for site  selection.  We
                     intend to consider  these new  markets,  as well as others,
                     over the next  several  fiscal  years.  We  intend to first
                     address markets in states in which we currently operate. We
                     expect  that  this new  store  growth  will  include  major
                     metropolitan  markets in Texas and have also  identified  a
                     number of smaller  markets  within  Texas and  Louisiana in
                     which we expect to  explore  new store  opportunities.  Our
                     long-term  growth plans  include  markets in other areas of
                     significant population density in neighboring states.

       o      Updating,  expanding or relocating  existing stores. Over the last
              three years,  we have updated,  expanded or relocated  many of our
              stores.  We  continue  to update  our  prototype  store  model and
              implement it at new locations  and in existing  locations in which
              the market  demands  support the required  design  changes.  As we
              continue to add new stores or replace existing  stores,  we intend
              to modify our floor plan to include elements of this new model. We
              continuously  evaluate our existing and potential  sites to ensure
              our  stores  are in the o best  possible  locations  and  relocate
              stores that are not properly positioned. We typically lease rather
              than purchase our stores to retain the flexibility of managing our
              financial  commitment  to a location  if we later  decide that the
              store is  performing  below our  standards  or the market would be
              better  served  by a  relocation.  After  updating,  expanding  or
              relocating  a store,  we expect to  increase  same store  sales at
              those stores.

       The addition of new stores and new and expanded  product  categories  has
played,  and we  believe  will  continue  to  play,  a  significant  role in our
continued growth and success.  We currently  operate 69 retail stores located in
Texas,  Louisiana and Oklahoma.  We opened six stores in each of fiscal 2006 and
2007 and seven  stores in fiscal  2008.  Additionally,  we  relocated  one store
during fiscal 2008. We plan to continue our store development program by opening
an additional seven to ten new stores, or an approximately 10% increase in total
retail  floor  space,  per year and continue to update a portion of our existing
stores each year. We believe that continuing our strategies of updating existing
stores,  growing our store base and locating our stores in desirable  geographic
markets are essential for our future success.

Customers

       We do not have a significant  concentration  of sales with any individual
customer and, therefore,  the loss of any one customer would not have a material
impact on our  business.  No single  customer  accounts for more than 10% of our
total  revenues;  in fact, no single  customer  accounted for more than $500,000
(less than 0.1%) of our total  revenue of $824.1  million  during the year ended
January 31, 2008.

                                       7

<PAGE>
Products and Merchandising

       Product  Categories.  Each of our stores sells five major  categories  of
products:  home  appliances,  consumer  electronics,  computers  and  peripheral
equipment,  delivery and  installation  services and other  household  products,
including  furniture,  lawn and garden  equipment and mattresses.  The following
table,  which has been adjusted from previous  filings to ensure  comparability,
presents a summary of total revenues for the years ended January 31, 2006, 2007,
and 2008:

<TABLE>
<CAPTION>
<S>                            <C>             <C>    <C>             <C>    <C>             <C>
                                                     Year Ended January 31,
                              --------------------------------------------------------------------
                                       2006                   2007                   2008
                              ---------------------- ---------------------- ----------------------
                                 Amount        %        Amount        %        Amount        %
                              ----------- ---------- ----------- ---------- ----------- ----------

Home appliances............... $ 224,032       32.0%  $ 231,156       30.4%  $ 223,967       27.2%
Consumer electronics..........   186,671       26.6     214,285       28.2     244,040       29.6
Track.........................    99,031       14.1      94,188       12.4     102,031       12.4
Delivery......................     9,344        1.3      11,380        1.5      12,524        1.5
Lawn and garden...............    17,561        2.5      16,741        2.2      20,914        2.5
Bedding.......................    13,120        1.9      17,721        2.3      16,424        2.0
Furniture.....................    15,320        2.2      33,357        4.4      46,373        5.6
Other.........................     4,798        0.7       5,131        0.6       5,298        0.7
                              ----------- ---------- ----------- ---------- ----------- ----------
   Total product sales........   569,877       81.3     623,959       82.0     671,571       81.5
Service maintenance agreement
 commissions..................    30,583        4.3      30,567        4.0      36,424        4.4
Service revenues..............    20,278        2.9      22,411        3.0      22,997        2.8
                              ----------- ---------- ----------- ---------- ----------- ----------
   Total net sales............   620,738       88.5     676,937       89.0     730,992       88.7
Finance charges and other.....    80,410       11.5      83,720       11.0      93,136       11.3
                              ----------- ---------- ----------- ---------- ----------- ----------
       Total revenues......... $ 701,148      100.0%  $ 760,657      100.0%  $ 824,128      100.0%
                              =========== ========== =========== ========== =========== ==========
</TABLE>

Within these major product categories (excluding service maintenance agreements,
service  revenues and delivery and  installation),  we offer our customers  over
2,800  SKU's in a wide  range  of  price  points.  Most of  these  products  are
manufactured by brand name companies,  including  General  Electric,  Whirlpool,
Frigidaire,  Maytag, LG, Mitsubishi,  Samsung,  Sony, Toshiba,  Hitachi,  Serta,
Simmons,  Ashley, Lane, Hewlett Packard,  Compaq, Poulan, Husqvarna and Toro. As
part of our good-better-best  merchandising  strategy, our customers are able to
choose from products  ranging from low-end to mid- to high-end models in each of
our key product categories, as follows:

<TABLE>
<CAPTION>
<S>                               <C>                                     <C>
                 Category                        Products                            Selected Brands
                 --------                        --------                            ---------------

Home appliances                   Refrigerators, freezers, washers,       General Electric, Frigidaire,
                                  dryers, ranges, dishwashers,            Whirlpool, Maytag, LG, KitchenAid,
                                  built-ins, air conditioners and         Sharp, Friedrich, Roper, Hoover and
                                  vacuum cleaners                         Eureka

Consumer electronics              LCD, plasma, and DLP televisions,       Sony, Samsung, Mitsubishi, LG,
                                  and home theater systems                Toshiba, Hitachi, Yamaha and Bose

Track                             Computers, computer peripherals,        Hewlett Packard, Compaq, Sony,
                                  camcorders, digital cameras, DVD        Garmin, Nintendo, Microsoft and
                                  players, audio components, compact      Yamaha
                                  disc players, GPS devices, video game
                                  equipment, speakers and portable
                                  electronics (e.g. iPods)

Other                             Lawn and garden, furniture and          Poulan, Husqvarna, Toro, Rally,
                                  mattresses                              Weedeater, Ashley, Lane, Franklin,
                                                                          Simmons and Serta
</TABLE>

                                       8

<PAGE>
       Purchasing.   We  purchase  products  from  over  100  manufacturers  and
distributors. Our agreements with these manufacturers and distributors typically
cover a one or two year time period,  are renewable at the option of the parties
and are terminable upon 30 days written notice by either party. Similar to other
specialty  retailers,  we purchase a significant  portion of our total inventory
from a  limited  number  of  vendors.  During  fiscal  2008,  54.8% of our total
inventory  purchases were from six vendors,  including 13.1%,  13.0% and 9.1% of
our total inventory from Whirlpool,  Samsung and Electrolux,  respectively.  The
loss of any one or more of these key  vendors or our  failure to  establish  and
maintain  relationships  with  these and other  vendors  could  have a  material
adverse effect on our results of operations and financial condition.  We have no
indication that any of our suppliers will discontinue selling us merchandise. We
have not experienced  significant  difficulty in maintaining adequate sources of
merchandise,  and we generally  expect that adequate sources of merchandise will
continue to exist for the types of products we sell.

       Merchandising  Strategy. We focus on providing a comprehensive  selection
of high-quality  merchandise to appeal to a broad range of potential  customers.
Consistent with our  good-better-best  merchandising  strategy,  we offer a wide
range of product  selections from entry-level models through high-end models. We
primarily sell brand name warranted merchandise.  Our established  relationships
with major  appliance and electronic  vendors and our  affiliation  with NATM, a
major buying group with $3.8 billion in purchases  annually,  give us purchasing
power that allows us to offer  custom-featured  appliances and  electronics  and
provides us a competitive selling advantage over other independent retailers. As
part of our merchandising  strategy,  we operate four clearance centers with two
in Houston,  one in San Antonio and one in Dallas to help sell damaged,  used or
discontinued merchandise.

       Pricing.  We  emphasize  competitive  pricing on all of our  products and
maintain a low price  guarantee  that is valid in all  markets for 10 to 30 days
after the sale,  depending  on the product.  At most of our stores,  to print an
invoice  that  contains  pricing  other  than the price  maintained  within  our
computer  system,  sales personnel must call a special  "hotline"  number at the
corporate  office for  approval.  Personnel  staffing  this  hotline  number are
familiar with competitor pricing and are authorized to make price adjustments to
fulfill our low price guarantee when a customer presents acceptable proof of the
competitor's  lower  price.  This  centralized  function  allows us to  maintain
control of pricing and gross margins,  and to store and retrieve pricing data of
our competitors.

Customer Service

       We focus on  customer  service as a key  component  of our  strategy.  We
believe  our  next  day  delivery  option  is one of the  keys  to our  success.
Additionally, we attempt to answer and resolve all customer complaints within 48
hours of  receipt.  We track  customer  complaints  by  individual  salesperson,
delivery  person  and  service  technician.  We send  out over  38,000  customer
satisfaction  survey cards each month covering all deliveries and service calls.
Based  upon a  response  rate  from  our  customers  of  approximately  15%,  we
consistently report an average customer satisfaction level of approximately 91%.

                                       9

<PAGE>
Store Operations

       Stores.  At the end of fiscal 2008 we  operated  69 retail and  clearance
stores located in Texas, Louisiana and Oklahoma. The following table illustrates
our markets, the number of freestanding and strip mall stores in each market and
the calendar year in which we opened our first store in each market:

                                                   Number of Stores
                                                  ------------------    First
                                                    Stand     Strip     Store
Market                                              Alone      Mall     Opened
------------------------------------------------- --------- --------- ---------
Houston..........................................      6        16       1983
San Antonio/Austin...............................      6         9       1994
Golden Triangle (Beaumont, Port Arthur and
 Orange, Texas and Lake Charles, Louisiana)......      1         4       1937
Baton Rouge/Lafayette............................      1         4       1975
Corpus Christi...................................      1         0       2002
Dallas/Fort Worth................................      1        16       2003
South Texas......................................      0         3       2004
Oklahoma.........................................      0         1       2008
                                                  --------- ---------
Total                                                 16        53
                                                  ========= =========

       Our stores have an average selling space of  approximately  22,000 square
feet,  plus a rear storage area  averaging  approximately  5,500 square feet for
fast-moving or smaller  products that customers  prefer to carry out rather than
wait  for  in-home  delivery.  Four of our  stores  are  clearance  centers  for
discontinued  product models and damaged  merchandise,  returns and  repossessed
product  located in our San  Antonio,  Houston  and Dallas  markets  and contain
48,800  square feet of combined  selling  space.  All stores are open from 10:00
a.m.  to 9:30  p.m.  Monday  through  Friday,  from 9:00  a.m.  to 9:30 p.m.  on
Saturday,  and from 11:00 a.m.  to 7:00 p.m. on Sunday.  We also offer  extended
store hours during the holiday selling season.

       Approximately 77% of our stores are located in strip shopping centers and
regional malls, with the balance being stand-alone  buildings in "power centers"
of big box consumer retail stores.  All of our locations have parking  available
immediately  adjacent to the store's  front  entrance.  Our  storefronts  have a
distinctive front that guides the customer to the entrance of the store.  Inside
the store,  a large colorful tile track circles the interior floor of the store.
One side of the track leads the  customer to major  appliances,  while the other
side of the track  leads the  customer  to a large  display  of  television  and
projection  television  products.  The inside of the track contains various home
office and consumer  electronic products such as computers,  laptops,  printers,
DVD players, camcorders,  digital cameras, MP3 players, video game equipment and
GPS devices. Mattresses, furniture and lawn and garden equipment displays occupy
the rear of the sales floor.  To reach the  cashier's  desk at the center of the
track area, our customers must walk past our products. We believe this increases
sales to customers who have purchased products from us on credit in the past and
who return to our stores to make their monthly credit payments.

       We have updated many of our stores in the last three years.  We expect to
continue to update our stores as needed to address each store's  specific needs.
All of our updated  stores,  as well as our new stores,  include modern interior
selling  spaces  featuring  attractive  signage and display  areas  specifically
designed for each major product type. Our prototype  store for future  expansion
has  from  20,000  to  25,000  square  feet  of  retail  selling  space,   which
approximates  the average size of our existing stores and a rear storage area of
between  5,000 and 7,000 square feet.  Our  investment  to update our stores has
averaged  approximately  $105,000 per store over the past three years,  and as a
result of the updating,  we expect to increase same store sales at those stores.
Over the last three years, we have invested approximately $5.1 million updating,
refurbishing or relocating our existing stores.

       Site Selection.  Our stores are typically located adjacent to freeways or
major travel  arteries and in the vicinity of major retail  shopping  areas.  We
prefer to locate our stores in areas where our prominent  storefront will be the
anchor of the shopping  center or readily visible from major  thoroughfares.  We
also  attempt to locate our stores in the vicinity of major home  appliance  and
electronics  superstores.  We have typically entered major metropolitan  markets
where we can  potentially  support  at least 10 to 12 stores.  We  believe  this
number of stores allows us to optimize  advertising and  distribution  costs. We
have and may continue to elect to  experiment  with opening lower numbers of new
stores in smaller  communities  where customer  demand for products and services
outweighs any extra cost.  Other factors we consider when  evaluating  potential
markets include the distance from our distribution  centers,  our existing store
locations and store locations of our  competitors  and population,  demographics
and growth potential of the market.

                                       10

<PAGE>
       Store Economics.  We lease 64 of our 69 current store locations,  with an
average monthly rent of $20,000. Our average per store investment for the 12 new
leased  stores  we have  opened in the last two  years  was  approximately  $1.6
million, including leasehold improvements,  fixtures and equipment and inventory
(net of accounts payable).  Our total investment for the location that was built
in the last two  years  totaled  approximately  $6.8  million,  including  land,
buildings,  fixtures and equipment and inventory (net of accounts payable).  For
these new stores,  excluding the clearance center,  the net sales per store have
averaged $0.7 million per month.

       Our new stores have  typically  been  profitable  on an  operating  basis
within  their  first  three to six months of  operation  and,  on  average  have
returned our net cash  investment  in 20 months or less. We consider a new store
to be  successful if it achieves $8 million to $9 million in sales volume and 2%
to 5% in operating  margins before other  ancillary  revenues and allocations of
overhead  and  advertising  in the  first  full  year of  operation.  We  expect
successful  stores that have matured,  which generally occurs after two to three
years of operations,  to generate annual sales of  approximately  $12 million to
$15 million and 5% to 9% in operating  margins before other  ancillary  revenues
and overhead and  allocations.  However,  depending on the credit and  insurance
penetration  of an  individual  store,  we  believe  that a store  that does not
achieve these levels of sales can still  contribute  significantly to our pretax
margin.

       Personnel  and  Compensation.  We  staff  a  typical  store  with a store
manager,  an  assistant  manager,  an  average of 20 sales  personnel  and other
support  staff  including  cashiers  and/or  porters  based  on  store  size and
location.  Managers  have an average  tenure  with us  exceeding  five years and
typically have prior sales floor experience.  In addition to store managers,  we
have four district  managers that generally  oversee from seven to ten stores in
each market.  Our district managers  generally have six to twenty years of sales
experience and report to our senior vice president of sales, who has over twenty
years of sales experience.

       We  compensate  the  majority  of  our  sales  associates  on a  straight
commission arrangement, while we generally compensate store managers on a salary
basis plus incentives and cashiers at an hourly rate. In some  instances,  store
managers receive earned  commissions  plus base salary.  We believe that because
our store  compensation  plans are tied to sales,  they generally  provide us an
advantage in attracting and retaining highly motivated employees.

       Training.  New sales  personnel  must  complete  an  intensive  classroom
training program conducted in each of our markets. We then require them to spend
an  additional   week  riding  in  delivery  and  service   trucks  to  gain  an
understanding of how we serve our customers after the sale is made. Installation
and delivery staff and service  personnel receive training through an on-the-job
program in which  individuals  are assigned to an experienced  installation  and
delivery or service employee as helpers prior to working alone. In addition, our
employees benefit from on-site training conducted by many of our vendors.

       We attempt to identify  store manager  candidates  early in their careers
with us and place them in a defined  program of training.  They generally  first
attend our in-house training program,  which provides guidance and direction for
the  development of managerial and supervisory  skills.  They then attend a Dale
Carnegie  certified  management  course  that helps  solidify  their  management
knowledge and builds upon their  internal  training.  After  completion of these
training  programs,  manager  candidates  work as assistant  managers for six to
twelve  months and are then allowed to manage one of our smaller  stores,  where
they  are  supervised  closely  by the  store's  district  manager.  We give new
managers an opportunity to operate larger stores as they become more  proficient
in their  management  skills.  Each store  manager  attends  mandatory  training
sessions on a monthly basis and also attends  bi-weekly sales training  meetings
where participants receive and discuss new product information.

Marketing

       We design our  marketing and  advertising  programs to increase our brand
name recognition, educate consumers about our products and services and generate
customer traffic in order to increase sales. We conduct our advertising programs
primarily through newspapers, radio and television stations and direct marketing
through direct mail, telephone and our website. Our promotional programs include
the use of discounts, rebates, product bundling and no-interest financing plans.

                                       11

<PAGE>
       Our website,  www.conns.com,  provides  customers the ability to purchase
our products  on-line,  offers  information  about our selection of products and
provides  useful  information to the consumer on pricing,  features and benefits
for each product, in addition to required corporate governance information.  Our
website  also allows the  customers  residing in the markets in which we operate
retail  locations to apply and be considered for credit.  The website  currently
averages  approximately  11,000  visits  per day  from  potential  and  existing
customers and during  fiscal 2008,  was the source of credit  applications.  The
website is linked to a call center,  allowing us to better assist customers with
their credit and product needs.

Distribution and Inventory Management

       We typically  locate our stores in close  proximity of our five  regional
distribution centers located in Houston, San Antonio, Dallas and Beaumont, Texas
and  Lafayette,  Louisiana  and  smaller  cross-dock  facilities  in Austin  and
Harlingen,  Texas and  Oklahoma  City,  Oklahoma.  This  enables  us to  deliver
products  to  our  customers  quickly,  reduces  inventory  requirements  at the
individual  stores  and  facilitates   regionalized   inventory  and  accounting
controls.

       In our retail  stores we maintain an inventory of  fast-moving  items and
products  that  the  customer  is  likely  to  carry  out  of  the  store.   Our
sophisticated  Distribution  Inventory  Sales  computer  system  and  the use of
scanning  technology in our  distribution  centers  allow us to determine,  on a
real-time  basis, the exact location of any product we sell. If we do not have a
product  at the  desired  retail  store at the time of sale,  we can  provide it
through our distribution system on a next day basis.

       We  maintain  a fleet of  tractors  and  trailers  that  allow us to move
products from market to market and from  distribution  centers to stores to meet
customer needs. Our fleet of home delivery  vehicles enables our  highly-trained
delivery and  installation  specialists  to quickly  complete the sales process,
enhancing customer service. We receive a delivery fee based on the products sold
and the services needed to complete the delivery.  Additionally,  we are able to
complete deliveries to our customers on the day after the sale for approximately
93% of our customers who have scheduled delivery during that timeframe.

Finance Operations

       General.  We sell our  products  for cash or for  payment  through  major
credit  cards,  in  addition  to  offering  our  customers   several   financing
alternatives  through our proprietary credit programs.  In the last three fiscal
years, we financed,  on average,  approximately  59% of our retail sales through
one of our two credit  programs.  We offer our customers a choice of installment
payment plans and revolving  credit plans through our primary credit  portfolio.
We also offer an installment program through our secondary credit portfolio to a
limited  number of  customers  who do not qualify  for credit  under our primary
credit portfolio.  Additionally, the most credit worthy customers in our primary
credit portfolio may be eligible for no-interest  financing plans. The following
table shows our product and service maintenance agreements sales, net of returns
and allowances, by method of payment for the periods indicated.

<TABLE>
<CAPTION>
<S>                           <C>             <C>   <C>             <C>   <C>             <C>
                                                   Year Ended January 31,
                              -----------------------------------------------------------------
                                       2006                  2007                  2008
                              --------------------- --------------------- ---------------------
                                Amount       %        Amount       %        Amount       %
                              ---------- ---------- ---------- ---------- ---------- ----------

Cash and other credit cards.. $ 254,047       42.3% $ 274,533       42.0% $ 267,931       37.8%
Primary credit portfolio:
   Installment...............   263,667       43.9    262,653       40.1    340,274       48.1
   Revolving.................    30,697        5.1     43,225        6.6     34,025        4.8
Secondary credit portfolio...    52,049        8.7     74,115       11.3     65,765        9.3
                              ---------- ---------- ---------- ---------- ---------- ----------
   Total..................... $ 600,460      100.0% $ 654,526      100.0% $ 707,995      100.0%
                              ========== ========== ========== ========== ========== ==========
</TABLE>


       Credit  Approval.  Our credit  programs  are  managed by our  centralized
credit underwriting department staff, independent of sales personnel. As part of
our  centralized  credit  approval  process,  we have  developed  a  proprietary
standardized scoring model that provides preliminary credit decisions, including
down payment amounts and credit terms,  based on both customer and product risk.
The weighted average origination credit score of the receivables included in the
sold portfolio was 611 at January 31, 2008,  excluding  bankruptcy  accounts and
accounts that had no credit score.  While we  automatically  approve some credit
applications from customers, approximately 92% of our credit decisions are based
on evaluation of the customer's  creditworthiness  by a qualified credit grader.
As of January 31, 2008, we employed  over 450 full-time and part-time  employees
who focus on credit approval, collections and credit customer service. Employees
in these  operational  areas are  trained to follow our  strict  methodology  in
approving  credit,  collecting our accounts,  and charging off any uncollectible
accounts  based on  pre-determined  aging  criteria,  depending on their area of
responsibility.

                                       12

<PAGE>
       A  significant  part  of our  ability  to  control  delinquency  and  net
charge-off  is  based on the  level of down  payments  that we  require  and the
purchase money security interest that we obtain in the product  financed,  which
reduce our credit risk and increase our  customers'  ability and  willingness to
meet their  future  obligations.  We require the customer to purchase or provide
proof of credit property  insurance coverage to offset potential losses relating
to theft or damage of the product financed.

       Installment  accounts  are paid over a specified  period of time with set
monthly payments.  Revolving  accounts provide customers with a specified amount
which the customer may borrow,  repay and  re-borrow so long as the credit limit
is not exceeded. Most of our installment accounts provide for payment over 12 to
36 months,  with the average account in the primary credit  portfolio  remaining
outstanding for  approximately  12 to 14 months.  Our revolving  accounts remain
outstanding approximately 13 to 15 months. During fiscal 2008, approximately 12%
of  the   applications   approved  under  the  primary   program  were  approved
automatically  through  our  computer  system  based  on the  customer's  credit
history. The remaining applications,  of both new and repeat customers, are sent
to an experienced in-house credit grader.

       We created our secondary  credit  portfolio  program to meet the needs of
those  customers  who do not  qualify  for  credit  under our  primary  program,
typically due to past credit  problems or lack of credit  history.  If we cannot
approve a  customer's  application  for credit under our primary  portfolio,  we
automatically  send  the  application  to the  credit  staff  of  our  secondary
portfolio for further  consideration,  using stricter underwriting criteria. The
additional  requirements  include  verification  of  employment  and recent work
history, reference checks and higher required down payment levels. We offer only
the  installment  program to those  customers  that qualify under these stricter
underwriting  criteria.  An experienced,  in-house credit grader administers the
credit  approval  process  for all  applications  received  under our  secondary
portfolio program.  Most of the installment accounts approved under this program
provide  for  repayment  over 12 to 36  months,  with the  average  account  was
remaining outstanding for approximately 18 to 20 months.

       The  following  tables  present,  for  comparison  purposes,  information
regarding our two credit portfolios.

                                                      Primary Portfolio (1)
                                               --------------------------------
                                                     Year Ended January 31,
                                               --------------------------------
                                                  2006       2007       2008
                                               ---------- ---------- ----------
                                                  (total outstanding balance
                                                        in thousands)
Total outstanding balance (period end).........$ 421,649  $ 435,607  $ 511,586
Average outstanding customer balance...........$   1,284  $   1,250  $   1,287
Number of active accounts (period end).........  328,402    348,593    397,606
Total applications processed (2)...............  684,674    778,784    823,627
Percent of retail sales financed...............     49.0%      46.7%      52.9%
Total applications approved....................     52.8%      45.8%      48.6%
Average down payment...........................      7.6%      10.6%       7.4%
Average interest spread (3)....................     12.0%      11.0%      12.9%

                                       13

<PAGE>
                                                      Secondary Portfolio
                                               --------------------------------
                                                     Year Ended January 31,
                                               --------------------------------
                                                  2006       2007       2008
                                               ---------- ---------- ----------
                                                  (total outstanding balance
                                                        in thousands)
Total outstanding balance (period end).........$  98,072  $ 133,944  $ 143,281
Average outstanding customer balance...........$   1,128  $   1,212  $   1,264
Number of active accounts (period end).........   86,936    110,472    113,316
Total applications processed (2)...............  314,698    404,543    400,592
Percent of retail sales financed...............      8.7%      11.3%       9.3%
Total applications approved....................     34.1%      32.1%      29.8%
Average down payment...........................     26.4%      25.1%      24.4%
Average interest spread (3)....................     14.1%      13.5%      14.0%


                                                     Combined Portfolio (1)
                                               --------------------------------
                                                     Year Ended January 31,
                                               --------------------------------
                                                  2006       2007       2008
                                               ---------- ---------- ----------
                                                  (total outstanding balance
                                                        in thousands)
Total outstanding balance (period end).........$ 519,721  $ 569,551  $ 654,867
Average outstanding customer balance...........$   1,251  $   1,241     $1,282
Number of active accounts (period end).........  415,338    459,065    510,922
Total applications processed (2)...............  999,372  1,183,327  1,224,219
Percent of retail sales financed...............     57.7%      58.0%      62.2%
Total applications approved....................     44.3%      41.7%      45.3%
Average down payment...........................     10.9%      13.7%       9.9%
Average interest spread (3)....................     12.4%      11.5%      13.2%

(1)    The Primary Portfolio consists of owned and sold receivables.
(2)    Unapproved credit applications in the primary portfolio are automatically
       referred to the secondary portfolio.
(3)    Difference  between the average  interest rate yield on the portfolio and
       the  average  cost of funds  under the  securitization  program  plus the
       allocated  interest  related  to funds  required  to  finance  the credit
       enhancement portion of the portfolio.  Also reflects the loss of interest
       income resulting from interest free promotional programs.

       Credit  Quality.  We enter into  securitization  transactions to sell our
retail  receivables to a qualifying  special  purpose  entity or QSPE,  which we
formed  for  this  purpose.  After  the  sale,  we  continue  to  service  these
receivables  under a contract  with the QSPE.  We closely  monitor  these credit
portfolios  to identify  delinquent  accounts  early and  dedicate  resources to
contacting  customers  concerning  past due accounts.  We believe that our local
presence,  ability to work with  customers and flexible  financing  alternatives
contribute to the historically low net charge-off rates on these portfolios.  In
addition,  our customers have the opportunity to make their monthly  payments in
our stores,  and  approximately 56% of our active credit accounts did so at some
time during the last 12 months. We believe that these factors help us maintain a
relationship  with the customer that keeps losses low while  encouraging  repeat
purchases.

       Our  collection  activities  involve a  combination  of efforts that take
place in our corporate office and San Antonio  collection  centers,  and outside
collection  efforts that involve a visit by one of our credit  counselors to the
customer's home. We maintain a predictive dialer system and letter campaign that
helps us contact between 25,000 and 30,000  delinquent  customers daily. We also
maintain an experienced  skip-trace  department that utilizes current technology
to locate customers who have moved and left no forwarding  address.  Our outside
collectors provide on-site contact with the customer to assist in the collection
process  or, if  needed,  to  actually  repossess  the  product  in the event of
non-payment.  Repossessions  are made  when it is clear  that  the  customer  is
unwilling  to  establish a  reasonable  payment  program.  Our legal  department
represents  us in  bankruptcy  proceedings  and filing of  delinquency  judgment
claims and helps handle any legal issues associated with the collection process.

       Generally,  we deem an account to be  uncollectible  and charge it off if
the  account is 120 days or more past due and we have not  received a payment in
the last seven months. Over the last 36 months, we have recovered  approximately
12% of charged-off amounts through our collection activities. The income that we
realize  from our  interest in  securitized  receivables  depends on a number of
factors,  including expected credit losses. Therefore, it is to our advantage to
maintain a low delinquency rate and loss ratio on these credit portfolios.

                                       14

<PAGE>
       Our   accounting  and  credit  staff   consistently   monitor  trends  in
charge-offs  by  examining  the  various  characteristics  of  the  charge-offs,
including store of origination,  product type, customer credit information, down
payment amounts and other identifying information. We track our charge-offs both
gross, before recoveries,  and net, after recoveries. We periodically adjust our
credit granting, collection and charge-off policies based on this information.

       The  following   tables  reflects  the  performance  of  our  two  credit
portfolios, net of unearned interest.

<TABLE>
<CAPTION>
<S>                                           <C>        <C>        <C>         <C>        <C>        <C>
                                                    Primary Portfolio (1)             Secondary Portfolio
                                              --------------------------------  --------------------------------
                                                   Year Ended January 31,            Year Ended January 31,
                                              --------------------------------  --------------------------------
                                                 2006       2007       2008        2006       2007       2008
                                              ---------- ---------- ----------  ---------- ---------- ----------
                                                   (dollars in thousands)            (dollars in thousands)

Total outstanding balance (period end)........$ 421,649  $ 435,607  $ 511,586   $  98,072  $ 133,944  $ 143,281
Average total outstanding balance.............$ 387,464  $ 417,747  $ 465,429   $  83,461  $ 116,749  $ 141,202
Account balances over 60 days old (period
 end).........................................$  26,029  $  26,024  $  31,558   $   9,508  $  11,638  $  18,220
Percent of balances over 60 days old to
 total outstanding (period end) (2)...........      6.2%       6.0%       6.2%        9.7%       8.7%      12.7%
Bad debt write-offs (net of recoveries).......$   9,852  $  13,507  $  12,429   $   1,915  $   3,896  $   4,989
Percent of write-offs (net) to average
 outstanding (3)..............................      2.5%       3.2%       2.7%        2.2%       3.3%       3.5%
</TABLE>



                                                    Combined Portfolio (1)
                                              --------------------------------
                                                   Year Ended January 31,
                                              --------------------------------
                                                 2006       2007       2008
                                              ---------- ---------- ----------
                                                   (dollars in thousands)
Total outstanding balance (period end)........$ 519,721  $ 569,551  $ 654,867
Average total outstanding balance.............$ 470,925  $ 534,496  $ 606,628
Account balances over 60 days old (period
 end).........................................$  35,537  $  37,662  $  49,778
Percent of balances over 60 days old to
 total outstanding (period end) (2)...........      6.8%       6.6%       7.6%
Bad debt write-offs (net of recoveries).......$  11,767  $  17,403  $  17,418
Percent of write-offs (net) to average
 outstanding (3)..............................      2.5%       3.3%       2.9%

------------------------------------
(1)    The Primary Portfolio consists of owned and sold receivables.
(2)    At  January  31,  2006,  the  percent  of  balances  over 60 days old was
       elevated due to the impact of Hurricanes Katrina and Rita. See additional
       discussion in Management's Discussion and Analysis of Financial Condition
       and Results of Operations.
(3)    The fiscal year ended January 31, 2007, was impacted by the disruption to
       our credit collection operations caused by Hurricane Rita.

       The  following  table  presents  information  regarding the growth of our
combined   credit   portfolios,    including    unearned   interest.

                                                   Year Ended January 31,
                                            -----------------------------------
                                                2006        2007        2008
                                            ----------- ----------- -----------
                                                   (dollars in thousands)
Beginning balance...........................$  514,204  $  620,736  $  675,253
New receivables financed....................   495,553     511,158     615,606
Revolving finance charges...................     3,858       3,892       3,838
Returns on account..........................    (5,397)     (5,465)     (5,474)
Collections on account......................  (375,342)   (437,665)   (491,487)
Accounts charged off........................   (14,392)    (19,538)    (19,622)
Recoveries of charge-offs...................     2,252       2,135       2,204
                                            ----------- ----------- -----------
Ending balance..............................   620,736     675,253     780,318
Less unearned interest at end of period.....  (101,015)   (105,702)   (125,451)
                                            ----------- ----------- -----------
Total portfolio, net........................$  519,721  $  569,551  $  654,867
                                            =========== =========== ===========

Product Support Services

       Credit Insurance.  Acting as agents for unaffiliated insurance companies,
we sell credit life,  credit  disability,  credit  involuntary  unemployment and
credit property insurance at all of our stores.  These products cover payment of
the customer's credit account in the event of the customer's  death,  disability
or involuntary  unemployment or if the financed property is lost or damaged.  We
receive sales commissions from the unaffiliated insurance company at the time we
sell  the  coverage,  and we  recognize  retrospective  commissions,  which  are
additional  commissions  paid by the insurance  carrier if insurance  claims are
less than earned premiums.

                                       15

<PAGE>
       We  require  proof  of  property  insurance  on  all  installment  credit
purchases,  although we do not require that  customers  purchase this  insurance
from  us.  During  fiscal  2008,  approximately  75.2% of our  credit  customers
purchased  one  or  more  of  the  credit  insurance   products  we  offer,  and
approximately 18.9% purchased all of the insurance products we offer. Commission
revenues from the sale of credit insurance contracts  represented  approximately
2.4%,  2.4% and 2.6% of total  revenues  for fiscal  years 2006,  2007 and 2008,
respectively.

       Warranty Service.  We provide service for all of the products we sell and
only  for  the  products  we  sell.   Customers  purchased  service  maintenance
agreements  on products  representing  approximately  49.4% of our total  retail
sales for fiscal 2008. These agreements broaden and extend the period of covered
manufacturer  warranty  service for up to five years from the date of  purchase,
depending  on the product,  and cover  certain  items during the  manufacturer's
warranty period. These agreements are sold at the time the product is purchased.
Customers may finance the cost of the  agreements  along with the purchase price
of the  associated  product.  We contact the customer prior to the expiration of
the service  maintenance  period to provide  them the  opportunity  to renew the
period of warranty coverage.

       We have contracts with  unaffiliated  third party insurers that issue the
service  maintenance  agreements to cover the costs of repairs  performed by our
service  department  under these  agreements.  The initial  service  contract is
between the  customer  and the  independent  insurance  company,  but we are the
insurance  company's  first  choice to provide  service  when it is  needed.  We
receive a  commission  on the sale of the  contract,  and we bill the  insurance
company for the cost of the service work that we perform.  Commissions earned on
the sales of these third party  contracts are recognized in revenues at the time
of the sale. We are the obligor under renewal  contracts  sold after the primary
warranty and third party service  maintenance  agreements expire.  Under renewal
contracts we recognize revenues received,  and direct selling expenses incurred,
over  the life of the  contracts,  and  expense  the  cost of the  service  work
performed as products are repaired.

       Of the 16,000 to 23,000 repairs that we perform each month, approximately
32.6% are covered  under these  service  maintenance  agreements,  approximately
35.3% are covered by  manufacturer  warranties  and the  remainder are "walk-in"
repairs  from our  customers.  Revenues  from the  sale of  service  maintenance
agreements  represented  approximately  4.9%, 4.5%, and 5.0% of net sales during
fiscal years 2006, 2007 and 2008, respectively.

Management Information Systems

       We have a fully integrated management  information system that tracks, on
a   real-time   basis,   point-of-sale   information,   inventory   receipt  and
distribution,  merchandise  movement and financial  information.  The management
information  system  also  includes  a local  area  network  that  connects  all
corporate users to e-mail, scheduling and various servers. All of our facilities
are linked by a wide-area  network  that  provides  communication  for  in-house
credit  authorization and real-time capture of sales and merchandise movement at
the store level.  In our  distribution  centers,  we use  wireless  terminals to
assist in receiving,  stock  put-away,  stock  movement,  order  filling,  cycle
counting and  inventory  management.  At our stores,  we  currently  use desktop
terminals  to  provide  sales,   and  inventory   receiving,   transferring  and
maintenance capabilities.

       Our  integrated  management  information  system also includes  extensive
functionality for management of the complete credit portfolio life cycle as well
as  functionality  for the  management  of product  service.  The credit  system
continues  from our in-house  credit  authorization  through  account set up and
tracking, credit portfolio condition,  collections, credit employee productivity
metrics,  skip-tracing,  and bankruptcy, fraud and legal account management. The
service  system   provides  for  service  order   processing,   warranty  claims
processing,  parts  inventory  management,  technician  scheduling and dispatch,
technician performance metrics and customer satisfaction measurement. The sales,
credit and service systems share a common customer and product sold database.

       Our point of sale system uses an IBM Series i5 hardware  system that runs
on the i5OS operating system. This system enables us to use a variety of readily
available  applications  in conjunction  with software that supports the system.
All  of  our  current  business  application   software,   except  our  website,
accounting,  human  resources  and  credit  legal  systems,  has been  developed
in-house  by  our  management  information  system  employees.  We  believe  our
management  information  systems  efficiently support our current operations and
provide a foundation for future growth.

                                       16

<PAGE>
       We employ Nortel telephone switches and state of the art Avaya predictive
dialers,  as well as a redundant  data network and cable  plant,  to improve the
efficiency of our collection and overall corporate communication efforts.

       As  part of our  ongoing  system  availability  protection  and  disaster
recovery  planning,  we have  implemented a secondary  IBM Series i5 system.  We
installed  and  implemented  the back-up  IBM Series i5 system in our  corporate
offices to provide the ability to switch production  processing from the primary
system to the secondary  system within thirty  minutes should the primary system
become disabled or unreachable. The two machines are kept synchronized utilizing
third party  software.  This backup system provides "high  availability"  of the
production  processing  environment.   The  primary  IBM  Series  i5  system  is
geographically  removed  from our  corporate  office for  purposes  of  disaster
recovery and security.  Our disaster recovery plan worked as designed during our
evacuation from our corporate headquarters in Beaumont,  Texas, due to Hurricane
Rita in September 2005.  While we were displaced,  our store,  distribution  and
service  operations  that were not impacted by the  hurricane  continued to have
normal system availability and functionality.

Competition

       According to Twice, total industry  manufacturer sales of home appliances
and consumer  electronics  products in the United States,  including imports, to
the top 100 dealers  were  estimated  to be $24.0  billion  and $113.1  billion,
respectively,   in  2006.  The  retail  home  appliance   market  is  large  and
concentrated among a few major suppliers. Sears has historically been the leader
in the retail  home  appliance  market,  with a market  share  among the top 100
retailers of approximately 39% in 2005 and 37% in 2006. The consumer electronics
market  is  highly  fragmented.  We  estimate  that  the  two  largest  consumer
electronics  superstore  chains  accounted  for  approximately  32% of the total
electronics sales  attributable to the 100 largest  retailers in 2006.  However,
new entrants in both  industries have been successful in gaining market share by
offering similar product selections at lower prices.

       As reported by Twice, based upon revenue in 2006, we were the 9th largest
retailer  of  home  appliances  and  the  37th  largest   retailer  of  consumer
electronics.  Our competitors  include national mass merchants such as Sears and
Wal-Mart, specialized national retailers such as Circuit City and Best Buy, home
improvement stores such as Lowe's and Home Depot, and locally-owned  regional or
independent  retail  specialty  stores.  The availability and convenience of the
Internet is increasing as a competitive factor in our industry.

       We compete  primarily  based on  enhanced  customer  service  through our
unique  sales  force   training  and  product   knowledge,   next  day  delivery
capabilities,  proprietary  in-house credit  program,  guaranteed low prices and
product repair service.

Regulation

       The  extension of credit to consumers is a highly  regulated  area of our
business.   Numerous  federal  and  state  laws  impose   disclosure  and  other
requirements on the  origination,  servicing and enforcement of credit accounts.
These laws  include,  but are not limited to, the Federal  Truth in Lending Act,
Equal Credit Opportunity Act and Federal Trade Commission Act. State laws impose
limitations on the maximum amount of finance charges that we can charge and also
impose  other  restrictions  on  consumer  creditors,   such  as  us,  including
restrictions on collection and  enforcement.  We routinely  review our contracts
and  procedures  to ensure  compliance  with  applicable  consumer  credit laws.
Failure  on  our  part  to  comply  with  applicable  laws  could  expose  us to
substantial penalties and claims for damages and, in certain circumstances,  may
require us to refund finance  charges already paid and to forego finance charges
not  yet  paid  under  non-complying  contracts.  We  believe  that  we  are  in
substantial compliance with all applicable federal and state consumer credit and
collection laws.

       Our  sale  of  credit  life,  credit   disability,   credit   involuntary
unemployment and credit property  insurance  products is also highly  regulated.
State laws currently impose disclosure  obligations with respect to our sales of
credit and other  insurance  products  similar to those  required by the Federal
Truth in Lending Act, impose  restrictions on the amount of premiums that we may
charge and require licensing of certain of our employees and operating entities.
We  believe  we are in  substantial  compliance  with  all  applicable  laws and
regulations relating to our credit insurance business.

                                       17

<PAGE>
Employees

       As of January 31, 2008, we had  approximately  2,800 full-time  employees
and 100 part-time employees,  of which approximately 1,300 were sales personnel.
We offer a comprehensive benefits package including health, life, short and long
term  disability,  and  dental  insurance  coverage  as well as a  401(k)  plan,
employee  stock  purchase  plan,  paid  vacation  and holiday  pay.  None of our
employees are covered by  collective  bargaining  agreements  and we believe our
employee  relations are good.  Conn's has formal  dispute  resolution  plan that
requires  mandatory  arbitration for employment  related issues. The plan covers
all  applicants  and current  employees,  and covers  former  employees who left
Conn's on or after March 1, 2006.

Tradenames and Trademarks

       We have registered the trademarks "Conn's" and our logos.

Available Information

       We are subject to reporting  requirements of the Securities  Exchange Act
of 1934,  or the Exchange Act, and its rules and  regulations.  The Exchange Act
requires us to file reports,  proxy and other  information  statements and other
information with the Securities and Exchange  Commission (SEC).  Copies of these
reports,  proxy statements and other  information can be inspected and copied at
the SEC Public Reference Room, 450 Fifth Street, N.W.,  Washington,  D.C. 20549.
You may obtain  information  on the  operation of the Public  Reference  Room by
calling  the  SEC  at  1-800-SEC-0330.  You  may  also  obtain  these  materials
electronically by accessing the SEC's home page on the internet at www.sec.gov.

       Our board has  adopted a code of  business  conduct  and  ethics  for our
employees, a code of ethics for our chief executive officer and senior financial
professionals  and a code of  business  conduct  and  ethics  for our  board  of
directors.  A copy of these codes are published on our website at  www.conns.com
under  "Investor   Relations."  We  intend  to  make  all  required  disclosures
concerning  any  amendments  to,  waivers from,  these codes on our website.  In
addition, we make available,  free of charge on our internet website, our Annual
Report on Form 10-K,  Quarterly  Reports on Form 10-Q,  Current  Reports on Form
8-K, and  amendments  to these  reports  filed or furnished  pursuant to Section
13(a) or 15(d) of the Exchange Act as soon as  reasonably  practicable  after we
electronically  file this  material  with,  or furnish  it to, the SEC.  You may
review  these  documents,  under the heading  "Conn's  Investor  Relations,"  by
accessing  our website at  www.conns.com.  Also,  reports and other  information
concerning  us are  available  for  inspection  and  copying  at NASDAQ  Capital
Markets.



I
TEM 1A. RISK FACTORS.

       An investment in our common stock involves risks and  uncertainties.  You
should  consider  carefully  the  following  information  about  these risks and
uncertainties before buying shares of our common stock. The occurrence of any of
the risks  described  below  could  adversely  affect  our  business,  financial
condition or results of operations. In that case, the trading price of our stock
could decline, and you could lose all or part of the value of your investment.

OUR SUCCESS DEPENDS ON OUR ABILITY TO OPEN AND OPERATE  PROFITABLY NEW STORES IN
EXISTING, ADJACENT AND NEW GEOGRAPHIC MARKETS.

       We plan to continue our  expansion by opening an  additional  seven to 10
new stores in fiscal 2009. We have not yet selected  sites for all of the stores
that we plan to open within the next fiscal year. We may not be able to open all
of these  stores,  and any new stores that we open may not be profitable or meet
our goals.  Any of these  circumstances  could have a material adverse effect on
our financial results.

                                       18

<PAGE>
       There are a number of factors  that could  affect our ability to open and
operate new stores consistent with our business plan, including:

       o      competition in existing, adjacent and new markets;

       o      competitive conditions, consumer tastes and discretionary spending
              patterns in adjacent and new markets that are different from those
              in our existing markets;

       o      a lack of consumer  demand for our products or financing  programs
              at levels that can support new store growth;

       o      inability to make customer financing programs available that allow
              consumer to purchase products at levels that can support new store
              growth;

       o      limitations  created by covenants and conditions  under our credit
              facilities and our asset-backed securitization program;

       o      the availability of additional financial resources;

       o      the substantial outlay of financial resources required to open new
              stores  and the  possibility  that we may  recognize  little or no
              related benefit;

       o      an inability or  unwillingness  of vendors to supply  product on a
              timely basis at competitive prices;

       o      the  failure  to open  enough  stores in new  markets to achieve a
              sufficient market presence;

       o      the  inability  to  identify   suitable  sites  and  to  negotiate
              acceptable leases for these sites;

       o      unfamiliarity  with local real estate markets and  demographics in
              adjacent and new markets;

       o      problems in adapting our  distribution  and other  operational and
              management systems to an expanded network of stores;

       o      difficulties associated with the hiring, training and retention of
              additional skilled personnel, including store managers; and

       o      higher costs for print, radio and television advertising.


       These  factors may also affect the ability of any newly opened  stores to
achieve sales and profitability levels comparable with our existing stores or to
become profitable at all.

IF WE ARE UNABLE TO MANAGE OUR GROWING  BUSINESS,  OUR REVENUES MAY NOT INCREASE
AS  ANTICIPATED,  OUR COST OF  OPERATIONS  MAY RISE  AND OUR  PROFITABILITY  MAY
DECLINE.

       We face many business risks associated with growing companies,  including
the risk that our management, financial controls and information systems will be
inadequate  to support  our planned  expansion.  Our growth  plans will  require
management to expend  significant  time and effort and  additional  resources to
ensure the continuing adequacy of our financial controls,  operating procedures,
information  systems,  product purchasing,  warehousing and distribution systems
and employee  training  programs.  We cannot predict  whether we will be able to
manage  effectively  these increased demands or respond on a timely basis to the
changing  demands  that our planned  expansion  will  impose on our  management,
financial controls and information  systems.  If we fail to manage  successfully
the  challenges  our growth poses,  do not continue to improve these systems and
controls  or  encounter  unexpected  difficulties  during  our  expansion,   our
business,  financial  condition,  operating  results  or  cash  flows  could  be
materially adversely affected.

                                       19

<PAGE>
THE INABILITY TO OBTAIN FUNDING FOR OUR CREDIT OPERATIONS THROUGH SECURITIZATION
FACILITIES  OR OTHER  SOURCES MAY  ADVERSELY  AFFECT OUR BUSINESS AND  EXPANSION
PLANS.

       We  finance  most  of  our  customer   receivables  through  asset-backed
securitization  facilities.  The trust  arrangement  governing these  facilities
currently  provides for three separate series of asset-backed notes that allowed
us, as of January 31,  2008,  to borrow up to $640  million to finance  customer
receivables.  Under each note  series,  we transfer  customer  receivables  to a
qualifying  special  purpose entity we formed for this purpose,  in exchange for
cash,  subordinated  securities and the right to receive cash flows equal to the
interest rate spread between the transferred receivables and the notes issued to
third parties.  This qualifying  special purpose entity,  in turn,  issues notes
collateralized  by these  receivables  that  entitle the holders of the notes to
participate  in certain  cash flows from these  receivables.  The 2002  Series A
program is a $450 million  variable  funding note,  of which $278.0  million was
drawn as of January  31,  2008.  The 2002  Series A program  consists  of a $250
million  364-day tranche that is up for renewal in July 2008, and a $200 million
tranche that matures in August 2011. If the $250 million  364-day  commitment is
not  renewed  in July 2008,  the  qualifying  special  purpose  entity  would be
required to use the proceeds from  collections on the  receivables  portfolio to
pay off the portion of the 2002 Series A note that is greater than $200 million.
If that were to occur,  and if we are not able to  complete  the  issuance of an
additional  series  of  medium-term  notes,  we  would be  required  to fund new
receivables  generated  using our existing cash flows,  borrowings on our credit
facilities  and may be required to obtain new sources of  financing  to continue
funding  our credit  operations.  The 2002  Series B program  consists  of $40.0
million in private bond placements that began  scheduled  principal  payments in
October 2006. The 2006 Series A program consists of $150 million in private bond
placements that will require scheduled principal payments beginning in September
2010.

       Our ability to raise  additional  capital through further  securitization
transactions,  and to do so on economically  favorable  terms,  depends in large
part on factors that are beyond our control.

       These factors include:

       o      conditions in the securities and finance markets generally;

       o      conditions in the markets for securitized instruments;

       o      the credit quality and performance of our customer receivables;

       o      our  ability  to obtain  financial  support  for  required  credit
              enhancement;

       o      our ability to adequately service our financial instruments;

       o      the absence of any material  downgrading  or withdrawal of ratings
              given to our securities previously issued in securitizations; and

       o      prevailing interest rates.

       Our   ability  to  finance   customer   receivables   under  our  current
asset-backed  securitization facilities depends on our continued compliance with
covenants  relating  to our  business  and our  customer  receivables.  If these
programs reach their capacity or otherwise become unavailable, and we are unable
to arrange substitute  securitization  facilities or other sources of financing,
we may have to limit the amount of credit  that we make  available  through  our
customer  finance  programs.  This may adversely  affect revenues and results of
operations.  Further,  our inability to obtain  funding  through  securitization
facilities  or  other  sources  may  adversely   affect  the   profitability  of
outstanding  accounts  under our credit  programs if existing  customers fail to
repay outstanding  credit due to our refusal to grant additional  credit.  Since
our cost of funds under our bank credit  facility is expected to be greater than
our cost of funds under our current securitization facility,  increased reliance
on our bank credit facility may adversely affect our net income.

       We also have a revolving  credit facility of $50 million that can be used
for working capital purposes,  including  funding credit portfolio  growth.  The
credit  facility has an accordion  feature that allows further  expansion of the
facility to $90 million, under certain conditions.  This facility has a maturity
date of  November  1, 2010,  and  provides a sublimit  of $5 million for standby
letters of credit.

                                       20

<PAGE>
AN INCREASE IN INTEREST RATES MAY ADVERSELY AFFECT OUR PROFITABILITY.

       The  interest  rates on our bank  credit  facility  and the 2002 Series A
program  under our  asset-backed  securitization  facility  fluctuate up or down
based upon the LIBOR  rate,  the prime rate of our  administrative  agent or the
federal  funds rate in the case of the bank credit  facility and the  commercial
paper rate in the case of the 2002 Series A program.  Additionally, the level of
interest  rates in the  market in  general  will  impact  the  interest  rate on
medium-term notes issued under our asset-backed  securitization facility. To the
extent that such rates increase,  the fair value of our interests in securitized
assets will decline and our interest expense could increase, which may result in
a decrease in our profitability.

WE HAVE SIGNIFICANT  FUTURE CAPITAL NEEDS WHICH WE MAY BE UNABLE TO FUND, AND WE
MAY NEED ADDITIONAL FUNDING SOONER THAN CURRENTLY ANTICIPATED.

       We  will  need  substantial  capital  to  finance  our  expansion  plans,
including  funds  for  capital  expenditures,   pre-opening  costs  and  initial
operating  losses  related to new store  openings.  We may not be able to obtain
additional  financing on acceptable  terms. If adequate funds are not available,
we will have to curtail  projected  growth,  which  could  materially  adversely
affect our business, financial condition, operating results or cash flows.

       We  estimate  that  capital  expenditures  during  fiscal  2009  will  be
approximately  $20 million to $25 million and that capital  expenditures  during
future years may exceed this amount.  We expect that cash  provided by operating
activities,  available  borrowings under our credit facility,  and access to the
unfunded portion of our asset-backed  securitization  program will be sufficient
to fund our  operations,  store  expansion and updating  activities  and capital
expenditure programs for at least 12 months.  However, this may not be the case.
We may be required to seek additional capital earlier than anticipated if future
cash flows from  operations fail to meet our  expectations  and costs or capital
expenditures related to new store openings exceed anticipated amounts.

A DECREASE IN OUR CREDIT  SALES OR A DECLINE IN CREDIT  QUALITY  COULD LEAD TO A
DECREASE IN OUR PRODUCT SALES AND PROFITABILITY.

       In the last three fiscal years,  we financed,  on average,  approximately
59% of our retail sales  through our internal  credit  programs.  Our ability to
provide  credit as a financing  alternative  for our  customers  depends on many
factors, including the quality of our accounts receivable portfolio. Payments on
some of our  credit  accounts  become  delinquent  from  time to time,  and some
accounts end up in default,  due to several  factors,  such as general and local
economic conditions,  including the impact of rising interest rates on sub-prime
mortgage  borrowers.  As we expand into new  markets,  we will obtain new credit
accounts that may present a higher risk than our existing  credit accounts since
new  credit  customers  do not have an  established  credit  history  with us. A
general decline in the quality of our accounts  receivable  portfolio could lead
to a reduction of available credit provided through our finance operations. As a
result, we might sell fewer products, which could adversely affect our earnings.
Further,  because  approximately  56% of our credit  customers make their credit
account  payments  in our stores,  any  decrease  in credit  sales could  reduce
traffic in our stores and lower our revenues. A decline in the credit quality of
our credit  accounts  could also cause an increase in our credit  losses,  which
could  result  in a  decrease  in our  securitization  income  or  increase  the
provision for bad debts on our statement of operations  and result in an adverse
effect on our earnings.  A decline in credit quality could also lead to stricter
underwriting criteria which might have a negative impact on sales.

A DOWNTURN IN THE ECONOMY MAY AFFECT CONSUMER PURCHASES OF DISCRETIONARY  ITEMS,
WHICH COULD REDUCE OUR NET SALES.

       A portion of our sales represent discretionary spending by our customers.
Many  factors  affect  spending,   including  regional  or  world  events,  war,
conditions in financial markets,  general business  conditions,  interest rates,
inflation, energy and gasoline prices, consumer debt levels, the availability of
consumer credit, taxation,  unemployment trends and other matters that influence
consumer  confidence  and spending.  Our customers'  purchases of  discretionary
items,  including our products,  could decline  during  periods when  disposable
income  is  lower  or  periods  of  actual  or  perceived  unfavorable  economic
conditions. If this occurs, our net sales and profitability could decline.

                                       21

<PAGE>
WE FACE SIGNIFICANT  COMPETITION FROM NATIONAL,  REGIONAL AND LOCAL RETAILERS OF
HOME APPLIANCES AND CONSUMER ELECTRONICS.

       The retail  market for  consumer  electronics  is highly  fragmented  and
intensely competitive and the market for home appliances is concentrated among a
few major dealers.  We currently  compete  against a diverse group of retailers,
including national mass merchants such as Sears,  Wal-Mart,  Target,  Sam's Club
and Costco,  specialized  national  retailers such as Circuit City and Best Buy,
home  improvement  stores  such as  Lowe's  and Home  Depot,  and  locally-owned
regional or independent  retail  specialty  stores that sell home appliances and
consumer  electronics  similar,  and often identical,  to those we sell. We also
compete with  retailers  that market  products  through  store  catalogs and the
Internet.  In  addition,  there are few  barriers  to entry into our current and
contemplated  markets,  and new  competitors  may  enter our  current  or future
markets at any time.

       We may not be able to compete  successfully  against  existing and future
competitors.   Some  of  our  competitors  have  financial  resources  that  are
substantially  greater than ours and may be able to purchase  inventory at lower
costs and better sustain  economic  downturns.  Our competitors may respond more
quickly to new or emerging technologies and may have greater resources to devote
to  promotion  and sale of products  and  services.  If two or more  competitors
consolidate their businesses or enter into strategic  partnerships,  they may be
able to compete more effectively against us.

       Our  existing  competitors  or new  entrants  into our industry may use a
number of different strategies to compete against us, including:

       o      expansion by our existing  competitors or entry by new competitors
              into markets where we currently operate;

       o      the decreased size of flat-panel televisions allowing new entrants
              to display and sell the product;

       o      lower pricing;

       o      aggressive advertising and marketing;

       o      extension of credit to customers on terms more  favorable  than we
              offer;

       o      larger  store  size,  which  may  result  in  greater  operational
              efficiencies, or innovative store formats; and

       o      adoption of improved retail sales methods.

       Competition  from  any of these  sources  could  cause us to lose  market
share,  revenues and customers,  increase  expenditures or reduce prices, any of
which could have a material adverse effect on our results of operations.

IF NEW PRODUCTS ARE NOT INTRODUCED OR CONSUMERS DO NOT ACCEPT NEW PRODUCTS,  OUR
SALES MAY DECLINE.

       Our ability to maintain and increase  revenues  depends to a large extent
on the periodic  introduction and availability of new products and technologies.
We believe that the introduction and continued growth in consumer  acceptance of
new  products,  such as digital  video  recorders  and digital,  high-definition
televisions, will have a significant impact on our ability to increase revenues.
These  products  are subject to  significant  technological  changes and pricing
limitations  and are subject to the actions and  cooperation  of third  parties,
such as movie distributors and television and radio  broadcasters,  all of which
could  affect  the  success  of  these  and  other  new   consumer   electronics
technologies.  It is possible that new products  will never  achieve  widespread
consumer acceptance.

IF WE FAIL TO ANTICIPATE CHANGES IN CONSUMER PREFERENCES, OUR SALES MAY DECLINE.

                                       22

<PAGE>
       Our products must appeal to a broad range of consumers whose  preferences
cannot be  predicted  with  certainty  and are  subject to change.  Our  success
depends upon our ability to anticipate  and respond in a timely manner to trends
in consumer preferences relating to home appliances and consumer electronics. If
we fail to identify and respond to these  changes,  our sales of these  products
may decline.  In addition,  we often make commitments to purchase  products from
our vendors up to six months in advance of proposed delivery dates.  Significant
deviation  from  the  projected  demand  for  products  that we sell  may have a
material  adverse effect on our results of operations  and financial  condition,
either  from lost  sales or lower  margins  due to the need to reduce  prices to
dispose of excess inventory.

A DISRUPTION IN OUR RELATIONSHIPS  WITH, OR IN THE OPERATIONS OF, ANY OF OUR KEY
SUPPLIERS COULD CAUSE OUR SALES TO DECLINE.

       The  success  of  our  business  and  growth  strategies   depends  to  a
significant  degree on our  relationships  with our suppliers,  particularly our
brand name suppliers such as General Electric,  Whirlpool,  Frigidaire,  Maytag,
LG, Mitsubishi,  Samsung, Sony, Toshiba,  Hitachi, Serta, Simmons, Ashley, Lane,
Hewlett Packard,  Compaq,  Poulan,  Husqvarna and Toro. We do not have long term
supply agreements or exclusive arrangements with the majority of our vendors. We
typically order our inventory through the issuance of individual purchase orders
to vendors. We also rely on our suppliers for cooperative  advertising  support.
We may be subject to rationing by suppliers  with respect to a number of limited
distribution items. In addition, we rely heavily on a relatively small number of
suppliers.  Our top six suppliers  represented 54.8% of our purchases for fiscal
2008,  and the top two suppliers  represented  approximately  26.1% of our total
purchases.  The loss of any one or more of these key  vendors or our  failure to
establish and maintain  relationships  with these and other vendors could have a
material adverse effect on our results of operations and financial condition.

       Our ability to enter new markets  successfully  depends, to a significant
extent,  on the willingness and ability of our vendors to supply  merchandise to
additional  warehouses  or stores.  If vendors are unwilling or unable to supply
some or all of their products to us at acceptable prices in one or more markets,
our results of operations and financial condition could be materially  adversely
affected.

       Furthermore,  we rely on credit from vendors to purchase our products. As
of January 31, 2008, we had $30.4 million in accounts  payable and $81.5 million
in merchandise inventories. A substantial change in credit terms from vendors or
vendors'  willingness  to extend credit to us would reduce our ability to obtain
the merchandise  that we sell, which could have a material adverse effect on our
sales and results of operations.

       Our vendors also supply us with marketing  funds and volume  rebates.  If
our vendors fail to continue these  incentives it could have a material  adverse
effect on our sales and results of operations.

YOU SHOULD NOT RELY ON OUR COMPARABLE STORE SALES AS AN INDICATION OF OUR FUTURE
RESULTS OF OPERATIONS BECAUSE THEY FLUCTUATE SIGNIFICANTLY.

       Our  historical   same  store  sales  growth   figures  have   fluctuated
significantly from quarter to quarter. For example,  same store sales growth for
each  of the  quarters  of  fiscal  2008  were  -0.3%,  5.0%,  6.8%,  and  1.9%,
respectively.  A number of factors have historically affected, and will continue
to affect, our comparable store sales results, including:

       o      changes in competition;

       o      general economic conditions;

       o      new product introductions;

       o      consumer trends;

       o      changes in our merchandise mix;

       o      changes in the relative  sales price  points of our major  product
              categories;

       o      ability to offer credit programs attractive to our customers;

                                       23

<PAGE>
       o      the impact of our new  stores on our  existing  stores,  including
              potential  decreases  in  existing  stores'  sales as a result  of
              opening new stores;

       o      weather conditions in our markets;

       o      timing of promotional events;

       o      timing, location and participants of major sporting events; and

       o      our ability to execute our business strategy effectively.

       Changes in our quarterly and annual  comparable store sales results could
cause the price of our common stock to fluctuate significantly.

BECAUSE WE EXPERIENCE SEASONAL  FLUCTUATIONS IN OUR SALES, OUR QUARTERLY RESULTS
WILL FLUCTUATE, WHICH COULD ADVERSELY AFFECT OUR COMMON STOCK PRICE.

       We  experience  seasonal  fluctuations  in our net  sales  and  operating
results.  In fiscal 2008,  we generated  27.4% of our net sales and 33.0% of our
net income in the fiscal  quarter ended  January 31 (which  included the holiday
selling  season).  We also incur  significant  additional  expenses  during this
fiscal  quarter due to higher  purchase  volumes and increased  staffing.  If we
miscalculate the demand for our products generally or for our product mix during
the fiscal quarter ending January 31, our net sales could decline,  resulting in
excess  inventory or increased sales discounts to sell excess  inventory,  which
could  harm our  financial  performance.  A  shortfall  in  expected  net sales,
combined with our  significant  additional  expenses during this fiscal quarter,
could cause a significant decline in our operating results. This could adversely
affect our common stock price.

OUR BUSINESS COULD BE ADVERSELY AFFECTED BY CHANGES IN CONSUMER  PROTECTION LAWS
AND REGULATIONS.

       Federal and state consumer  protection laws and regulations,  such as the
Fair  Credit  Reporting  Act,  limit the manner in which we may offer and extend
credit.  Since we finance a substantial portion of our sales, any adverse change
in the regulation of consumer credit could  adversely  affect our total revenues
and gross margins.  For example,  new laws or regulations could limit the amount
of interest or fees that may be charged on consumer  credit accounts or restrict
our ability to collect on account balances,  which would have a material adverse
effect on our earnings.  During 2005, new bankruptcy  laws went into effect that
impacted our customers'  ability to file for  bankruptcy.  Historically,  we had
been  relatively  effective in pursuing  our  position as a secured  creditor of
bankrupt borrowers and obtaining payments on the related accounts and contracts.
However,  at this time we cannot be certain what long term impact these  changes
will have on our  delinquency or loss  experience.  Compliance with existing and
future laws or regulations  could require us to make material  expenditures,  in
particular  personnel training costs, or otherwise adversely affect our business
or financial results. Failure to comply with these laws or regulations,  even if
inadvertent,  could result in negative publicity,  fines or additional licensing
expenses, any of which could have an adverse effect on our results of operations
and stock price.

PENDING  LITIGATION  RELATING  TO THE SALE OF CREDIT  INSURANCE  AND THE SALE OF
SERVICE MAINTENANCE AGREEMENTS IN THE RETAIL INDUSTRY COULD ADVERSELY AFFECT OUR
BUSINESS.

       We understand that states' attorneys general and private  plaintiffs have
filed lawsuits against other retailers relating to improper practices  conducted
in connection with the sale of credit insurance in several  jurisdictions around
the  country.  We offer  credit  insurance  in all of our stores and require the
customer to purchase property  insurance from us or from a third party provider,
at their  election,  in  connection  with sales of  merchandise  on  installment
credit;  therefore,  similar  litigation  could be brought  against us. While we
believe we are in full compliance with  applicable laws and  regulations,  if we
are found liable in any future  lawsuit  regarding  credit  insurance or service
maintenance agreements, we could be required to pay substantial damages or incur
substantial costs as part of an out-of-court  settlement,  either of which could
have a material  adverse effect on our results of operations and stock price. An
adverse  judgment  or  any  negative  publicity   associated  with  our  service
maintenance  agreements or any potential credit insurance  litigation could also
affect our reputation, which could have a negative impact on sales.

                                       24

<PAGE>
IF WE LOSE KEY  MANAGEMENT  OR ARE  UNABLE TO ATTRACT  AND RETAIN THE  QUALIFIED
SALES AND CREDIT  GRANTING AND COLLECTION  PERSONNEL  REQUIRED FOR OUR BUSINESS,
OUR OPERATING RESULTS COULD SUFFER.

       Our  future  success  depends  to a  significant  degree  on the  skills,
experience and continued service of our key executives or the  identification of
suitable  successors  for  them.  If we  lose  the  services  of  any  of  these
individuals,  or if one or more of them or other key personnel  decide to join a
competitor  or  otherwise  compete  directly or  indirectly  with us, and we are
unable to identify a suitable  successor,  our business and operations  could be
harmed, and we could have difficulty in implementing our strategy.  In addition,
as our  business  grows,  we will need to  locate,  hire and  retain  additional
qualified  sales  personnel in a timely manner and develop,  train and manage an
increasing  number of management  level sales  associates  and other  employees.
Additionally,  if we are unable to attract and retain  qualified credit granting
and collection  personnel,  our ability to perform  quality  underwriting of new
credit  transactions or maintain  workloads for our  collections  personnel at a
manageable  level,  our  operations  could be  adversely  impacted and result in
higher delinquency and net charge-offs on our credit portfolio.  Competition for
qualified employees could require us to pay higher wages to attract a sufficient
number of employees, and increases in the federal minimum wage or other employee
benefits  costs  could  increase  our  operating  expenses.  If we are unable to
attract and retain  personnel as needed in the future,  our net sales growth and
operating results could suffer.

BECAUSE OUR STORES ARE LOCATED IN TEXAS,  LOUISIANA AND OKLAHOMA, WE ARE SUBJECT
TO REGIONAL RISKS.

       Our 69 stores are located  exclusively in Texas,  Louisiana and Oklahoma.
This subjects us to regional  risks,  such as the economy,  weather  conditions,
hurricanes  and other  natural  disasters.  If the region  suffered  an economic
downturn or other adverse  regional  event,  there could be an adverse impact on
our net sales  and  profitability  and our  ability  to  implement  our  planned
expansion program.  Several of our competitors  operate stores across the United
States and thus are not as vulnerable to the risks of operating in one region.

OUR  INFORMATION  TECHNOLOGY  INFRASTRUCTURE  IS VULNERABLE TO DAMAGE THAT COULD
HARM OUR BUSINESS.

       Our ability to operate our business  from day to day, in  particular  our
ability to manage our credit operations and inventory levels, largely depends on
the efficient  operation of our computer hardware and software  systems.  We use
management  information  systems  to track  inventory  information  at the store
level,  communicate customer information,  aggregate daily sales information and
manage our credit  portfolio.  These systems and our  operations  are subject to
damage or interruption from:

       o      power   loss,    computer    systems    failures   and   Internet,
              telecommunications or data network failures;

       o      operator  negligence or improper  operation by, or supervision of,
              employees;

       o      physical  and  electronic  loss  of  data  or  security  breaches,
              misappropriation and similar events;

       o      computer viruses;

       o      intentional acts of vandalism and similar events; and

       o      hurricanes, fires, floods and other natural disasters.

       The software that we have  developed to use in our daily  operations  may
contain  undetected  errors that could cause our network to fail or our expenses
to increase.  Any failure due to any of these causes,  if it is not supported by
our disaster  recovery plan,  could cause an  interruption in our operations and
result in reduced net sales and profitability.

IF WE ARE UNABLE TO MAINTAIN OUR INSURANCE LICENSES IN THE STATES WE OPERATE OUR
OPERATING RESULTS COULD SUFFER.

         We derive a significant  portion of our revenues and  operating  income
from the sale of various  insurance  products to our  customers.  These products
include credit insurance, service maintenance agreements and product replacement
policies. If for any reason we were unable to maintain our insurance licenses in
the states we operate our operating results could suffer.

                                       25

<PAGE>
IF WE ARE UNABLE TO MAINTAIN  OUR  CURRENT  INSURANCE  COVERAGE  FOR OUR SERVICE
MAINTENANCE  AGREEMENTS,  OUR  CUSTOMERS  COULD INCUR  ADDITIONAL  COSTS AND OUR
REPAIR  EXPENSES  COULD  INCREASE,  WHICH COULD  ADVERSELY  AFFECT OUR FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.

       There are a limited  number of insurance  carriers that provide  coverage
for our service  maintenance  agreements.  If insurance becomes unavailable from
our current  carriers  for any reason,  we may be unable to provide  replacement
coverage on the same terms, if at all. Even if we are able to obtain replacement
coverage,  higher premiums could have an adverse impact on our  profitability if
we are  unable  to  pass  along  the  increased  cost of  such  coverage  to our
customers.  Inability to obtain insurance  coverage for our service  maintenance
agreements  could  cause   fluctuations  in  our  repair  expenses  and  greater
volatility of earnings.

IF WE ARE UNABLE TO MAINTAIN  GROUP CREDIT  INSURANCE  POLICIES  FROM  INSURANCE
CARRIERS,  WHICH  ALLOW US TO  OFFER  THEIR  CREDIT  INSURANCE  PRODUCTS  TO OUR
CUSTOMERS  PURCHASING  ON CREDIT,  OUR  REVENUES  COULD BE REDUCED AND BAD DEBTS
MIGHT INCREASE.

       There are a limited  number of insurance  carriers  that  provide  credit
insurance  coverage  for sale to our  customers.  If  credit  insurance  becomes
unavailable for any reason we may be unable to offer replacement coverage on the
same terms, if at all. Even if we are able to obtain  replacement  coverage,  it
may be at higher  rates or reduced  coverage,  which could  affect the  customer
acceptance of these products, reduce our revenues or increase our credit losses.

CHANGES IN PREMIUM AND  COMMISSION  RATES  ALLOWED BY  REGULATORS  ON OUR CREDIT
INSURANCE  AND  SERVICE  MAINTENANCE  AGREEMENTS  AS  ALLOWED  BY THE  LAWS  AND
REGULATIONS IN THE STATES IN WHICH WE OPERATE COULD AFFECT OUR REVENUES.

       We derive a significant portion of our revenues and operating income from
the sale of various insurance products to our customers.  These products include
credit insurance and service maintenance agreements.  If the rate we are allowed
to charge on those products declines, our operating results could suffer.

CHANGES IN TRADE REGULATIONS, CURRENCY FLUCTUATIONS AND OTHER FACTORS BEYOND OUR
CONTROL COULD AFFECT OUR BUSINESS.

       A significant  portion of our inventory is  manufactured  overseas and in
Mexico.  Changes in trade  regulations,  currency  fluctuations or other factors
beyond  our  control  may  increase  the  cost of items we  purchase  or  create
shortages of these items,  which in turn could have a material adverse effect on
our results of  operations  and  financial  condition.  Conversely,  significant
reductions  in the cost of these items in U.S.  dollars may cause a  significant
reduction  in the  retail  prices of those  products,  resulting  in a  material
adverse  effect on our sales,  margins or  competitive  position.  In  addition,
commissions  earned  on  both  our  credit  insurance  and  service  maintenance
agreement  products could be adversely  affected by changes in statutory premium
rates, commission rates, adverse claims experience and other factors.

WE MAY BE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS, WHICH COULD IMPAIR
OUR NAME AND REPUTATION.

       We believe  that our success  and  ability to compete  depends in part on
consumer  identification of the name "Conn's." We have registered the trademarks
"Conn's" and our logo. We intend to protect  vigorously  our  trademark  against
infringement  or  misappropriation  by others.  A third  party,  however,  could
attempt  to  misappropriate  our  intellectual   property  in  the  future.  The
enforcement  of our  proprietary  rights  through  litigation  could  result  in
substantial  costs  to us that  could  have a  material  adverse  effect  on our
financial condition or results of operations.

FAILURE TO PROTECT THE SECURITY OF OUR CUSTOMER'S INFORMATION COULD EXPOSE US TO
LITIGATION,  JUDGMENTS FOR DAMAGES AND UNDERMINE THE TRUST PLACED WITH US BY OUR
CUSTOMERS.

       We  capture,  transmit,  handle and store  sensitive  information,  which
involves  certain  inherent  security  risks.  Such risks  include,  among other
things,  the  interception  of by  persons  outside  the  Company  or by our own
employees.  While  we  believe  we  have  taken  appropriate  steps  to  protect
confidential  information,  there can be no  assurance  that we can  prevent the
compromise of our customers' data or other confidential  information.  If such a
breach  should occur at Conn's,  it could have a severe  negative  impact on our
business and results of operations.

                                       26

<PAGE>
ANY CHANGES IN THE TAX LAWS OF THE STATES IN WHICH WE OPERATE  COULD  AFFECT OUR
STATE TAX LIABILITIES.  ADDITIONALLY,  BEGINNING  OPERATIONS IN NEW STATES COULD
ALSO AFFECT OUR STATE TAX LIABILITIES.

       As we  experienced  in fiscal  year 2007 with the change in the Texas tax
law,  legislation  could be  introduced  at any time that  changes our state tax
liabilities  in a way that has an adverse  impact on our results of  operations.
The  Texas  margin  tax  is  expected  to  increase  our  effective   rate  from
approximately 35.3%, before its introduction,  to between 36.5% and 37.5% in the
future.  Our recent  commencement of operations in Oklahoma and the potential to
enter new states in the future could adversely affect our results of operations,
dependent upon the tax laws in place in those states.

A  FURTHER  RISE  IN  OIL  AND  GASOLINE  PRICES  COULD  AFFECT  OUR  CUSTOMERS'
DETERMINATION  TO DRIVE TO OUR  STORES,  AND  CAUSE  US TO  RAISE  OUR  DELIVERY
CHARGES.

       A further significant increase in oil and gasoline prices could adversely
affect our customers'  shopping  decisions and patterns.  We rely heavily on our
internal  distribution  system and our next day  delivery  policy to satisfy our
customers' needs and desires, and any such significant increases could result in
increased  distribution charges. Such increases may not significantly affect our
competitors.



ITEM 1B. UNRESOLVED STAFF COMMENTS.

       None.



ITEM 2. PROPERTIES.

       The following summarizes the geographic location of our stores, warehouse
and distribution centers and corporate facilities by major market area:

<TABLE>
<CAPTION>
        <S>                                   <C>          <C>     <C>           <C>              <C>
                                                                                            Leases
                                                                                             With
                                                                                           Options
                                                                   Total                   Expiring
                                        No. of       Leased       Square       Storage     Beyond 10
            Geographic Location        Locations   Facilities      Feet      Square Feet     Years
        ----------------------------  -----------  -----------  -----------  -----------  -----------
        Golden Triangle District (1).         5            5       157,129       30,456           5
        Louisiana District...........         5            5       148,628       38,394           5
        Houston District.............        22           19       538,342       89,235          14
        San Antonio/Austin District..        15           15       458,637       87,849          14
        Corpus Christi...............         1            1        61,864       18,960           1
        South Texas..................         3            3        91,697       15,484           3
        Oklahoma District............         1            1        31,385        6,385           1
        Dallas District..............        17           15       492,193       86,809          15
                                      -----------  -----------  -----------  -----------  -----------
           Store Totals..............        69           64     1,979,875      373,572          58
        Warehouse/Distribution
         Centers.....................         7            4       721,453      721,453           1
        Service Centers..............         5            3       191,932      133,636           1
        Corporate Offices............         1            1       106,783       25,000           1
                                      -----------  -----------  -----------  -----------  -----------
           Total.....................        82           72     3,000,043    1,253,661          61
                                      ===========  ===========  ===========  ===========  ===========
</TABLE>

-----------
       (1)    Includes one store in Lake Charles, Louisiana.

                                       27

<PAGE>

ITEM 3. LEGAL PROCEEDINGS.

       We are involved in routine  litigation  incidental  to our business  from
time to time. We do not expect the outcome of any of this routine  litigation to
have a material  effect on our  financial  condition  or  results of  operation.
However,  the results of their  proceedings  cannot be predicted with certainty,
and changes in facts and circumstances could impact our estimate of reserves for
litigation.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

       There were no matters  submitted to a vote of security holders during the
fourth quarter of fiscal 2008.



                                     PART II


ITEM 5. MARKET FOR REGISTRANT'S  COMMON EQUITY, AND RELATED  STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES.

WHAT IS THE PRINCIPAL MARKET FOR OUR COMMON STOCK?

       The  principal  market for our common stock is the NASDAQ  Global  Select
Market.  Our common stock is listed on the NASDAQ Global Select Market under the
symbol  "CONN."  Information  regarding  the high and low sales  prices  for our
common stock for each  quarterly  period within the two most recent fiscal years
as  reported  on NASDAQ is  summarized  as  follows:

                                                            High      Low
                                                         --------- ---------
           Quarter ended April 30, 2006.................. $ 44.99   $ 31.81
           Quarter ended July 31, 2006................... $ 35.52   $ 24.02
           Quarter ended October 31, 2006................ $ 26.75   $ 17.61
           Quarter ended January 31, 2007................ $ 25.33   $ 21.00
           Quarter ended April 30, 2007.................. $ 28.27   $ 22.66
           Quarter ended July 31, 2007................... $ 32.19   $ 24.35
           Quarter ended October 31, 2007................ $ 28.54   $ 19.60
           Quarter ended January 31, 2008................ $ 25.87   $ 14.05


HOW MANY COMMON STOCKHOLDERS DO WE HAVE?

       As of March 14, 2008,  we had  approximately  51 common  stockholders  of
record and an estimated 7,500 beneficial owners of our common stock.

DID WE DECLARE ANY CASH DIVIDENDS IN FISCAL 2007 OR FISCAL 2008?

       No cash  dividends were paid in fiscal 2007 or 2008. We do not anticipate
paying dividends in the foreseeable future. Any future payment of dividends will
be at the  discretion of the Board of Directors and will depend upon our results
of operations,  financial condition,  cash requirements and other factors deemed
relevant by the Board of  Directors,  including  the terms of our  indebtedness.
Provisions in  agreements  governing  our  long-term  indebtedness  restrict the
amount  of  dividends  that  we may  pay  to  our  stockholders.  See  "Item  7.

Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations - Liquidity and Capital Resources."

HAS THE COMPANY HAD ANY SALES OF UNREGISTERED SECURITIES DURING THE LAST YEAR?

       The Company has had no sales of  unregistered  securities  during  fiscal
2008.

                                       28

<PAGE>
HAS THE COMPANY PURCHASED ANY OF ITS SECURITIES DURING THE PAST QUARTER?

       On  August  25,  2006,  we  announced  that our  Board of  Directors  had
authorized a common stock repurchase  program,  permitting us to purchase,  from
time to time, in the open market and in privately negotiated transactions, up to
an  aggregate  of  $50.0  million  of our  common  stock,  dependent  on  market
conditions  and the price of the stock.  During the  quarter  ended  January 31,
2008, we effected the following repurchases of our common stock:

<TABLE>
<CAPTION>
<S>                                          <C>  <C>                       <C>  <C>
                                                             Total # of Shares      Approximate
                                                                Purchased as      Dollar Value of
                                     Total # of    Average   Part of Publicly     Shares That May
                                       shares    Price Paid      Announced       Yet Be Purchased
             Period                  purchased    per share      Programs        Under the Programs
             ------                  ----------  ----------  -----------------  -------------------

November 1 - November 30, 2007......         -    $      -                  -    $      25,498,150

December 1 - December 31, 2007......   443,600    $  19.64            443,600    $      16,784,118

January 1 - January 31, 2008........   238,420    $  15.93            238,420    $      12,985,016
                                     ----------              -----------------

Total...............................   682,020                        682,020
                                     ==========              =================
</TABLE>


                                       29

<PAGE>

I
TEM 6. SELECTED FINANCIAL DATA.

<TABLE>
<CAPTION>
<S>                                               <C>         <C>         <C>         <C>         <C>
                                                                 Year Ended January 31, (A)
                                                -----------------------------------------------------------
                                                    2004        2005        2006        2007        2008
                                                ----------- ----------- ----------- ----------- -----------
                                                (dollars and shares in thousands, except per share amounts)
                                                                                                     (B)
Statement of Operations:
Total revenues..................................  $498,378    $565,821    $701,148    $760,657    $824,128
Operating expense:
Cost of goods sold, including warehousing
 and occupancy cost.............................   300,935     339,887     427,843     473,064     517,166
Selling, general and administrative expense.....   152,234     173,349     208,259     224,979     245,317
Provision for bad debts.........................     2,504       2,589       1,133       1,476       1,908
                                                ----------- ----------- ----------- ----------- -----------
Total operating expense.........................   455,673     515,825     637,235     699,519     764,391
                                                ----------- ----------- ----------- ----------- -----------
Operating income................................    42,705      49,996      63,913      61,138      59,737
Interest (income) expense, net and minority
 interest.......................................     4,577       2,477         400        (676)       (515)
Other (income) expense..........................      (175)        126          69        (772)       (943)
                                                ----------- ----------- ----------- ----------- -----------
Earnings before income taxes....................    38,303      47,393      63,444      62,586      61,195
Provision for income taxes......................    13,260      16,706      22,341      22,275      21,509
                                                ----------- ----------- ----------- ----------- -----------
Net income......................................    25,043      30,687      41,103      40,311      39,686
Less preferred stock dividends (1)..............    (1,954)          -           -           -           -
                                                ----------- ----------- ----------- ----------- -----------
Net income available for common stockholders....   $23,089     $30,687     $41,103     $40,311     $39,686
                                                =========== =========== =========== =========== ===========
Earnings per common share:
     Basic......................................     $1.30       $1.32       $1.76       $1.70       $1.71
     Diluted....................................     $1.26       $1.30       $1.71       $1.66       $1.68
Average common shares outstanding:
     Basic......................................    17,726      23,192      23,412      23,663      23,193
     Diluted....................................    18,257      23,646      24,088      24,289      23,673

Other Financial Data:
Stores open at end of period....................        45          50          56          62          69
Same store sales growth (2).....................       2.6%        3.6%       16.9%        3.6%        3.2%
Inventory turns (3).............................       6.5         6.0         6.6         6.1         6.4
Gross margin percentage (4).....................      39.6%       39.9%       39.0%       37.8%       37.2%
Operating margin (5)............................       8.6%        8.8%        9.1%        8.0%        7.2%
Return on average equity (6)....................      20.9%       16.1%       17.7%       14.7%       13.3%
Capital expenditures............................    $9,401     $19,619     $18,490     $18,425     $18,955

Balance Sheet Data:
Working capital.................................  $121,154    $156,006    $190,073    $220,740    $236,763
Total assets....................................   240,081     276,716     355,617     389,947     382,852
Total debt......................................    14,512      10,532         136         198         119
Total stockholders' equity......................   171,911     208,734     255,861     292,528     304,418
</TABLE>


--------------------------------

(1)    Dividends declared and paid related to 2004.
(2)    Same store sales growth is calculated by comparing the reported  sales by
       store for all stores that were open throughout a period to reported sales
       by store for all stores that were open throughout the prior period. Sales
       from  closed  stores  have been  removed  from each  period.  Sales  from
       relocated  stores have been  included in each  period  because  each such
       store was relocated within the same general geographic market. Sales from
       expanded stores have been included in each period.
(3)    Inventory  turns  are  defined  as the  cost  of  goods  sold,  excluding
       warehousing and occupancy cost,  divided by the average product inventory
       balance, excluding consigned goods.
(4)    Gross margin  percentage is defined as total  revenues less cost of goods
       and parts sold,  including  warehousing  and occupancy  cost,  divided by
       total revenues.
(5)    Operating  margin  is  defined  as  operating  income  divided  by  total
       revenues.
(6)    Return on  average  equity is  calculated  as  current  period net income
       divided by the average of the beginning and ending equity.
(A)    In order to present our results on a basis that is more  comparable  with
       others in our industry,  we have  reclassified  advertising  expenditures
       that were previously included in costs of goods sold to selling,  general
       and administrative expense.
(B)    Fiscal 2008 was  impacted  by a non-cash  fair value  adjustment  of $4.8
       million  which  reduced the fair value of our  interests  in  securitized
       assets.

                                       30

<PAGE>

ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

Forward-Looking Statements

       This report contains forward-looking  statements.  We sometimes use words
such  as  "believe,"  "may,"  "will,"  "estimate,"   "continue,"   "anticipate,"
"intend," "expect," "project" and similar expressions, as they relate to us, our
management   and  our   industry,   to  identify   forward-looking   statements.
Forward-looking   statements  relate  to  our  expectations,   beliefs,   plans,
strategies,  prospects, future performance,  anticipated trends and other future
events.  We have based our  forward-looking  statements  largely on our  current
expectations and projections  about future events and financial trends affecting
our  business.  Actual  results  may  differ  materially.  Some  of  the  risks,
uncertainties  and assumptions  about us that may cause actual results to differ
from these forward-looking statements include, but are not limited to:

       o      the success of our growth strategy and plans regarding opening new
              stores and entering adjacent and new markets,  including our plans
              to continue expanding into the Dallas/Fort Worth Metroplex,  South
              Texas and Oklahoma;

       o      our ability to open and profitably operate new stores in existing,
              adjacent and new geographic markets;

       o      our intention to update or expand existing stores;

       o      our ability to obtain  capital for required  capital  expenditures
              and costs  related  to the  opening  of new stores or to update or
              expand existing stores;

       o      our cash flows from operations, borrowings from our revolving line
              of  credit  and  proceeds   from   securitizations   to  fund  our
              operations, capital expenditures, debt repayment and expansion;

       o      the  ability  of the QSPE to  obtain  additional  funding  for the
              purpose of purchasing our  receivables,  including  limitations on
              the ability of the QSPE to obtain financing through its commercial
              paper-based funding sources;

       o      the effect of rising  interest  rates that could increase our cost
              of borrowing or reduce securitization income; the

       o      the  effect  of  rising  interest  rates  on  sub-prime   mortgage
              borrowers  that  could  impair  our  customers'  ability  to  make
              payments on outstanding credit accounts;

       o      our inability to make customer  financing  programs available that
              allow  consumers  to purchase  products at levels that can support
              our growth;

       o      the potential for  deterioration in the delinquency  status of the
              sold or owned  credit  portfolios  or higher than  historical  net
              charge-offs in the portfolios could adversely impact earnings;

       o      the long-term effect of the change in bankruptcy laws could effect
              net  charge-offs  in the credit  portfolio  which could  adversely
              impact earnings;

       o      technological and market developments, growth trends and projected
              sales in the home  appliance  and consumer  electronics  industry,
              including with respect to digital products like DVD players, HDTV,
              GPS devices,  home networking devices and other new products,  and
              our ability to capitalize on such growth;

       o      the  potential  for price  erosion or lower unit sales points that
              could result in declines in revenues;

       o      higher oil and gas prices could  adversely  affect our  customers'
              shopping  decisions  and  patterns,  as  well  as the  cost of our
              delivery  and  service  operations  and our cost of  products,  if
              vendors  pass on their  additional  fuel costs  through  increased
              pricing for products;

                                       31

<PAGE>
       o      the ability to attract and retain qualified personnel;

       o      both the  short-term  and  long-term  impact  of  adverse  weather
              conditions  (e.g.  hurricanes)  that could result in volatility in
              our revenues and increased expenses and casualty losses;

       o      changes  in laws and  regulations  and/or  interest,  premium  and
              commission  rates  allowed by  regulators  on our  credit,  credit
              insurance and service  maintenance  agreements as allowed by those
              laws and regulations;

       o      our relationships with key suppliers;

       o      the  adequacy  of our  distribution  and  information  systems and
              management experience to support our expansion plans;

       o      changes in the assumptions  used in the valuation of our interests
              in securitized assets at fair value;

       o      the accuracy of our  expectations  regarding  competition  and our
              competitive advantages;

       o      the  potential  for market  share  erosion  that  could  result in
              reduced revenues;

       o      the  accuracy of our  expectations  regarding  the  similarity  or
              dissimilarity  of our existing  markets as compared to new markets
              we enter; and

       o      the outcome of litigation affecting our business.

       Additional  important  factors  that could  cause our  actual  results to
differ  materially from our  expectations  are discussed under "Risk Factors" in
this Form 10-K.  In light of these risks,  uncertainties  and  assumptions,  the
forward-looking  events and  circumstances  discussed  in this report  might not
happen.

       The  forward-looking  statements  in this  report  reflect  our views and
assumptions  only as of the date of this report.  We undertake no  obligation to
update publicly or revise any forward-looking statements, whether as a result of
new information, future events or otherwise, except as required by law.

       All forward-looking  statements  attributable to us, or to persons acting
on our behalf,  are expressly  qualified in their  entirety by these  cautionary
statements.

General

       We intend the  following  discussion  and  analysis to provide you with a
better understanding of our financial condition and performance in the indicated
periods,  including  an analysis of those key factors  that  contributed  to our
financial condition and performance and that are, or are expected to be, the key
drivers of our business.

       Through our 69 retail  stores,  we provide  products  and services to our
customers in seven primary market areas,  including Houston, San Antonio/Austin,
Dallas/Fort Worth,  southern Louisiana,  Southeast and South Texas and Oklahoma.
Products  and  services  offered  through  retail  sales  outlets  include  home
appliances,  consumer  electronics,  home  office  equipment,  lawn  and  garden
products, mattresses, furniture, service maintenance agreements, customer credit
programs,  including  installment  and revolving  credit account  programs,  and
various credit insurance  products.  These activities are supported  through our
extensive  service,  warehouse  and  distribution  system.  Our stores  bear the
"Conn's"  name,  after our founder's  family,  and deliver the same products and
services to our  customers.  All of our stores  follow the same  procedures  and
methods  in  managing  their  operations.  The  Company's  management  evaluates
performance and allocates resources based on the operating results of the retail
stores and considers the credit  programs,  service  contracts and  distribution
system to be an integral part of the Company's retail operations.

                                       32

<PAGE>
       On February 1, 2007,  we were  required to adopt  Statement  of Financial
Accounting  Standard  (SFAS) No. 155,  Accounting for Certain  Hybrid  Financial
Instruments.  Among other things,  this  statement  established a requirement to
evaluate  interests in securitized  financial assets to identify  interests that
are  freestanding  derivatives  or that are hybrid  financial  instruments  that
contain an embedded derivative requiring bifurcation.  Additionally,  we had the
option to choose to early adopt the  provisions  of SFAS No. 159, The Fair Value
Option for Financial Assets and Financial Liabilities. We elected to early adopt
SFAS  No.  159  because  we  believe  it  provides  a  more  easily   understood
presentation  for  financial  statement  users.  This  election  resulted  in us
including all changes in the fair value of our Interests in  securitized  assets
in current earnings,  in Finance charges and other,  beginning February 1, 2007.
Previously,  most  changes in the fair  value of our  Interests  in  securitized
assets  were  recorded  in Other  comprehensive  income,  which was  included in
Stockholders'  equity.  SFAS Nos.  155 and 159 do not  allow  for  retrospective
application  of these changes in accounting  principle,  as such, no adjustments
have been made to the amounts disclosed in the financial  statements for periods
ending prior to February 1, 2007.  Additionally,  effective February 1, 2007, we
adopted SFAS No. 157, Fair Value Measurements, which established a framework for
measuring fair value,  based on the  assumptions we believe market  participants
would  use to value  assets  or  liabilities  to be  exchanged.  Changes  in the
assumptions over time,  including varying credit portfolio  performance,  market
interest rate changes,  market participant risk premiums required, or a shift in
the mix of funding sources,  could result in significant  volatility in the fair
value of the Interest in securitized assets, and thus our earnings.

       During the fiscal year ended January 31, 2008, risk premiums  required by
market participants on many investments  increased  significantly as a result of
disruption in the  asset-backed  securities  markets due to increased losses and
delinquencies  in sub-prime real estate  mortgages.  Though we do not anticipate
any significant variation from the current earnings and cash flow performance of
our securitized credit portfolio,  we increased the risk premium included in the
discount  rate  assumption  used in the  determination  of the fair value of our
interests in securitized  assets to reflect the higher estimated risk premium we
believe a market  participant would require if purchasing the asset.  Based on a
review of the  changes in market  risk  premiums  during  the fiscal  year ended
January 31, 2008,  and  discussions  with our  investment  bankers and financial
advisors,  we estimated that a market participant would require an approximately
500 basis point  increase  in the  required  discount  rate risk  premium.  As a
result, we increased the weighted average discount rate assumption from 14.6% at
January 31,  2007,  to 16.5% at January 31, 2008,  after  reflecting a 280 basis
point  decrease in the  risk-free  interest  rate  included in the discount rate
assumption.   We  have  also  included  an  expected  market   participant-based
assumption related to the estimated cost of a bond issuance  contemplated by the
QSPE,  and an  increase  in the  credit  loss rate on the  credit  portfolio  we
estimate a market  participant  would use in  determining  the fair value of our
interests in  securitized  assets.  The  increase in the  discount  rate has the
effect of  deferring  income to future  periods,  but not  permanently  reducing
securitization income or our earnings. If a market participant were to require a
risk premium that is 100 basis points higher than we estimated in the fair value
calculation,  the fair value of our  interests  in  securitized  assets would be
decreased by an additional $1.7 million.  If we had assumed a 10.0% reduction in
net  interest  spread  (which  might  be  caused  by  rising  interest  rates or
reductions  in rates  charged on the  accounts  transferred),  our  interest  in
securitized assets and Finance charges and other would have been reduced by $6.7
million as of January 31, 2008. If the  assumption  used for  estimating  credit
losses was increased by 0.5%, the impact to Finance charges and other would have
been a reduction in revenues and pretax income of $2.3  million.  As of the date
of the  filing of this  Annual  Report on Form  10-K,  we  understand  that risk
premiums and borrowing  costs have continued to increase since January 31, 2008,
and could result in a significant  adjustment to the fair value of our interests
in securitized assets in future periods.

       We were also required to adopt the provisions of SFAS No. 156, Accounting
for Servicing of Financial Assets, effective on February 1, 2007. As a result of
the adoption of this pronouncement, along with the requirements of SFAS No. 157,
we recorded a $1.1 million servicing  liability on the balance sheet in Deferred
revenues  and  allowances.  Any changes in the fair value of the  liability  are
recorded  in the  period of change in the  statement  of  operations  in Finance
charges and other.  As with the other changes  discussed  above,  no adjustments
have been made to the financial  statements for periods ending prior to February
1, 2007.

                                       33

<PAGE>
       Presented  below is a diagram setting forth our five  cornerstones  which
represent,  in our  view,  the  five  components  of  our  sales  goal -  strong
merchandising systems,  flexible credit options for our customers,  an extensive
warehousing and  distribution  system, a service system to support our customers
needs  during  and  beyond  the  product  warranty  periods,  and our  uniquely,
well-trained  employees in each area.  Each of these systems combine to create a
"nuts and bolts"  support  system for our customers  needs and desires.  Each of
these systems is discussed at length in the Business section of this report.

 BUSINESS
 CORNERSTONES:
---------------------
 Merchandising
 Credit
 Distribution                  Drive     >               Sales
 Service
 Training

       We, of course, derive a large part of our revenue from our product sales.
However, unlike many of our competitors,  we provide in-house credit options for
our customers' product purchases.  In the last three years, we have financed, on
average,  approximately 59% of our retail sales through these programs. In turn,
we finance (convert to cash) substantially all of our customer  receivables from
these  credit  options  through an  asset-backed  securitization  facility.  See
"Business - Finance Operations" for a detailed discussion of our in-house credit
programs. As part of our asset-backed securitization facility, we have created a
qualifying special purpose entity,  which we refer to as the QSPE or the issuer,
to purchase  customer  receivables from us and to issue medium-term and variable
funding notes  serviced by the  receivables  to finance its  acquisition  of the
receivables.  We transfer our receivables,  consisting of retail installment and
revolving  account  receivables  extended  to our  customers,  to the  issuer in
exchange for cash and subordinated securities.

       While our warehouse and  distribution  system does not directly  generate
revenues,   other  than  the  fees  paid  by  our  customers  for  delivery  and
installation  of the  products to their  homes,  it is our extra,  "value-added"
program that our existing  customers have come to rely on, and our new customers
are hopefully sufficiently impressed with to become repeat customers.  We derive
revenues from our repair services on the products we sell. Additionally,  acting
as an agent for unaffiliated  companies, we sell credit insurance to protect our
customers from credit losses due to death, disability,  involuntary unemployment
and  damage to the  products  they have  purchased;  to the  extent  they do not
already have it.

Executive Overview

       This overview is intended to provide an executive  level  overview of our
operations for our fiscal year ended January 31, 2008. A detailed explanation of
the changes in our  operations  for the fiscal year ended  January 31, 2008,  as
compared to the prior year is included  beginning  under Results of  Operations.
Following are significant financial items in managements view:

       o      Our revenues for the fiscal year ended January 31, 2008, increased
              by 8.3 percent, or $63.5 million, from fiscal year 2007, to $824.1
              million due  primarily to product  sales growth which drove higher
              service maintenance  agreement  commissions and finance charge and
              other  revenues.  Our same store sales  growth rate for the fiscal
              year ended  January  31,  2008,  was 3.2%,  versus 3.6% for fiscal
              2007.

                                       34

<PAGE>
       o      The addition of stores in our existing Dallas/Fort Worth, Houston,
              San  Antonio  and  South  Texas  markets  and our  first  store in
              Oklahoma  had a  positive  impact  on our  revenues.  We  achieved
              approximately  $35.0  million of  increases  in product  sales and
              service maintenance agreement (SMA) commissions for the year ended
              January 31, 2008, from the opening of thirteen new stores in these
              markets since  February 2006. Our plans provide for the opening of
              seven to ten additional stores, primarily in existing markets, and
              expand our presence in Oklahoma, during fiscal 2009 as we focus on
              opportunities in markets in which we have existing infrastructure.

       o      Deferred  interest  and  "same as cash"  plans  continue  to be an
              important  part of our sales  promotion  plans and are utilized to
              provide a wide  variety of  financing  to enable us to appeal to a
              broader customer base. For the fiscal year ended January 31, 2008,
              $193.4  million,  or 28.8%,  of our product sales were financed by
              deferred  interest  and  "same  as cash"  plans.  This  volume  of
              promotional  credit as a percent  of product  sales is  consistent
              with our use of this type of credit  product before the hurricanes
              in late 2005. For the comparable period in the prior year, product
              sales financed by deferred  interest and "same as cash" sales were
              $152.3 million, or 24.4%. Our promotional credit programs (same as
              cash  and  deferred  interest  programs),  which  require  monthly
              payments,  are reserved for our highest credit quality  customers,
              thereby  reducing the overall risk in the portfolio,  and are used
              primarily  to finance  sales of our highest  margin  products.  We
              expect to continue to offer  extended term  promotional  credit in
              the future.

       o      Our gross margin was 37.2% for fiscal 2008, a decrease  from 37.8%
              in fiscal 2007,  primarily as a result of a $4.8 million reduction
              in the fair  value  of our  interest  in  securitized  assets  and
              reduced  gross margin  realized on product sales from 25.3% in the
              year  ended  January  31,  2007,  to 24.2% in  fiscal  year  2008.
              Excluding  the  decrease  in the  fair  value of our  interest  in
              securitized assets we would have achieved a 37.6% gross margin.

       o      Our operating  margin  decreased to 7.2% in fiscal 2008, from 8.0%
              in fiscal 2007, primarily as a result of the $4.8 million decrease
              in the fair value of our interest in securitized assets. Excluding
              the  decrease  in the fair value of our  interest  in  securitized
              assets,  we would have achieved a 7.8% operating margin. In fiscal
              year 2008,  SG&A  expense as a percent of  revenues  increased  to
              29.8% from 29.6% when compared to the prior year,  primarily  from
              increases in payroll and payroll related expenses.

       o      Cash flows used in operations  was $5.6 million during fiscal 2008
              due primarily to increased  investment in credit  portfolio growth
              and  increased  investment  in  inventory  due  to the  timing  of
              receipts of inventory.

       o      Our  pretax   income  for  fiscal  2008   decreased   by  2.2%  or
              approximately  $1.4 million,  from fiscal 2007 to $61.2 million in
              fiscal 2008.  The  decrease  was driven by $4.8  million  non-cash
              reduction in the fair value of our interest in securitized assets.

Operational Changes and Outlook

       We have  implemented,  continued  increased focus on, or modified several
initiatives  in fiscal 2008 that we believe  will  positively  impact our future
operating results,  including:

       o      Increased  promotion of flat panel technology in our stores as the
              price point becomes more affordable for our customers; and

       o      Increased  emphasis  on the sale of small  electronics,  including
              video game equipment and GPS devices; and

       o      Increased  emphasis  on the  sales of  furniture,  and  additional
              product lines added to this category; and

       o      A thorough  review of our staffing and cost structure to ensure we
              are effectively leveraging the infrastructure in place and that it
              is sufficient to support our growth plans.

                                       35

<PAGE>
       While the  hurricanes  that hit the Gulf Coast on August and September of
2005  impacted  our  customer's  ability to pay on their  accounts,  its biggest
impact was the disruption to our credit collection operations, including payment
processing  delays  caused  by  disruption  in  the  mail  service.  The  credit
collection operations were negatively affected by the loss of personnel, as some
employees  did  not  return  to  work,  and by the  increase  in the  number  of
delinquent  accounts,  resulting in increased  workloads for the personnel  that
returned to work. To address the staffing issues caused by the disruption we saw
after  Hurricane  Rita that hit the Gulf  Coast  during  September  of 2005,  we
intensified our recruiting efforts to attract individuals to our Beaumont, Texas
collection center. Further, during 2008, we opened a second collection center in
San  Antonio,  Texas and  closed our  collection  center in  Dallas,  Texas.  We
identified and have been successful in recruiting highly  qualified,  bi-lingual
credit  collectors in the San Antonio market that we were not able to recruit in
sufficient  numbers  in  Dallas.  Additionally,  non-storm  factors  that may be
negatively  affecting  delinquencies  and charge-offs  include the impact of the
bankruptcy  law  change  in  October  2005 and  other  economic  factors  on our
customers, including the impact of rising interest rates on sub-prime mortgages.
In addition to opening the San Antonio  collection  center,  we have reorganized
the management team over our credit operations to achieve a flatter organization
to put key managers closer to the customer.  As a result of the changes made, we
have been successful in reducing delinquencies and expect to maintain net credit
losses around 3%.

       On May 18, 2006,  the  Governor of Texas signed a tax bill that  modifies
the  existing  franchise  tax,  with  the  most  significant  change  being  the
replacement  of the existing base with a tax based on margin.  Taxable margin is
generally defined as total federal tax revenues minus the greater of (a) cost of
goods  sold or (b)  compensation.  The tax  rate  to be  paid by  retailers  and
wholesalers is 0.5% on taxable margin.  This will result in an increase in taxes
paid by us, as  franchise  taxes paid totaled less than $50,000 per year for the
years prior to fiscal 2007.  During June 2007, we completed a reorganization  to
simplify our legal  entity  structure  by merging  certain of our Texas  limited
partnerships into their corporate partners.  The reorganization also resulted in
the one-time  elimination  of the Texas  margin tax owed by those  partnerships,
representing  virtually  all of the  margin  tax  owed  by us.  Accordingly,  we
reversed approximately $0.9 million of accrued Texas margin tax as of June 2007,
net of federal  income tax. We began  accruing  the margin tax for the  entities
that acquired the operations through the mergers in July 2007. Going forward, we
expect our  effective  tax rate on Income  before  income  taxes to  increase to
between 36.5% and 37.5%,  from the 35.3% we experienced  prior to the initiation
of the new tax.

       During the year, we opened one new store in the Houston market,  three in
the Dallas/Fort  Worth market,  one in San Antonio,  Texas,  one in Brownsville,
Texas and one in Oklahoma City, Oklahoma. The Dallas/Fort Worth market continues
to perform at the mid-point of our range of expectations  and we believe we have
significant  upside  potential  in that market  through  growth in the  existing
stores  and our  intention  to  continue  to expand the number of stores in that
market. We have several other locations in Texas, Louisiana and Oklahoma that we
believe are promising and are in various  stages of  development  for opening in
fiscal  year  2009.  We  also  continue  to  look at  other  markets,  including
neighboring states for opportunities.

       The consumer  electronics  industry depends on new products to drive same
store sales increases.  Typically,  these new products,  such as LCD, plasma and
DLP televisions,  DVD players,  digital cameras, GPS devices and MP3 players are
introduced at relatively  high price points that are then  gradually  reduced as
the  product  becomes  more  mainstream.  To sustain  positive  same store sales
growth,  unit sales must  increase at a rate greater than the decline in product
prices.  The  affordability  of the product  helps drive the unit sales  growth.
However,  as a result of  relatively  short  product life cycles in the consumer
electronics industry,  which limit the amount of time available for sales volume
to increase,  combined with rapid price  erosion in the industry,  retailers are
challenged  to maintain  overall  gross margin  levels and  positive  same store
sales. This has historically been our experience,  and we continue to adjust our
marketing  strategies to address this challenge  through the introduction of new
product categories and new products within our existing categories.

Application of Critical Accounting Policies

       In  applying  the  accounting   policies  that  we  use  to  prepare  our
consolidated financial statements, we necessarily make accounting estimates that
affect our reported amounts of assets, liabilities,  revenues and expenses. Some
of these accounting  estimates require us to make assumptions about matters that
are highly uncertain at the time we make the accounting estimates. We base these
assumptions  and  the  resulting  estimates  on  authoritative   pronouncements,
historical  information and other factors that we believe to be reasonable under
the circumstances, and we evaluate these assumptions and estimates on an ongoing
basis. We could reasonably use different  accounting  estimates,  and changes in
our accounting  estimates could occur from period to period,  with the result in
each case being a material change in the financial statement presentation of our
financial condition or results of operations.  We refer to accounting  estimates
of this type as critical  accounting  estimates.  We believe  that the  critical
accounting  estimates  discussed  below are among  those  most  important  to an
understanding of our consolidated financial statements as of January 31, 2008.

                                       36

<PAGE>

       Transfers of Financial Assets. We transfer customer receivables to a QSPE
that issues asset-backed  securities to third-party lenders using these accounts
as collateral,  and we continue to service these accounts after the transfer. We
recognize  the  sale  of  these  accounts  when  we  relinquish  control  of the
transferred  financial  asset in accordance  with SFAS No. 140,  Accounting  for
Transfers and Servicing of Financial Assets and  Extinguishment  of Liabilities,
as amended by SFAS No. 155, Accounting for Certain Hybrid Financial Instruments.
As we transfer the accounts we record an asset  representing our interest in the
cash flows of the QSPE,  which is the difference  between the interest earned on
customer  accounts and the cost  associated  with  financing  and  servicing the
transferred  accounts,  including a provision for bad debts  associated with the
transferred accounts, plus our retained interest in the transferred receivables,
discounted using a return that would be expected by a third-party  investor.  We
recognize the income from our interest in these transferred accounts as gains on
the transfer of the asset,  interest  income and servicing  fees. This income is
recorded  as  Finance  charges  and  other  in our  consolidated  statements  of
operations.

       On February 1, 2007, we were  required to adopt SFAS No. 155,  Accounting
for Certain Hybrid  Financial  Instruments.  Among other things,  this statement
establishes a requirement to evaluate interests in securitized  financial assets
to  identify  interests  that are  freestanding  derivatives  or that are hybrid
financial instruments that contain an embedded derivative requiring bifurcation.
Additionally,  we had the option to choose to early adopt the provisions of SFAS
No. 159, The Fair Value Option for Financial  Assets and Financial  Liabilities.
Essentially, we had to decide between bifurcation of the embedded derivative and
the fair value option in  determining  how we would account for our Interests in
securitized assets. We elected to early adopt SFAS No. 159 because we believe it
provides a more easily  understood  presentation for financial  statement users.
Historically,  we had valued and reported our interests in securitized assets at
fair  value,  though  most  changes  in the fair value  were  recorded  in Other
comprehensive  income. The fair value option simplifies the treatment of changes
in the fair value of the asset,  by reflecting  all changes in the fair value of
our Interests in securitized assets in current earnings,  in Finance charges and
other,  beginning  February  1,  2007.  SFAS  Nos.  155 and 159 do not allow for
retrospective application of these changes in accounting principle and, as such,
no  adjustments  have  been  made  to the  amounts  disclosed  in the  financial
statements for periods ending prior to February 1, 2007. However, the balance in
Other  comprehensive  income,  as of January 31, 2007,  of $6.3  million,  which
represented unrecognized gains on the fair value of the Interests in securitized
assets,  was  included in a  cumulative-effect  adjustment  that was recorded in
Retained earnings, effective February 1, 2007.

       Because of our adoption of SFAS No. 159,  effective  February 1, 2007, we
were required to adopt the provisions of SFAS No. 157, Fair Value  Measurements.
This statement establishes a framework for measuring fair value and defines fair
value as "the price that would be  received to sell an asset or paid to transfer
a  liability  in an  orderly  transaction  between  market  participants  at the
measurement  date." We estimate the fair value of our  Interests in  securitized
assets  using a  discounted  cash flow model with most of the inputs  used being
unobservable   inputs.  The  primary  unobservable  inputs,  which  are  derived
principally  from our  historical  experience,  with input  from our  investment
bankers and financial  advisors,  include the estimated  portfolio yield, credit
loss rate,  discount  rate,  payment rate and  delinquency  rate and reflect our
judgments about the  assumptions  market  participants  would use in determining
fair  value.  In  determining  the cost of  borrowings,  we use  current  actual
borrowing rates,  and adjusts them, as appropriate,  using interest rate futures
data from market  sources to project  interest  rates over time.  Changes in the
assumptions over time,  including varying credit portfolio  performance,  market
interest rate changes,  market participant risk premiums required, or a shift in
the mix of funding sources,  could result in significant  volatility in the fair
value of the Interest in securitized assets, and thus our earnings.

       Additionally, as a result of our adoption of SFAS No. 159, The Fair Value
Option for Financial  Assets and Financial  Liabilities,  effective  February 1,
2007,  we record all changes in the fair value of our  Interests in  securitized
assets in current  earnings,  in Finance  charges  and other.  Previously,  most
changes in the fair value of our Interests in  securitized  assets were recorded
in Other comprehensive  income.  Effective February 1, 2007, we adopted SFAS No.
157, Fair Value  Measurements,  which established a framework for measuring fair
value, based on the assumptions a company believes market participants would use
to value assets or liabilities to be exchanged.  The gain or loss  recognized on
the sales of the receivables is based on our best estimates of key  assumptions,
including  forecasted credit losses,  payment rates, forward yield curves, costs
of  servicing  the  accounts  and  appropriate  discount  rates,  based  on  our
expectations of the assumptions that a market participant would use.

                                       37

<PAGE>
       We were required to adopt the provisions of SFAS No. 156,  Accounting for
Servicing of Financial Assets, effective on February 1, 2007. As a result of the
adoption of this pronouncement we recorded a servicing  liability on the balance
sheet in Deferred  revenues and  allowances and any changes in the fair value of
the  liability  are  recorded  in the  period  of  change  in the  statement  of
operations  in Finance  charges  and other.  We  estimate  the fair value of our
servicing   liability   using  the  portfolio   performance  and  discount  rate
assumptions  discussed  above,  and an  estimate of the  servicing  fee a market
participant would require to service the portfolio.

       The use of different  estimates or  assumptions  in the  valuation of our
Interest in securitized  assets or servicing  liability could produce  different
financial results. Additionally, changes in the assumptions over time, including
varying  credit  portfolio  performance,  market  interest  rate changes or risk
premiums  required,  or a shift in the mix of funding  sources,  could result in
significant volatility in the fair value of the Interests in securitized assets,
and thus our  earnings.  During the fiscal  year ended  January 31,  2008,  risk
premiums  required  by  market   participants  on  many  investments   increased
significantly as a result of disruption in the asset-backed  securities  markets
due to increased losses and delinquencies in sub-prime  mortgages.  Though we do
not anticipate any significant variation from the current earnings and cash flow
performance of our securitized  credit portfolio,  we increased the risk premium
included in the discount rate assumption used in the  determination  of the fair
value of our interests in securitized assets to reflect the higher expected risk
premiums  included in investment  returns we believe a market  participant would
require if purchasing our interests.  Based on a review of the changes in market
risk  premiums  during the fiscal year ended January 31, 2008,  and  discussions
with our investment bankers and financial  advisors,  we estimated that a market
participant  would  require an  approximately  500 basis  point  increase in the
required risk premium.  As a result,  the Company increased the weighted average
discount rate assumption from 14.6% at January 31, 2007, to 16.5% at January 31,
2008, after reflecting a 280 basis point decrease in the risk-free interest rate
included in the  discount  rate  assumption.  We have also  included an expected
market  participant-based  assumption  related to the  estimated  cost of a bond
issuance  contemplated  by the QSPE,  and an increase in the credit loss rate on
the credit portfolio we estimate a market  participant  would use in determining
the fair value of our  interests  in  securitized  assets.  The  increase in the
discount  rate has the effect of  deferring  income to future  periods,  but not
permanently  reducing  securitization  income  or  our  earnings.  If  a  market
participant  were to require a risk premium that is 100 basis points higher than
we estimated in the fair value  calculation,  the fair value of our interests in
securitized  assets would be decreased by an additional $1.7 million.  If we had
assumed a 10.0%  reduction  in net  interest  spread  (which  might be caused by
rising   interest   rates  or  reductions  in  rates  charged  on  the  accounts
transferred),  our interest in securitized  assets and Finance charges and other
would  have  been  reduced  by $6.7  million  as of  January  31,  2008.  If the
assumption  used for estimating  credit losses was increased by 0.5%, the impact
to Finance  charges and other would have been a reduction in revenues and pretax
income of $2.3 million.

       Revenue  Recognition.  Revenues  from the  sale of  retail  products  are
recognized at the time the product is delivered to the  customer.  Such revenues
are  recognized  net of any  adjustments  for  sales  incentive  offers  such as
discounts, coupons, rebates, or other free products or services. We sell service
maintenance  agreements  and credit  insurance  contracts on behalf of unrelated
third  parties.  For  contracts  where the third  parties are the obligor on the
contract, commissions are recognized in revenues at the time of sale, and in the
case of  retrospective  commissions,  at the time that they are earned.  When we
sell service maintenance  agreements in which we are deemed to be the obligor on
the  contract  at  the  time  of  sale,  revenue  is  recognized  ratably,  on a
straight-line basis, over the term of the service maintenance  agreement.  These
direct obligor service maintenance agreements are renewal contracts that provide
our  customers  protection  against  product  repair  costs  arising  after  the
expiration of the manufacturer's  warranty and the third party obligor contracts
and typically range from 12 months to 36 months.  These  agreements are separate
units of  accounting  under  Emerging  Issues  Task  Force  No.  00-21,  Revenue
Arrangements  with  Multiple  Deliverables.  The amounts of service  maintenance
agreement  revenue  deferred at January 31, 2007 and 2008 were $3.6  million and
$5.4  million,  respectively,  and  are  included  in  Deferred  revenue  in the
accompanying  balance  sheets.  The  amounts  of service  maintenance  agreement
revenue  recognized  for the fiscal years ended January 31, 2006,  2007 and 2008
were $5.0 million, $4.7 million and $5.7 million, respectively.

                                       38

<PAGE>
       Vendor  Allowances.  We receive funds from vendors for price  protection,
product  rebates  (earned  upon  purchase  or sale of  product),  marketing  and
training and  promotion  programs  which are recorded on the accrual  basis as a
reduction to the related  product cost or advertising  expense  according to the
nature of the program.  We accrue rebates based on the  satisfaction of terms of
the  program  and sales of  qualifying  products  even  though  funds may not be
received  until the end of a quarter or year.  If the  programs  are  related to
product  purchases,  the  allowances,  credits or  payments  are  recorded  as a
reduction of product  cost;  if the programs are related to product  sales,  the
allowances,  credits or payments  are  recorded as a reduction  of cost of goods
sold; if the programs are related to promotion or marketing of the product,  the
allowances,  credits,  or payments are  recorded as a reduction  of  advertising
expense  in the period in which the  expense  is  incurred.  We  received  $25.3
million,  $27.2 million and $36.1 million in vendor allowances during the fiscal
year ended January 31, 2006, 2007 and 2008, respectively, of which $5.8 million,
$7.2 million and $6.6 million, respectively,  represented advertising assistance
allowances.

       Share-Based  Compensation.  In December 2004, SFAS No. 123R,  Share-Based
Payment,  was issued.  Under the  requirements  of this statement we measure the
cost  of  employee  services  received  in  exchange  for  an  award  of  equity
instruments,  typically stock options, based on the grant-date fair value of the
award,  and  record  that cost over the  period  during  which the  employee  is
required to provide service in exchange for the award. The grant-date fair value
is based on our best estimate of key assumptions, including expected time period
over  which the  options  will  remain  outstanding  and  expected  stock  price
volatility  at the  date  of  grant.  Additionally,  we must  estimate  expected
forfeitures  for each stock option  grant and adjust the  recorded  compensation
expense  accordingly.  The use of different  estimates  could produce  different
financial results.  See Notes 1 and 8 to our financial statements for additional
information.

       Accounting for Leases. The accounting for leases is governed primarily by
SFAS No. 13, Accounting for Leases. As required by the standard, we analyze each
lease,  at its inception and any  subsequent  renewal,  to determine  whether it
should be accounted for as an operating lease or a capital lease.  Additionally,
monthly lease expense for each  operating  lease is calculated as the average of
all payments required under the minimum lease term,  including rent escalations.
Generally, the minimum lease term begins with the date we take possession of the
property  and ends on the last day of the minimum  lease term,  and includes all
rent  holidays,  but excludes  renewal terms that are at our option.  Any tenant
improvement  allowances  received are deferred  and  amortized  into income as a
reduction of lease expense on a straight line basis over the minimum lease term.
The amortization of leasehold  improvements is computed on a straight line basis
over the shorter of the remaining lease term or the estimated useful life of the
improvements.  For transactions  that qualify for treatment as a sale-leaseback,
any gain or loss is deferred and  amortized  as rent expense on a  straight-line
basis over the  minimum  lease  term.  Any  deferred  gain would be  included in
Deferred  gain on sale of property  and any  deferred  loss would be included in
Other assets on the consolidated balance sheets.

                                       39

<PAGE>
       Results of Operations

       The  following   table  sets  forth   certain   statement  of  operations
information  as a  percentage  of  total  revenues  for the  periods  indicated.

<TABLE>
<CAPTION>
<S>                                                         <C>         <C>         <C>
                                                            Year ended January 31, (A)
                                                        ----------------------------------
                                                           2006        2007        2008
                                                        ----------  ----------  ----------
Revenues:
  Product sales.........................................    81.3 %      82.0 %      81.5 %
  Service maintenance agreement commissions (net).......     4.3         4.0         4.4
  Service revenues......................................     2.9         3.0         2.8
                                                        ----------  ----------  ----------
     Total net sales....................................    88.5        89.0        88.7
  Finance charges and other.............................    11.5        11.0        11.3
                                                        ----------  ----------  ----------
     Total revenues.....................................   100.0       100.0       100.0
Cost and expenses:
  Cost of goods sold, including warehousing and
   occupancy costs......................................    60.3        61.3        61.7
  Cost of parts sold, including warehousing and
   occupancy costs......................................     0.7         0.9         1.0
  Selling, general and administrative expense...........    29.7        29.6        29.8
  Provision for bad debts...............................     0.2         0.2         0.3
                                                        ----------  ----------  ----------
  Total costs and expenses..............................    90.9        92.0        92.8
                                                        ----------  ----------  ----------
Operating income........................................     9.1         8.0         7.2
Interest (income) expense...............................     0.1        (0.1)       (0.1)
Other (income) expense..................................     0.0        (0.1)       (0.1)
                                                        ----------  ----------  ----------
Earnings before income taxes............................     9.0         8.2         7.4
Provision for income taxes..............................     3.1         2.9         2.6
                                                        ----------  ----------  ----------
Net income..............................................     5.9 %       5.3 %       4.8 %
                                                        ==========  ==========  ==========
</TABLE>


(A) - In order to present  our results on a basis that is more  comparable  with
others in our industry, we have reclassified  advertising expenditures that were
previously   included   in  costs  of  goods  sold  to   selling,   general  and
administrative expense.


       The table above  identifies  several  changes in our  operations  for the
periods presented, including changes in revenue and expense categories expressed
as a  percentage  of revenues.  These  changes are  discussed  in the  Executive
Overview, and in more detail in the discussion of operating results beginning in
the analysis below.

       Same store sales growth is calculated by comparing the reported  sales by
store for all stores that were open  throughout  a period to  reported  sales by
store for all stores that were open throughout the prior year period. Sales from
closed stores have been removed from each period.  Sales from  relocated  stores
have been included in each period  because each store was  relocated  within the
same general geographic market. Sales from expanded stores have been included in
each period.

       The  presentation  of our gross  margins may not be  comparable  to other
retailers since we include the cost of our in-home  delivery  service as part of
selling,  general and administrative expense.  Similarly, we include the cost of
merchandising our products,  including amounts related to purchasing the product
in selling,  general and  administrative  expense.  It is our understanding that
other retailers may include such costs as part of cost of goods sold.

                                       40

<PAGE>
       The following table presents  certain  operations  information in dollars
and percentage changes from year to year:

       Refer to the above Analysis of  Consolidated  Statements of Operations in
condensed form while reading the operations review on a year by year basis.

Analysis of Consolidated Statements of Operations
(in thousands except percentages)

<TABLE>
<CAPTION>
<S>                                <C>         <C>      <C>        <C>       <C>      <C>         <C>
                                                                  2007 vs. 2006       2008 vs. 2007
                                    Year Ended January 31, (A)      Incr/(Decr)         Incr/(Decr)
                                  ------------------------------------------------- -------------------
                                     2006      2007      2008    Amount     Pct       Amount      Pct
                                  --------- --------- --------- --------  -------    --------    ------
Revenues
Product sales                      $569,877  $623,959  $671,571   $54,082     9.5%   $47,612       7.6 %
Service maintenance agreement
commissions (net)                    30,583    30,567    36,424      (16)    (0.1)     5,857      19.2
Service revenues                     20,278    22,411    22,997     2,133    10.5        586       2.6
                                  --------- --------- --------- --------             --------  
Total net sales                     620,738   676,937   730,992    56,199     9.1     54,055       8.0
Finance charges and other            80,410    83,720    93,136     3,310     4.1      9,416      11.2
                                  --------- --------- --------- --------             --------   
Total revenues                      701,148   760,657   824,128    59,509     8.5     63,471       8.3
Cost and expenses
Cost of goods and parts sold        427,843   473,064   517,166    45,221    10.6     44,102       9.3
                                  --------- --------- --------- --------             --------  
Gross Profit                        273,305   287,593   306,962    14,288     5.2     19,369       6.7
Gross Margin                           39.0%     37.8%     37.2%
Selling, general and
 administrative expense             208,259   224,979   245,317    16,720     8.0     20,338       9.0
Provision for bad debts               1,133     1,476     1,908       343    30.3        432      29.3
                                  --------- --------- --------- --------             --------  
Operating income                     63,913    61,138    59,737   (2,775)    (4.3)   (1,401)      (2.3)
Operating Margin                        9.1%      8.0%      7.2%
Interest (income) expense               400     (676)     (515)   (1,076)  (269.0)       161     (23.8)
Other (income) expense                   69     (772)     (943)     (841) (1218.8)     (171)      22.2
                                  --------- --------- --------- --------             --------  
Pretax Income                        63,444    62,586    61,195     (858)    (1.4)   (1,391)      (2.2)
Provision for income taxes           22,341    22,275    21,509      (66)    (0.3)     (766)      (3.4)
                                  --------- --------- --------- --------             -------- 
Net income available
for common stockholders             $41,103   $40,311   $39,686    ($792)    (1.9)%   ($625)      (1.6)%
                                  ========= ========= ========= ========             ========
</TABLE>

       (A) - In order to present our results on a basis that is more  comparable
with others in our industry, we have reclassified  advertising expenditures that
were  previously  included  in costs  of  goods  sold to  selling,  general  and
administrative expense.

Year Ended January 31, 2007 Compared to the Year Ended January 31, 2008

<TABLE>
<CAPTION>
<S>                                                                                <C>          <C>         <C>       <C>
---------------------------------------------------------------------------- ------------- ------------- ------------------
                                                                                                              Change
(Dollars in Millions)                                                           2008          2007           $         %
---------------------------------------------------------------------------- ------------- ------------- -------- ---------
Net sales                                                                          $731.0        $676.9     54.1       8.0
---------------------------------------------------------------------------- ------------- ------------- -------- ---------
Finance charges and other                                                            93.1          83.7      9.4      11.2
---------------------------------------------------------------------------- ------------- ------------- -------- ---------
Revenues                                                                            824.1         760.6     63.5       8.3
---------------------------------------------------------------------------- ------------- ------------- -------- ---------
</TABLE>


       The $54.1 million increase in net sales was made up of the following:

       o    a $20.4 million  increase  resulted from a same store sales increase
            of 3.2%.

       o    a $35.0 million increase generated by thirteen retail locations that
            were not open for twelve consecutive months in each period,

       o    a $1.9 million  decrease  resulted  from an increase in discounts on
            promotional credit sales, and

                                       41

<PAGE>
       o    a $0.6  million  increase  resulted  from  an  increase  in  service
            revenues.

       The  components of the $54.1  million  increase in net sales were a $47.6
million  increase in product  sales and an $6.5  million net increase in service
maintenance  agreement  commissions  and  service  revenues.  The $47.6  million
increase in product sales resulted from the following:

       o    approximately  $4.6  million was  attributable  to increases in unit
            sales, due primarily to increased consumer  electronics  (especially
            flat-panel  televisions) and furniture sales,  partially offset by a
            decline in appliance and track sales, and

       o    approximately  $43.0 million was attributable to an overall increase
            in the average unit price.  The  increase was driven  primarily by a
            change in the mix of product sales, as consumer  electronics,  which
            has the highest  average  price,  became a larger share of our total
            product sales and was partially  offset by the $1.9 million increase
            in discounts on extended-term promotional credit sales.

The  following table presents the makeup of net sales by product category in
each period,  including service  maintenance  agreement  commissions and service
revenues,  expressed both in dollar amounts and as a percent of total net sales.
Classification  of sales  has been  adjusted  from  previous  filings  to ensure
comparability between the categories.

<TABLE>
<CAPTION>
<S>                                 <C>        <C>        <C>            <C>         <C>     <C>
                                             Year Ended January 31,
                                 -----------------------------------------------
                                        2007                  2008                 Percent
                                 --------------------- -------------------------
            Category               Amount     Percent    Amount       Percent     Increase
                                 ----------- --------- ----------- ------------- -----------

Home appliances                     $230,963    34.1%    $223,967       30.6%     (3.0)%(1)
Consumer electronics                 214,271    31.7      244,040       33.4      13.9  (2)
Track                                 94,395    13.9      102,031       14.0       8.1  (3)
Delivery                              11,380     1.7       12,524        1.7      10.1  (4)
Lawn and garden                       16,741     2.5       20,914        2.9      24.9  (5)
Bedding                               17,721     2.6       16,424        2.3      (7.3) (6)
Furniture                             33,357     4.9       46,373        6.3      39.0  (7)
Other                                  5,131     0.8        5,298        0.7       3.3
                                 ----------- --------- ----------- ----------
     Total product sales             623,959    92.2      671,571       91.9       7.6
Service maintenance agreement
commissions                           30,567     4.5       36,424        5.0      19.2  (8)
Service revenues                      22,411     3.3       22,997        3.1       2.6  (9)
                                 ----------- --------- ----------- -------------
     Total net sales                $676,937   100.0%    $730,992      100.0%      8.0%
                                 =========== ========= =========== =============
</TABLE>


       (1) While the industry is down  nationally,  we expect to outperform  the
national  trend and are taking  steps to improve  our  performance  relative  to
merchandising,  advertising  and promotion of this  category.  Additionally,  we
experienced  higher than normal demand for these  products in the prior year due
to consumers replacing appliances after Hurricanes Katrina and Rita,  especially
during the first three months of the period.

       (2)  This  increase  is due to  increased  unit  volume  in the  area  of
flat-panel  televisions,  partially  offset by a decline in the sale of tube and
projection televisions.

       (3) The  increase  in  track  sales  (consisting  largely  of  computers,
computer  peripherals,  video game  equipment,  portable  electronics  and small
appliances)  is driven  primarily  by increased  laptop  computer and video game
equipment  sales  and  was  partially   offset  by  reduced  sales  of  portable
electronics, including camcorders, digital cameras and portable CRT televisions.

       (4) This  increase  was due to an increase in the delivery fee charged to
our customers,  as the total number of deliveries  declined slightly as compared
to the prior year.

       (5) This category  benefited from a high level of rainfall in the current
year and an increase in sales of higher priced lawn and garden  equipment,  such
as zero turn radius mowers and tractors.

       (6) This  decrease  is due to the impact of our change in  strategy as we
move to a multi-vendor relationship.

       (7)  This  increase  is due to the  increased  emphasis  on the  sales of
furniture,  primarily  sofas,  recliners  and  entertainment  centers,  and  new
products added to this category.

       (8) This  increase  is due to the  increase in product  sales,  increased
sales penetration and decreased SMA cancellations as credit charge-offs declined
as compared to the prior year period.

       (9) This  increase  is  driven  by  increased  units in  operation  as we
continue  to grow  product  sales and an  increase  in the cost of parts used to
repair higher-priced technology (flat-panel televisions, etc.).


                                       42

<PAGE>
    Finance  charges  and  other  increased  due  primarily  to an  increase  in
securitization  income of $7.4  million,  or 11.9% and an increase in  insurance
commissions of $2.9 million,  and a decrease in other items of $0.9 million. The
securitization  income,  which grew due to growth in the portfolio and lower net
credit losses on receivables transferred to the QSPE, was negatively impacted by
a non-cash,  decrease in the fair value of our Interests in securitized  assets.
The non-cash fair value  adjustment of $4.8 million was recorded  primarily as a
result of the recent  turmoil in the  financial  markets.  We increased the risk
premium  included in the discount rate  assumption in the  determination  of the
fair value of our interests in  securitized  assets based on our estimate of the
risk premium we believe a market participant would require if they purchased our
Interests in securitized  assets.  Additionally,  we increased the loss rate and
borrowing  cost  assumptions  we  believe  a  market  participant  would  use in
determining the fair value of our interest in securitized  assets (See Note 2 to
the financial statements for additional information).  The securitization income
comparison  was impacted by a $1.5  million  impairment  charge  recorded in the
prior year for  higher  projected  credit  losses due to the impact in the prior
year of  Hurricane  Rita  on our  credit  collection  operations  and  increased
bankruptcy  filings due to the new  bankruptcy  laws that took effect in October
2005.  Our net credit loss rate of 2.9% for the year ended January 31, 2008, was
in-line  with our  expected  long-term  net loss rate of between  2.5% and 3.0%.
Insurance  commissions  increased  primarily due to increased  sales and reduced
insurance  cancellations  as credit  charge-offs  declined  from the prior  year
period.

<TABLE>
<CAPTION>
<S>                                                                   <C>                 <C>            <C>       <C>
---------------------------------------------------------------- -------------------- ------------------ ------------------
                                                                                                              Change
(Dollars in Millions)                                                   2008                2007            $        %
---------------------------------------------------------------- -------------------- ------------------ -------- ---------
Cost of goods sold                                                     $508.8              $466.3         42.5      9.1
---------------------------------------------------------------- -------------------- ------------------ -------- ---------
As a percent of net product sales                                       75.8%               74.7%
---------------------------------------------------------------- -------------------- ------------------ -------- ---------


       Cost of products  sold  increased  from 74.7% of net product sales in the
2007 period to 75.8% in the 2008 period due to pricing pressures in retailing in
general, and especially on flat-panel TV's.

---------------------------------------------------------------- -------------------- ------------------ ------------------
                                                                                                              Change
(Dollars in Millions)                                                   2008                2007            $        %
---------------------------------------------------------------- -------------------- ------------------ -------- ---------
Cost of service parts sold                                              $8.4                $6.8           1.6      23.5
---------------------------------------------------------------- -------------------- ------------------ -------- ---------
As a percent of service revenues                                        36.4%               30.4%
---------------------------------------------------------------- -------------------- ------------------ -------- ---------


       This increase was due primarily to a 22.8% increase in parts sales, which
grew faster than labor sales.

---------------------------------------------------------------- -------------------- ------------------ ------------------
                                                                                                              Change
(Dollars in Millions)                                                   2008                2007            $        %
---------------------------------------------------------------- -------------------- ------------------ -------- ---------
Selling, general and administrative expense                            $245.3              $225.0         20.3      9.0
---------------------------------------------------------------- -------------------- ------------------ -------- ---------
As a percent of total revenues                                          29.8%               29.6%
---------------------------------------------------------------- -------------------- ------------------ -------- ---------


       The  increase  in  expense as a  percentage  of total  revenues  resulted
primarily from increased payroll and payroll related  expenses,  as a percent of
revenues.

---------------------------------------------------------------- -------------------- ------------------ ------------------
                                                                                                              Change
(Dollars in Millions)                                                   2008                2007            $        %
---------------------------------------------------------------- -------------------- ------------------ -------- ---------
Provision for bad debts                                                 $1.9                $1.5           0.4      29.3
---------------------------------------------------------------- -------------------- ------------------ -------- ---------
As a percent of total revenues                                          .23%                .19%
---------------------------------------------------------------- -------------------- ------------------ -------- ---------
</TABLE>


       The  provision  for bad debts on  non-credit  portfolio  receivables  and
credit portfolio  receivables  retained by us and not eligible to be transferred
to the QSPE  increased  primarily  as a result of provision  adjustments  due to
increased net credit  losses.  Additionally,  the provision for bad debts in the
year ended January 31, 2007,  benefited from a $0.1 million  reserve  adjustment
related to the special reserves  recorded as a result of the hurricanes in 2005.
See  the  notes  to the  financial  statements  for  information  regarding  the
performance of the credit portfolio.

                                       43

<PAGE>

<TABLE>
<CAPTION>
<S>                                                                     <C>                <C>           <C>        <C>

---------------------------------------------------------------- -------------------- ------------------ ------------------
                                                                                                              Change
(Dollars in Millions)                                                   2008                2007            $        %
---------------------------------------------------------------- -------------------- ------------------ -------- ---------
Interest income, net                                                   $(515)              $(676)        (161)      23.8
---------------------------------------------------------------- -------------------- ------------------ -------- ---------


       The net  decrease  in  interest  income  was a result  of a  decrease  in
interest  income from invested  funds due to lower balances of invested cash and
lower interest rates earned on amounts invested.

---------------------------------------------------------------- -------------------- ------------------ ------------------
                                                                                                              Change
(Dollars in Millions)                                                   2008                2007            $        %
---------------------------------------------------------------- -------------------- ------------------ -------- ---------
Other income                                                           $(943)              $(772)          171      22.2
---------------------------------------------------------------- -------------------- ------------------ -------- ---------


       Both periods  included gains  recognized on the sales of company  assets.
Additionally, during the year ended January 31, 2008, there were gains realized,
but not recognized,  on transactions  qualifying for  sale-leaseback  accounting
that have been  deferred and will be amortized as a reduction of rent expense on
a straight-line basis over the minimum lease terms.

---------------------------------------------------------------- -------------------- ------------------ ------------------
                                                                                                              Change
(Dollars in Millions)                                                   2008                2007            $        %
---------------------------------------------------------------- -------------------- ------------------ -------- ---------
Provision for income taxes                                              $21.5               $22.3         (0.8)    (3.4)
---------------------------------------------------------------- -------------------- ------------------ -------- ---------


       This  decrease in taxes was impacted  primarily  by the 1.4%  decrease in
pretax income. Additionally,  the effective tax rate declined from 35.6% for the
year ended January 31, 2007,  to 35.1% for the year ended January 31, 2008.  The
decrease in the effective tax rate is attributable to the reversal of previously
accrued  Texas  margin  tax as a  result  of  the  legal  entity  reorganization
completed  during the three months ended July 31, 2007.  In July 2007,  we began
accruing  margin tax for the entities that acquired the  operations  through the
mergers completed during the quarter.

Year Ended January 31, 2006 Compared to the Year Ended January 31, 2007

--------------------------------------------------------------------------- -------------- ------------- ------------------
                                                                                                              Change
(Dollars in Millions)                                                           2007           2006         $        %
--------------------------------------------------------------------------- -------------- ------------- -------- ---------
Net sales                                                                          $676.9        $620.7     56.2       9.1
--------------------------------------------------------------------------- -------------- ------------- -------- ---------
Finance charges and other                                                            83.7          80.4      3.3       4.1
--------------------------------------------------------------------------- -------------- ------------- -------- ---------
Revenues                                                                            760.6         701.1     59.5       8.5
--------------------------------------------------------------------------- -------------- ------------- -------- ---------
</TABLE>


       The $56.2 million increase in net sales was made up of the following:

       o    a $21.1 million  increase  resulted from a same store sales increase
            of 3.6%.  The fiscal 2007  growth  rate was  impacted as a result of
            being  compared to the very  strong,  hurricane-impacted  prior year
            sales,  which  resulted in a same store  sales  growth rate of 16.9%
            achieved in the year ended January 31, 2006.

       o    a $35.2 million  increase  generated by twelve retail locations that
            were not open for twelve consecutive months in each period,

       o    a $2.2 million  decrease  resulted  from an increase in discounts on
            promotional credit sales, and

       o    a $2.1  million  increase  resulted  from  an  increase  in  service
            revenues.

                                       44

<PAGE>
       The  components of the $56.2  million  increase in net sales were a $54.1
million  increase in product  sales and an $2.1  million net increase in service
maintenance  agreement  commissions  and  service  revenues.  The $54.1  million
increase in product sales resulted from the following:

       o    approximately  $34.1 million was  attributable  to increases in unit
            sales, due primarily to increased  appliances,  consumer electronics
            (especially  LCD, plasma and DLP  televisions)  and furniture sales,
            partially offset by a decline in track sales, and

       o    approximately  $20.0 million was  attributable  to increases in unit
            price  points.  The price  point  impact  was  driven  primarily  by
            consumers  selecting  higher priced  appliance  products,  including
            high-efficiency  washers  and dryers  and  stainless  steel  kitchen
            appliances  and  increased  delivery  fees,  partially  offset  by a
            decline in consumer  electronics as prices for new technology  erode
            and  the  $2.2  million   increase  in  discounts  on  extended-term
            promotional credit sales.

       The following table presents the makeup of net sales by product  category
in each period,  including service maintenance agreement commissions and service
revenues,  expressed both in dollar amounts and as a percent of total net sales.
Classification  of sales  has been  adjusted  from  previous  filings  to ensure
comparability between the categories.

<TABLE>
<CAPTION>
<S>                                <C>         <C>        <C>            <C>           <C>   <C>
                                             Year Ended January 31,
                                 -----------------------------------------------
                                        2006                   2007                 
                                 ---------------------  -------------------------  Percent
            Category               Amount     Percent     Amount       Percent     Increase
                                 ----------- ---------  ----------- ------------- -----------

Home appliances                     $223,294      36.0%    $230,963         34.1%     3.4%(1)
Consumer electronics                 186,663      30.1      214,271         31.7     14.8 (2)
Track                                 99,184      16.0       94,395         13.9     (4.8)(3)
Delivery                               9,931       1.6       11,380          1.7     14.6 (2)
Lawn and garden                       17,567       2.8       16,741          2.5     (4.7)(4)
Bedding                               13,120       2.1       17,721          2.6     35.1 (5)
Furniture                             15,320       2.4       33,357          4.9    117.7 (5)
Other                                  4,798       0.8        5,131          0.8      6.9 (2)
                                 ----------- ---------  ----------- -------------
     Total product sales             569,877      91.8      623,959         92.2      9.5
Service maintenance agreement
commissions                           30,583       4.9       30,567          4.5     (0.1)(6)
Service revenues                      20,278       3.3       22,411          3.3     10.5 (7)
                                 ----------- ---------  ----------- -------------
     Total net sales                $620,738     100.0%    $676,937        100.0%     9.1%
                                 =========== =========  =========== =============
</TABLE>


(1)           Fiscal year 2006 appliance sales were benefited by strong customer
              demand after Hurricanes Katrina and Rita in that year.
(2)           These  increases are consistent  with overall  increase in product
              sales and improved unit prices.
(3)           The  decline in track  sales  (consisting  largely  of  computers,
              computer  peripherals,  portable electronics and small appliances)
              is due  primarily to reduced  sales of computers  and portable CRT
              televisions.
(4)           A slower  late-summer  selling season due to dry weather  impacted
              this category.
(5)           This  increase  is due to the  increased  emphasis on the sales of
              mattresses  and   furniture,   primarily   sofas,   recliners  and
              entertainment   centers,  and  new  product  lines  added  to  the
              furniture category.
(6)           This  decrease is due to  increased  SMA  cancellations  driven by
              higher  credit  charge-offs  and reduced sales  penetration  as we
              introduced  products  (furniture  and  mattresses)  that  are  not
              SMA-eligible.
(7)           This  increase is driven by  increased  units in  operation  as we
              continue  to grow  product  sales and an increase in the prices of
              parts  used  to  repair   higher-priced   technology   (flat-panel
              televisions, etc.).


       This  increase  in  revenue   resulted   primarily   from   increases  in
securitization  income of $3.4  million,  a $2.0  million  decrease  in  service
maintenance agreement retrospective  commissions and a net increase in insurance
commissions and other revenues of $1.9 million.  Securitization income grew at a
slower pace than net sales because of higher credit  losses  experienced  during
the year ended  January 31, 2007,  as a result of the  disruption  to our credit
operations  caused  by  Hurricane  Rita.  As a result  of the  higher  loss rate
experienced, we recorded an impairment charge of $1.5 million during the quarter
ended July 31, 2006,  reducing the value of our interest in securitized  assets.
The credit net charge-off rate has returned to historical levels and is expected
to approximate 3.0% during fiscal 2008. We recorded an impairment charge of $0.9
million during the quarter ended October 31, 2005, for anticipated credit losses
due to the impact of Hurricane Rita on our credit  operations and an increase in
bankruptcy  filings  due to the new  bankruptcy  law that took effect in October
2005.  Securitization  income growth is attributable to higher product sales and
increases in our retained interest in assets transferred to the QSPE, due

                                       45

<PAGE>
primarily to increases in the transferred  balances.  Insurance  commissions and
other revenue  growth was driven by the increase in product sales The decline in
service maintenance agreement  retrospective  commissions was due to a change in
the commission  structure that became  effective  during fiscal 2006. The change
resulted in us receiving a greater portion of the income at the time of the sale
of the service maintenance agreement, which is included in Total net sales, with
a corresponding decrease in the retrospective commissions received.

<TABLE>
<CAPTION>
<S>                                                                   <C>                 <C>             <C>       <C>
---------------------------------------------------------------- -------------------- ------------------ ------------------
                                                                                                              Change
(Dollars in Millions)                                                   2007                2006            $        %
---------------------------------------------------------------- -------------------- ------------------ -------- ---------
Cost of Goods Sold                                                     $466.3              $422.5         43.8      10.4
---------------------------------------------------------------- -------------------- ------------------ -------- ---------
As a percent of net product sales                                       74.7%               74.1%
---------------------------------------------------------------- -------------------- ------------------ -------- ---------


       Cost of products sold  increased  due to pricing  pressures on flat-panel
TV's and the fact that the strong fiscal 2006 sales, after the hurricanes,  were
achieved with very little discounting.


---------------------------------------------------------------- -------------------- ------------------ ------------------
                                                                                                              Change
(Dollars in Millions)                                                   2007                2006            $        %
---------------------------------------------------------------- -------------------- ------------------ -------- ---------
Cost of Service Parts Sold                                              $6.8                $5.3           1.5      27.8
---------------------------------------------------------------- -------------------- ------------------ -------- ---------
As a percent of service revenue                                         30.4%               26.1%
---------------------------------------------------------------- -------------------- ------------------ -------- ---------


       Cost of service parts sold,  including  warehousing  and occupancy  cost,
increased due to a 34.8% increase in parts sales.

---------------------------------------------------------------- -------------------- ------------------ ------------------
                                                                                                              Change
(Dollars in Millions)                                                   2007                2006            $        %
---------------------------------------------------------------- -------------------- ------------------ -------- ---------
Selling, General and Administrative Expense                            $225.0              $208.3         16.7      8.0
---------------------------------------------------------------- -------------------- ------------------ -------- ---------
As a percent of total revenue                                           29.6%               29.7%
---------------------------------------------------------------- -------------------- ------------------ -------- ---------


       The  decrease  in  expense as a  percentage  of total  revenues  resulted
primarily  from  decreased   payroll  and  payroll  related   expenses  and  net
advertising  expense,  as a percent of revenues.  Additionally,  $0.9 million of
expenses, net of insurance proceeds, were incurred in the year ended January 31,
2006, due to Hurricane Rita.

---------------------------------------------------------------- -------------------- ------------------ ------------------
                                                                                                              Change
(Dollars in Millions)                                                   2007                2006            $        %
---------------------------------------------------------------- -------------------- ------------------ -------- ---------
Provision for Bad Debts                                                 $1.5                $1.1           .4       30.3
---------------------------------------------------------------- -------------------- ------------------ -------- ---------
As a percent of total revenue                                           .19%                .16%
---------------------------------------------------------------- -------------------- ------------------ -------- ---------


       The  provision  for bad debts on  non-credit  portfolio  receivables  and
credit portfolio  receivables retained by the Company and not transferred to the
QSPE increased  primarily as a result of provision  adjustments due to increased
credit losses.

---------------------------------------------------------------- -------------------- ------------------ ------------------
                                                                                                              Change
(Dollars in Millions)                                                   2007                2006            $        %
---------------------------------------------------------------- -------------------- ------------------ -------- ---------
Interest (Income) Expense, net                                         $(676)               $400          1,076     N/A
---------------------------------------------------------------- -------------------- ------------------ -------- ---------
</TABLE>


       The net improvement in interest  (income) expense was attributable to the
following factors:

       o    expiration  in April  2005 of $20.0  million  in our  interest  rate
            hedges and the  discontinuation  of hedge accounting for derivatives
            resulted  in a net  decrease in  interest  expense of  approximately
            $244,000; and

       o    increased  interest  income  from  invested  funds of  approximately
            $539,000.

                                       46

<PAGE>
       The remaining change of $317,000 resulted from lower average  outstanding
debt balances and capitalization of interest on construction in progress.

<TABLE>
<CAPTION>
<S>                                                                   <C>                   <C>           <C>      <C>
---------------------------------------------------------------- -------------------- ------------------ ------------------
                                                                                                              Change
(Dollars in Millions)                                                   2007                2006            $        %
---------------------------------------------------------------- -------------------- ------------------ -------- ---------
Other (Income) Expense, net                                            $(772)                $69           841      N/A
---------------------------------------------------------------- -------------------- ------------------ -------- ---------


       This change was primarily the result of a $0.7 million gain recognized on
the sale of a building and the related land.

---------------------------------------------------------------- -------------------- ------------------ ------------------
                                                                                                              Change
(Dollars in Millions)                                                   2007                2006            $        %
---------------------------------------------------------------- -------------------- ------------------ -------- ---------
Provision for Income Taxes                                              $22.3               $22.4          .1       0.3
---------------------------------------------------------------- -------------------- ------------------ -------- ---------
</TABLE>


       The decrease in the Provision for income taxes is  attributable  to lower
Income  before income taxes,  state tax refunds  received  during the period and
adjustments  to  reconcile  final tax returns to previous  estimates,  partially
offset by  additional  tax expense  from the new Texas margin tax. The impact of
the new Texas  margin  tax was  partially  offset  by the  one-time  benefit  of
deferred tax assets  recorded as a result of the new tax. Our effective rate for
the year ended  January  31,  2007 was 35.6%,  as compared to 35.2% for the year
ended January 31, 2006,  as impact of the Texas margin tax was partially  offset
by the refunds and return adjustments.

Impact of Inflation

       We do not believe that  inflation has a material  effect on our net sales
or results of operations.  However, a continuing significant increase in oil and
gasoline prices could  adversely  affect our customers'  shopping  decisions and
patterns.  We rely heavily on our internal  distribution system and our next day
delivery  policy to  satisfy  our  customers'  needs and  desires,  and any such
significant  increases  could result in  increased  distribution  charges.  Such
increases may not affect our competitors in the same manner as it affects us.

Seasonality and Quarterly Results of Operations

       Our  business is somewhat  seasonal,  with a higher  portion of sales and
operating profit realized during the quarter that ends January 31, due primarily
to the holiday  selling  season.  Over the four  quarters of fiscal 2008,  gross
margins were 34.8%,  33.8%, 32.6% and 32.8%.  During the same period,  operating
margins were 9.4%,  6.7%,  3.4% and 9.0%. A portion of the  fluctuation in gross
margins and operating margins is due to planned  infrastructure  cost additions,
such as increased  warehouse space and larger stores,  additional  personnel and
systems  required to absorb the  significant  increase in revenues  that we have
experienced  over the last several  years.  We also  recorded a reduction in the
fair value of our interests in securitized assets by $4.0 million in the quarter
ended October 31, 2007,  which caused both the gross margin and operating margin
for that quarter to be reduced.

       Additionally,  quarterly  results may fluctuate  materially  depending on
factors such as the following:

       o timing  of new  product  introductions,  new store  openings  and store
relocations;

       o sales contributed by new stores;

       o increases or decreases in comparable store sales;

       o adverse weather conditions;

       o shifts in the timing of certain holidays or promotions; and

       o changes in our merchandise mix.

       Results  for any quarter are not  necessarily  indicative  of the results
that may be achieved for a full year.

                                       47

<PAGE>
       The following tables sets forth certain unaudited  quarterly statement of
operations  information  for the eight  quarters  ended  January 31,  2008.  The
unaudited  quarterly  information  has been  prepared on a consistent  basis and
includes all normal recurring  adjustments that management  considers  necessary
for a fair presentation of the information shown.

<TABLE>
<CAPTION>
<S>                                                        <C>          <C>         <C>           <C>
                                                                       Fiscal Year 2007 (A)
                                                         ------------------------------------------------
                                                                          Quarter Ended
                                                         ------------------------------------------------
                                                           Apr. 30     Jul. 31     Oct. 31     Jan. 31
                                                         ----------- ----------- ----------- ------------
                                                          (dollars and shares in thousands, except per
                                                                          share amounts)
Revenues
  Product sales                                             $158,509    $150,647    $139,594     $175,209
  Service maintenance agreement commissions (net)              7,967       7,063       6,845        8,692
  Service revenues                                             5,229       5,927       5,951        5,304
                                                         ----------- ----------- ----------- ------------
    Total net sales                                          171,705     163,637     152,390      189,205
  Finance charges and other                                   20,483      18,567      21,303       23,367
                                                         ----------- ----------- ----------- ------------
    Total revenues                                           192,188     182,204     173,693      212,572

Percent of annual revenues                                     25.3%       24.0%       22.8%        27.9%

Cost and expenses
  Cost of goods sold, including warehousing and 
   occupancy costs                                           118,552     112,760     104,124      130,843
  Cost of service parts sold, including warehousing 
   and occupancy costs                                         1,565       1,389       1,834        1,997
  Selling, general and administrative expense                 53,841      55,421      56,204       59,513
  Provision for bad debts                                         43         390         526          517
                                                         ----------- ----------- ----------- ------------
    Total cost and expenses                                  174,001     169,960     162,688      192,870
                                                         ----------- ----------- ----------- ------------
Operating Income                                              18,187      12,244      11,005       19,702

Operating Profit as a % total revenues                          9.5%        6.7%        6.3%         9.3%

Interest (income) expense                                      (184)       (187)       (141)        (164)
Other (income) expense                                          (33)       (721)        (19)            1
                                                         ----------- ----------- ----------- ------------
Income before income taxes                                    18,404      13,152      11,165       19,865
Provision for income taxes                                     6,455       4,608       4,011        7,201
                                                         ----------- ----------- ----------- ------------
Net income                                                   $11,949      $8,544      $7,154      $12,664
                                                         =========== =========== =========== ============

Net income as a % of revenue                                    6.2%        4.7%        4.1%         6.0%

Outstanding shares:
      Basic                                                   23,596      23,676      23,698       23,680
      Diluted                                                 24,448      24,344      24,165       24,204

Earnings per share:
      Basic                                                    $0.51       $0.36       $0.30        $0.53
      Diluted                                                  $0.49       $0.35       $0.30        $0.52

(A) - In order to present our results on a basis that is more comparable with others in our industry, we
 have reclassified advertising expenditures that were previously included in costs of goods sold to
 selling, general and administrative expense.
</TABLE>


                                       48

<PAGE>

<TABLE>
<CAPTION>
<S>                                                         <C>         <C>         <C>           <C>
                                                                       Fiscal Year 2008 (A)
                                                         ------------------------------------------------
                                                                          Quarter Ended
                                                         ------------------------------------------------
                                                           Apr. 30     Jul. 31     Oct. 31     Jan. 31
                                                         ----------- ----------- ----------- ------------
                                                          (dollars and shares in thousands, except per
                                                                          share amounts)
Revenues
  Product sales                                             $166,639    $163,793    $155,657     $185,482
  Service maintenance agreement commissions (net)              9,281       9,071       8,336        9,736
  Service revenues                                             5,445       6,137       6,059        5,356
                                                         ----------- ----------- ----------- ------------
    Total net sales                                          181,365     179,001     170,052      200,574
  Finance charges and other                                   23,945      24,526      19,314       25,351
                                                         ----------- ----------- ----------- ------------
    Total revenues                                           205,310     203,527     189,366      225,925

Percent of annual revenues                                     24.9%       24.7%       23.0%        27.4%

Cost and expenses
  Cost of goods sold, including warehousing and 
   occupancy costs                                           124,393     125,297     118,191      140,906
  Cost of service parts sold, including warehousing
   and occupancy costs                                         1,866       2,123       2,257        2,133
  Selling, general and administrative expense                 59,214      62,113      61,928       62,062
  Provision for bad debts                                        560         348         582          418
                                                         ----------- ----------- ----------- ------------
    Total cost and expenses                                  186,033     189,881     182,958      205,519
                                                         ----------- ----------- ----------- ------------
Operating Income                                              19,277      13,646       6,408       20,406

Operating Profit as a % total revenues                          9.4%        6.7%        3.4%         9.0%

Interest (income) expense                                      (240)       (251)       (110)           86
Other (income) expense                                         (831)        (55)        (34)         (23)
                                                         ----------- ----------- ----------- ------------
Income before income taxes                                    20,348      13,952       6,552       20,343
Provision for income taxes                                     7,402       4,295       2,531        7,281
                                                         ----------- ----------- ----------- ------------
Net income                                                   $12,946      $9,657      $4,021      $13,062
                                                         =========== =========== =========== ============

Net income as a % of revenue                                    6.3%        4.7%        2.1%         5.8%

Outstanding shares:
      Basic                                                   23,567      23,489      23,077       22,651
      Diluted                                                 24,121      24,058      23,550       22,976

Earnings per share:
      Basic                                                    $0.55       $0.41       $0.17        $0.58
      Diluted                                                  $0.54       $0.40       $0.17        $0.57

(A) - In order to present our results on a basis that is more comparable with others in our industry, we
 have reclassified advertising expenditures that were previously included in costs of goods sold to
 selling, general and administrative expense.
</TABLE>


Liquidity and Capital Resources

       We require capital to finance our growth as we add new stores and markets
to our  operations,  which  in turn  requires  additional  working  capital  for
increased   receivables  and  inventory.   We  have  historically  financed  our
operations  through a combination  of cash flow  generated  from  operations and
external  borrowings,  including primarily bank debt, extended terms provided by
our vendors for inventory purchases,  acquisition of inventory under consignment
arrangements  and transfers of  receivables to our  asset-backed  securitization
facilities.  At January  31,  2008,  we had a  revolving  lines of credit in the
amount  of $58  million,  under  which  we had no  borrowings  outstanding,  but
utilized $2.4 million of availability to issue letters of credit. We expect that
our cash  requirements  for the  foreseeable  future,  including  those  for our
capital expenditure requirements, will be met with our available lines of credit
and our $6.4 million of excess cash and cash equivalents, which were invested in
short-term,  tax-free  instruments,  at January  31,  2008,  together  with cash
generated  from  operations.  Our  current  plans are to grow our store  base by
approximately 10% a year. We expect we will invest in inventory, real estate and
customer  receivables  to support  the  additional  stores and same store  sales
growth.   Depending  on  market   conditions  we  may,  at  times,   enter  into
sale-leaseback  transactions  to  finance  our real  estate or seek  alternative
financing  sources for new store  expansions  and customer  receivables  growth,
including  expansion  of existing  lines of credit,  and  accessing  new debt or
equity markets.

       On March 26, 2008, we executed an amendment to our bank credit  facility,
to  increase  the  commitment  from $50  million  to $100  million,  to  provide
additional liquidity, if needed, to support our growth plans. In addition to the
expanded  commitment,  the interest margin added to the applicable base rate was
increased by 25 basis  points.  This  facility  matures in November  2010.  This
increase in the facility brings our total  availability under revolving lines of
credit to $105.6 million at March 26, 2008.

       In its  regularly  scheduled  meeting  on August 24,  2006,  our Board of
Directors authorized the repurchase of up to $50 million of our common stock,

                                       49

<PAGE>
dependent  on market  conditions  and the price of the stock.  We expect to fund
these  purchases with a combination of excess cash,  cash flow from  operations,
borrowings under our revolving  credit  facilities and proceeds from the sale of
owned  properties.  Through  January 31, 2008,  we had spent $37.1 million under
this authorization to acquire 1,723,205 shares of our common stock. Future stock
repurchases  will be dependent upon the  availability of sufficient  capital and
liquidity to support our growth plans and the repurchase program.

       The  following  is a  comparison  of our  statement of cash flows for our
fiscal years 2007 and 2008:

       During the year ended  January 31, 2008,  net cash  provided by (used in)
operating  activities  decreased  $34.5 million from $28.9  million  provided by
operating activities in the year ended January 31, 2007, to $5.6 million used in
the January 31, 2008.  Operating  cash flows for both  periods  were  negatively
impacted  by higher  than  normal  payments  on  accounts  payable  and  accrued
expenses,  as discussed  below.  The cash used in operations  for the year ended
January 31, 2008, was driven  primarily by payments on accounts  payable,  which
was driven by the timing of receipts of inventory  and  increased  investment in
accounts  receivable.  Our increased  investment in accounts  receivable was due
primarily to increased  balances in the sold  portfolio and a lower funding rate
as a percentage of the sold  portfolio.  The lower funding rate is primarily the
result of the QSPE's pay down of its 2002 Series B bond issuance.  We expect the
funding rate to improve once the pay down is  completed,  which is scheduled for
completion in May,  2008.  The cash  provided by  operations  for the year ended
January 31, 2007,  resulted primarily from net income plus depreciation plus the
benefit of the QSPE completing its medium-term bond issuance in August 2006. The
completion  of the bond  issuance  resulted in an increase in the funding  rate,
providing  additional  cash to be  advanced  to us on  receivables  transferred.
Offsetting the cash provided was cash used primarily due to increased investment
in inventory and the timing of payments of accounts  payable and federal  income
and employment taxes, which had been extended due to the impact of hurricanes in
the prior fiscal year.  Those extended terms ended and deadlines were reached in
the  quarter  ended  April 30,  2006,  and we were  required  to  satisfy  those
obligations,  negatively  impacting  our operating  cash flows by  approximately
$18.9 million.

       As noted above, we offer promotional credit programs to certain customers
that provide for "same as cash" or deferred  interest  interest-free  periods of
varying  terms,  generally  three,  six,  or 12 months;  in fiscal  year 2005 we
increased  these  terms to include 18, 24 and 36 months.  The  various  "same as
cash"  promotional  accounts and deferred interest program accounts are eligible
for  securitization  up  to  the  limits  provided  for  in  our  securitization
agreements.  This limit is currently 30.0% of eligible securitized  receivables.
If we exceed  this 30.0%  limit,  we would be  required to use some of our other
capital  resources to carry the  unfunded  balances of the  receivables  for the
promotional   period.  The  percentage  of  eligible   securitized   receivables
represented by promotional  receivables was 20.0% as of January 31, 2007, and at
January 31, 2008,  the  percentage  was 23.0% The weighted  average  promotional
period was 13.1 months and 15.1 months for promotional  receivables  outstanding
as of January 31, 2007 and 2008,  respectively.  The weighted average  remaining
term on those same promotional  receivables was 9.8 months and 10.7 months as of
January  31,  2007 and  2008,  respectively.  While  overall  these  promotional
receivables  have a much  shorter  weighted  average  term than  non-promotional
receivables for the customers that take advantage of the  promotional  terms, we
receive  less income on these  receivables,  resulting in a reduction of the net
interest margin used in the calculation of the gain on the sale of receivables.

       Net cash used in investing activities was $16.1 million and $10.0 million
in fiscal year 2007 and fiscal year 2008, respectively.  Cash used for purchases
of property and  equipment was  approximately  $18.4 million in fiscal year 2007
and $19.0 fiscal year 2008.  The cash  expended for property and  equipment  was
used primarily for  construction of new stores and the  reformatting of existing
stores to better  support our current  product  mix.  We estimate  that  capital
expenditures  for the 2009  fiscal  year will  approximate  $20  million  to $25
million.

       We lease 64 of our 69 stores,  and our plans for future  store  locations
include  primarily  leases,  but does not exclude store  ownership.  Our capital
expenditures  for  future  store  projects  should  primarily  be for our tenant
improvements to the property leased (including any new distribution  centers and
warehouses),  the cost of which is approximately $1.6 million per store, and for
our existing store remodels, in the range of $105,000 per store remodel,

                                       50

<PAGE>
depending  on store size.  In the event we  purchase  existing  properties,  our
capital  expenditures  will depend on the particular  property and whether it is
improved when purchased.  We are  continuously  reviewing new  relationship  and
funding   sources  and   alternatives   for  new   stores,   which  may  include
"sale-leaseback" or direct  "purchase-lease"  programs, as well as other funding
sources  for  our  purchase  and  construction  of  those  projects.  If we  are
successful  in these  relationship  developments,  our direct cash needs  should
include  only  our  capital  expenditures  for  tenant  improvements  to  leased
properties and our remodel programs for existing stores,  but could include full
ownership if it meets our cash investment strategy.

       Net cash used in financing  activities  increased $28.6 million from $1.3
million for the year ended January 31, 2007, to $29.9 million for the year ended
January 31, 2008. This change  resulted  primarily from the use of $33.3 million
for the purchase of our common stock in fiscal year 2008.

       We entered  into our existing  bank credit  facility on October 31, 2005.
The  agreement  provides  a line of credit  to $50  million,  with an  accordion
feature to allow further expansion of the facility to $90 million, under certain
conditions.  The  credit  facility  has a  maturity  date of  November  1, 2010.
Additionally, the facility provides sublimits of $8 million for a swingline line
of credit for faster advances on borrowing requests,  and $5 million for standby
letters of credit. Loans under our revolving credit facility may, at our option,
bear  interest at either the  alternate  base rate,  which is the greater of the
administrative  agent's  prime rate or the federal funds rate, or the LIBOR rate
for the applicable  interest  period,  in each case plus an applicable  interest
margin.  The interest  margin is between 0.00% and 0.50% for base rate loans and
between 0.75% and 1.75% for LIBOR  alternative  rate loans.  The interest margin
will vary depending on our debt coverage  ratio.  Additionally we pay commitment
fees for the undrawn portion of our revolving  credit  facility.  At January 31,
2008,  based on the LIBOR rate, the interest rate on the revolving  facility was
4.15%.

       Effective  August 28,  2006,  we  entered  into an  amendment  to our $50
million  revolving  credit  facility  with the existing  lenders.  The amendment
increases  our  restricted   payment  capacity,   which  includes  payments  for
repurchases  of capital  stock,  from $25 million to $50 million.  There were no
other modifications of the Credit Agreement.

A summary of the  significant  financial  covenants  that govern our bank
credit facility compared to our actual compliance status at January 31, 2008, is
presented below:

<TABLE>
<CAPTION>
<S>                                                                          <C>               <C>
                                                                                      Required
                                                                                      Minimum/
                                                                       Actual         Maximum
                                                                    --------------- ---------------
Debt service coverage ratio must exceed required minimum            4.09 to 1.00    2.00 to 1.00
Total adjusted leverage ratio must be lower than required maximum   1.65 to 1.00    3.00 to 1.00
Adjusted consolidated net worth must exceed required minimum        $301.2 million  $214.8 million
Charge-off ratio must be lower than required maximum                0.03 to 1.00    0.06 to 1.00
Extension ratio must be lower than required maximum                 0.03 to 1.00    0.05 to 1.00
30-day delinquency ratio must be lower than required maximum        0.10 to 1.00    0.13 to 1.00
</TABLE>


      Note: All terms in the above table are defined by the bank credit facility
      and may or may not agree directly to the financial  statement  captions in
      this document.

       Events of default  under the credit  facility  include,  subject to grace
periods  and  notice  provisions  in  certain   circumstances,   non-payment  of
principal,  interest or fees; violation of covenants; material inaccuracy of any
representation  or warranty;  default  under or  acceleration  of certain  other
indebtedness;  bankruptcy and  insolvency  events;  certain  judgments and other
liabilities;  certain environmental claims; and a change of control. If an event
of default  occurs,  the lenders under the credit  facility are entitled to take
various actions,  including  accelerating  amounts due under the credit facility
and requiring that all such amounts be immediately paid in full. Our obligations
under  the  credit  facility  are  secured  by all of our and our  subsidiaries'
assets,  excluding customer  receivables owned by the QSPE and certain inventory
subject to vendor floor plan arrangements.

                                       51

<PAGE>
       The following table reflects  outstanding  commitments for borrowings and
letters of credit,  and the  amounts  utilized  under those  commitments,  as of
January 31, 2008:

<TABLE>
<CAPTION>
<S>                    <C>      <C>                                       <C>         <C>       <C>
                         Commitment Expires in Fiscal Year Ending January 31,      Balance at   Available at
                     ------------------------------------------------------------  January 31,  January 31,
                         2009     2010    2011    2012    2013 Thereafter Total      2008         2008
                     ------------------------------------------------------------ ----------    ----------
                      (in thousands)

 Revolving Bank
  Facility (1)                 $50,000                                    $50,000     $2,442       $47,558
 Unsecured Line of
  Credit                8,000                                               8,000          -         8,000
 Inventory Financing
  (2)                  40,000                                              40,000     14,766        25,234
 Letters of Credit     25,000                                              25,000        847        24,153
                     ------------------------------------------------------------ ----------    ----------
          Total       $73,000  $50,000      $-      $-      $-        $- $123,000    $18,055      $104,945
                     ============================================================ ==========    ==========
</TABLE>


       (1)  Includes  letter  of credit  sublimit.  There  was $2.4  million  of
            letters of credit issued at January 31, 2008.

       (2)  Included in accounts payable on the consolidated balance sheet as of
            January 31, 2008.

       Since we extend credit in connection  with a large portion of our retail,
service  maintenance  and credit  insurance  sales, we created a QSPE in 2002 to
purchase  customer  receivables  from us and to issue  medium-term  and variable
funding  notes  secured by the  receivables  to third  parties  to  finance  its
purchase of these  receivables.  We transfer  receivables,  consisting of retail
installment and revolving accounts receivables extended to our customers, to the
issuer in exchange for cash,  subordinated  securities  and the right to receive
the interest  spread between the assets held by the QSPE and the notes issued to
third parties and our servicing fees. The subordinated  securities  issued to us
accrue  interest  based on prime rates and are  subordinate to these third party
notes.

       Both the bank credit facility and the asset-backed securitization program
are  significant  factors  relative to our ongoing  liquidity and our ability to
meet the cash needs associated with the growth of our business. Our inability to
use either of these programs because of a failure to comply with their covenants
would  adversely  affect our  continued  growth.  Funding of current  and future
receivables  under the  asset-backed  securitization  program  can be  adversely
affected  if we exceed  certain  predetermined  levels of  re-aged  receivables,
write-offs,  bankruptcies or other ineligible receivable amounts. If the funding
under the  asset-backed  securitization  program were reduced or terminated,  we
would  have to draw down our bank  credit  facility  more  quickly  than we have
estimated.

       A summary of the total  receivables  managed under the credit  portfolio,
including  quantitative  information about delinquencies,  net credit losses and
components of  securitized  assets,  is presented in Note 3 to our  consolidated
financial statements.

       Based on current  operating  plans,  we  believe  that cash  provided  by
operating activities,  available borrowings under our credit facility, access to
the  unfunded  portion of the  variable  funding  portion  of our asset-  backed
securitization  program  and our  current  cash  and  cash  equivalents  will be
sufficient to fund our operations,  store expansion and updating  activities and
capital expenditure programs for at least the next 12 months. However, there are
several  factors that could  decrease  cash  provided by  operating  activities,
including:

       o    reduced demand or margins for our products;

       o    more stringent vendor terms on our inventory purchases;

       o    loss of ability to acquire inventory on consignment;

       o    increases  in product cost that we may not be able to pass on to our
            customers;

       o    reductions  in  product   pricing  due  to  competitor   promotional
            activities;

       o    changes in inventory  requirements based on longer delivery times of
            the  manufacturers  or other  requirements  which  would  negatively
            impact our delivery and distribution capabilities;

       o    increases in the retained portion of our receivables portfolio under
            our current QSPE's asset-backed  securitization  program as a result
            of  changes  in  performance  or  types of  receivables  transferred
            (promotional versus non-promotional),  or as a result of a change in
            the mix of funding sources  available to the QSPE,  requiring higher
            collateral levels;

                                       52

<PAGE>
       o    inability  to  renew  or  expand  our  capacity  for  financing  our
            receivables   portfolio   under   existing   or   replacement   QSPE
            asset-backed securitization programs or a requirement that we retain
            a higher percentage of the credit portfolio under such programs;

       o    increases in the program  costs  (interest and  administrative  fees
            relative to our receivables  portfolio)  associated with the funding
            of our receivables;

       o    increases in personnel costs required for us to stay  competitive in
            our markets; and

       o    the inability to get our current variable funding facility renewed.


       If cash provided by operating  activities during this period is less than
we expect or if we need additional  financing for future growth,  we may need to
increase our revolving  credit facility or undertake  additional  equity or debt
offerings. We may not be able to obtain such financing on favorable terms, if at
all.


       Off-Balance Sheet Financing Arrangements

       Since we extend credit in connection  with a large portion of our retail,
service  maintenance  and credit  insurance  sales,  we have created a qualified
special purpose entity, which we refer to as the QSPE or the issuer, to purchase
customer  receivables  from us and to issue  asset-backed  and variable  funding
notes to  third  parties  to  obtain  cash  for  these  purchases.  We  transfer
receivables  with a weighted  average  life of 1.2 years,  consisting  of retail
installment  contracts and revolving accounts extended to our customers,  to the
issuer in exchange for cash and  subordinated,  unsecured  promissory  notes. To
finance its  acquisition of these  receivables,  the issuer has issued the notes
and bonds  described  below to third  parties.  The unsecured  promissory  notes
issued to us are subordinate to these third party notes and bonds.

       At January 31, 2008,  the issuer has issued  three  series of notes:  the
2002 Series A variable funding note with a total availability of $450.0 million,
three  classes of 2002 Series B notes in the  aggregate  amount  outstanding  of
$40.0  million,  of which $4.0 million was required to be placed in a restricted
cash  account  for the  benefit of the  bondholders,  and three  classes of 2006
Series A bonds with an aggregate amount outstanding of $150.0 million,  of which
$6.0  million was  required to be placed in a  restricted  cash  account for the
benefit of the bondholders.  The 2002 Series A variable funding note is composed
of a $250 million  364-day  tranche,  and a $200 million tranche that matures in
2011. The 364-day  commitment was recently renewed and increased,  in the amount
of $150  million,  by the note  holders  until July 31,  2008.  The $150 million
increase in the  commitment  will stay in place until the first to occur of: (i)
the QSPE completes a medium-term bond issuance,  or (ii) the note is not renewed
by the note holders. At the time of the increase in the note, an additional bank
joined  as  the  second  note  holder  in the  facility.  The  commercial  paper
underlying  the 2002 Series A variable  funding  note is rated A1/P1 by Standard
and Poors and Moody's, respectively.  These ratings represent the highest rating
(highest  quality) of each rating  agency's three  short-term  investment  grade
ratings,  except that Standard and Poors could add a "+" which would convert the
highest  quality rating to an extremely  strong rating.  The 2002 Series B notes
consist  of:  Class A notes in the amount  $24.0  million,  rated Aaa by Moody's
representing  the  highest  rating  (highest  quality)  of the  four  long  term
investment  grade ratings  provided by this  organization;  Class B notes in the
amount $11.6 million,  rated A2 by Moody's  representing the middle of the third
rating (upper  medium  quality) of the four long term  investment  grade ratings
provided by this organization;  and Class C notes in the amount of $4.4 million,
rated  Baa2/BBB  by Moody's  and Fitch,  respectively.  The 2006  Series A notes
consist  of:  Class A notes in the amount  $90.0  million,  rated Aaa by Moody's
representing  the  highest  rating  (highest  quality)  of the  four  long  term
investment  grade ratings  provided by this  organization;  Class B notes in the
amount $43.3 million,  rated A2 by Moody's  representing the middle of the third
rating (upper  medium  quality) of the four long term  investment  grade ratings
provided by this organization; and Class C notes in the amount of $16.7 million,
rated Baa2 by Moody's.  The Baa2/BBB  ratings  represent  the lowest of the four
investment grades (medium quality) provided by these organizations.  The ratings
disclosed are not recommendations to buy, sell or hold securities. These ratings
may be changed or withdrawn at any time without notice,  and each of the ratings
should be evaluated  independently  of any other  rating.  We are not aware of a
rating by any other  rating  organization  and are not aware of any  changes  in
these ratings. Private institutional  investors,  primarily insurance companies,
purchased  the 2002 Series B notes and 2006 Series A notes.  The issuer used the
proceeds of these issuances to purchase eligible accounts receivable from us and
to fund the required  restricted  cash  accounts for credit  enhancement  of the
notes. If the net portfolio yield, as defined by agreements, falls below 5.0%,

                                       53

<PAGE>

then the issuer may be required to fund  additions  to the cash  reserves in the
restricted  cash accounts.  At January  31,2008,  the net portfolio yield was in
compliance with this requirement.

       We  are  entitled  to a  monthly  servicing  fee,  so  long  as we act as
servicer,  in an  amount  equal  to .25%  multiplied  by the  average  aggregate
principal amount of receivables plus the amount of average  aggregate  defaulted
receivables.  The issuer records  revenues equal to the interest  charged to the
customer  on the  receivables  less  losses,  the  cost of  funds,  the  program
administration fees paid in connection with the 2002 Series A, 2002 Series B, or
2006 Series A note holders,  the servicing  fee and  additional  earnings to the
extent they are available.

       After the  September  10,  2007,  amendment,  the 2002  Series A variable
funding  note now  permits  the  issuer to borrow  funds up to $450  million  to
purchase  receivables  from us, thereby  functioning as a "basket" to accumulate
receivables.  As issuer borrowings under the 2002 Series A variable funding note
approach $450 million, the issuer is required to request an increase in the 2002
Series A amount or issue a new series of bonds and use the  proceeds to pay down
the then outstanding balance of the 2002 Series A variable funding note, so that
the basket will once again become  available to accumulate  new  receivables  or
meet other obligations required under the transaction  documents.  As of January
31, 2008,  borrowings  under the 2002 Series A variable funding note were $278.0
million.

       Recent  turmoil in the  financial  markets,  especially  with  respect to
asset-backed  securities,  has  resulted  in  reduced  liquidity  available  for
issuances of these  securities  and rising costs for issuers.  As a result,  the
issuer has delayed the marketing of an additional series of fixed rate bonds. It
is currently  anticipated that the issuer will attempt to complete a transaction
in the second or third quarter of the fiscal year ending  January 31, 2009,  but
no assurance can be given that a transaction can be completed on terms favorable
to it..  The  proceeds of a new  issuance  would  provide the issuer  additional
capacity  for the  purchase  of our  receivables.  If the  issuer  is  unable to
complete the new bond issuance or renew or increase the total availability under
the 2002 Series A variable funding note, then, after its current funding sources
are exhausted, we may have to fund growth in the receivables portfolio until the
issuer can obtain  additional  funding.  If necessary,  in addition to available
cash  balances,  cash flow from  operations  and  borrowing  capacity  under our
revolving   facilities,   additional  cash  to  fund  our  growth  and  increase
receivables balances could be obtained by:

       o    reducing capital expenditures for new store openings,

       o    taking advantage of longer payment terms and financing available for
            inventory purchases,

       o    utilizing other sources for providing financing to our customers,

       o    negotiating to expand the capacity  available  under existing credit
            facilities, and

       o    accessing new debt or equity markets.

       At January 31, 2008, we had $6.4 million of excess cash and $55.6 million
of availability  under our revolving  credit  facilities,  among other liquidity
sources, to provide funding, if needed, to fund receivable  portfolio growth. As
such, we believe we have sufficient sources of liquidity to fund our operations,
including credit portfolio growth, for at least the next 12 months.

       The Series A variable funding note bears interest at the commercial paper
rate plus an applicable  margin,  in most  instances of 0.8%.  The 2002 Series B
notes  have fixed  rates of  4.469%,  5.769% and 8.180% for the Class A, B and C
notes, respectively.  The 2006 Series A notes have fixed rates of 5.507%, 5.854%
and 6.814% for the Class A, B and C notes,  respectively.  In addition, there is
an  annual  administrative  fee and a non-use  fee  associated  with the  unused
portion of the committed facility.

       While we are not directly  liable to the lenders  under the  asset-backed
securitization  facility,  any shortfall in the cash necessary to repay the note
and bond holders and our  subordinated  notes would first reduce the amount paid
to us under the subordinated notes. As such, we bear the risk of losses incurred
by the  issuer,  to the extent of our  retained  interest,  before the  issuer's
third-party  lenders are exposed to losses. If the issuer is unable to repay the
2002  Series A note,  2002  Series B bonds  and 2006  Series A bonds  due to its
inability to collect the transferred  customer accounts and the issuer could not
pay  the  subordinated  notes  it  has  issued  to us  in  partial  payment  for
transferred customer accounts,  the 2002 Series B and 2006 Series A bond holders
could claim the balance in its $10.0 million  restricted  cash  account.  We are
also contingently liable under a $20.0 million letter of credit that secures our
performance of our  obligations or services under the servicing  agreement as it
relates  to  the   transferred   assets  that  are  part  of  the   asset-backed
securitization facility.

                                       54

<PAGE>
       The  issuer is  subject to certain  affirmative  and  negative  covenants
contained  in the  transaction  documents  governing  the 2002 Series A variable
funding note and the 2002 Series B and 2006 Series A bonds,  including covenants
that  restrict,  subject to specified  exceptions:  the incurrence of additional
indebtedness  and  other  obligations  and the  granting  of  additional  liens;
mergers,  acquisitions,  investments and  disposition of assets;  and the use of
proceeds of the program.  The issuer also makes covenants relating to compliance
with certain laws,  payment of taxes,  maintenance of its separate legal entity,
preservation of its existence, protection of collateral and financial reporting.
In addition, the program requires the issuer to maintain a minimum net worth.

       A summary of the  significant  financial  covenants  that govern the 2002
Series A variable funding note compared to actual  compliance  status at January
31, 2008, is presented below:

<TABLE>
<CAPTION>
<S>                                                                          <C>                  <C>
                                                                                                     Required
                                                                                                     Minimum/
                                                                               As reported           Maximum
                                                                            ------------------- -------------------
Issuer interest must exceed required minimum                                  $78.5 million       $75.8 million
Gross loss rate must be lower than required maximum                                4.1%               10.0%
Net portfolio yield must exceed required minimum                                   8.7%                2.0%
Payment rate must exceed required minimum                                          7.0%                3.0%
</TABLE>


         Note:  All terms in the above  table are  defined  by the asset  backed
         credit  facility  and may or may not agree  directly  to the  financial
         statement captions in this document.

       Events of default  under the 2002 Series A variable  funding note and the
2002  Series B and  Series  2006 A bonds,  subject to grace  periods  and notice
provisions in some circumstances,  include,  among others: failure of the issuer
to pay  principal,  interest  or fees;  violation  by the  issuer  of any of its
covenants or agreements;  inaccuracy of any  representation  or warranty made by
the issuer;  certain servicer  defaults;  failure of the trustee to have a valid
and perfected first priority security interest in the collateral;  default under
or acceleration of certain other indebtedness; bankruptcy and insolvency events;
failure to maintain certain loss ratios and portfolio  yield;  change of control
provisions and certain events  pertaining to us. The issuer's  obligations under
the program are secured by the receivables and proceeds.

<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>    <C>    <C>    <C>
Securitization Facilities
We finance most of our customer receivables through asset-backed
securitization facilities

                                                                                ----------------------------
                                                                                |                           |
                                                                                |    2002 Series A Note     |
                                                                           ---->|  $450 million Commitment  |
                                                                           |    |  $278 million Outstanding |
                                                                           |    |   Credit Rating: P1/A2    |
                                                                           |    |      Bank Commercial      |
                                                                           |    |      Paper Conduits       |
                                                                           |    ----------------------------
                                                                           |
--------------------------  ----------->  --------------------------       |    ----------------------------
|                        |                |                        |       |    |    2002 Series B Bonds    |
|                        |                |       Qualifying       |       |    |       $40 million         |
|         Retail         |                |     Special Purpose    |<---------->|   Private Institutional   |
|         Sales          |                |         Entity         |       |    |        Investors          |
|         Entity         |                |        ("QSPE")        |       |    | Class A: $24.0 mm (Aaa)   |
|                        |                |                        |       |    | Class B: $11.6 mm (A2)    |
|                        |                |                        |       |    | Class C: $4.4 mm (Baa2)   |
--------------------------  <-----------  --------------------------       |    ----------------------------
                                                                           |
                            1. Cash Proceeds                               |    ----------------------------
                            2. Subordinated Securities                     |    |    2006 Series A Bonds    |
                            3. Right to Receive Cash Flows                 |    |       $150 million        |
                               Equal to Interest Rate Spread               |--->|   Private Institutional   |
                                                                                |         Investors         |
                                                                                | Class A: $90 mm (Aaa)     |
                                                                                | Class B: $43.3 mm (A2)    |
                                                                                | Class C: $16.7 mm (Baa2)  |
                                                                                ----------------------------
</TABLE>

                                       55

<PAGE>
       Certain Transactions

       Since 1996,  we have  leased a retail  store  location  of  approximately
19,150 square feet in Houston,  Texas from Thomas J. Frank, Sr., our Chairman of
the Board and Chief  Executive  Officer.  The lease  provides  for base  monthly
rental  payments of $17,235  plus escrows for taxes,  insurance  and common area
maintenance  expenses of increasing monthly amounts based on expenditures by the
management  company  operating the shopping center of which this store is a part
through  January  31,  2011.  We also  have an option to renew the lease for two
additional  five-year  terms. Mr. Frank received total payments under this lease
of $281,000 in fiscal 2006, 2007 and 2008,  respectively.  Based on market lease
rates for comparable retail space in the area, we believe that the terms of this
lease are no less favorable to us than we could have obtained in an arms' length
transaction at the date of the lease commencement.

       We  leased  six  store  locations  from  Specialized  Realty  Development
Services, LP (SRDS), a real estate development company that was created prior to
our becoming  publicly held and was owned by various  members of management  and
individual  investors of Stephens Group, Inc., a significant  shareholder of the
company.  Based on  independent  appraisals  that were performed on each project
that was  completed,  we  believe  that the  terms of the  leases  were at least
comparable  to those that could be obtained in an arms' length  transaction.  As
part of the ongoing  operation of SRDS, we received  management  fees associated
with the  administrative  functions that were provided to SRDS of $6,500 for the
year ended  January 31, 2006.  As of January 31, 2005,  we no longer  leased any
properties from SRDS since it divested itself of the leased properties.  As part
of the  divestiture,  SRDS  reimbursed  us  $75,000  for costs  related to lease
modifications.

       We engage the services of Direct Marketing Solutions, Inc., or DMS, for a
substantial portion of our direct mail advertising.  Direct Marketing Solutions,
Inc.  is  partially  owned (less than 50%) by SF Holding  Corp.,  members of the
Stephens family,  Jon E. M. Jacoby,  and Douglas H. Martin. SF Holding Corp. and
the members of the Stephens family are significant  shareholders of the Company,
and Messrs. Jacoby and Martin are members of our Board of Directors. The fees we
paid  to DMS  during  fiscal  years  ended  2006,  2007  and  2008  amounted  to
approximately $2.1 million, $3.6 million and $2.5 million, respectively.  Thomas
J. Frank,  the Chief  Executive  Officer and  Chairman of the Board of Directors
owned a small percentage (0.7%) at the end of fiscal year 2005, but divested his
interest during the first half of fiscal year 2006.

       We engage the  services of Stephens  Inc. to act as our broker  under our
stock  repurchase  program.  Stephens Inc. is a shareholder of the Company,  and
Doug Martin,  an Executive  Vice  President of Stephens Inc., is a member of our
Board  of  Directors.  During  the  years  ended  January  31,  2007  and  2008,
respectively,  we incurred  fees payable to Stephens Inc. of $5,040 and $46,644,
respectively,   related  to  the  purchase  of  168,000  and  1,555,205  shares,
respectively of our common stock. Based on a review of competitive bids received
from various broker candidates,  we believe the terms of this arrangement are no
less favorable than we could have obtained in an arms' length transaction.

                                       56

<PAGE>
      Contractual Obligations

       The  following  table  presents  a  summary  of  our  known   contractual
obligations  as of January 31, 2008,  with respect to the specified  categories,
classified by payments due per period.

<TABLE>
<CAPTION>
<S>                                <C>         <C>        <C>         <C>        <C>
                                                      Payments due by period
                                            -------------------------------------------
                                            Less Than 1   1-3        3-5     More Than
                                   Total        Year     Years      Years      5 Years
                                ----------- --------------------- ---------- ----------
                                                        (in thousands)
Long term debt                         $119       $102        $10         $7         $-
Operating leases:
Real estate                         145,463     17,769     34,420     29,792     63,482
Equipment                             8,720      2,511      3,873      1,583        753
Purchase obligations (1)              1,998      1,515        483          -          -
                                ----------- ---------- ---------- ---------- ----------
Total contractual cash
 obligations                       $156,300    $21,897    $38,786    $31,382    $64,235
                                =========== ========== ========== ========== ==========
</TABLE>


      ---------------------
       (1) Includes  contracts for long-term  communication  services.  Does not
        include  outstanding  purchase  orders  for  merchandise,   services  or
        supplies  which are ordered in the normal course of operations and which
        generally are received and recorded within 30 days.


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

       Interest  rates  under our bank  credit  facility  are  variable  and are
determined,  at our option, as the base rate, which is the greater of prime rate
or federal  funds rate plus 0.50% plus the base rate  margin,  which ranges from
0.00% to 0.50%,  or LIBOR  plus the LIBOR  margin,  which  ranges  from 0.75% to
1.75%. Accordingly,  changes in the prime rate, the federal funds rate or LIBOR,
which are  affected  by changes in  interest  rates  generally,  will affect the
interest rate on, and therefore our costs under,  our bank credit  facility.  We
are  also  exposed  to  interest  rate  risk  associated  with our  interest  in
securitized  assets.  See  Note  3  to  the  audited  financial  statements  for
disclosures related to the sensitivity of the current fair value of the interest
in securitized  assets to 10% and 20% adverse changes in the factors that affect
these assets,  including  interest  rates.  Since January 31, 2007, our interest
rate  sensitivity  has  increased on our interest in  securitized  assets as the
variable rate portion of the QSPE's debt has increased from $120.0  million,  or
29.2% of its debt, to $278.0 million or 59.4% of its total debt.

                                       57

<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                                                                            Page
                                                                            ----

Management's Report on Internal Control Over Financial Reporting..............59


Report of Independent Registered Public Accounting Firm on Internal Control
Over Financial Reporting......................................................60

Report of Independent Auditors................................................61

Consolidated Balance Sheets...................................................62

Consolidated Statements of Operations.........................................63

Consolidated Statements of Stockholders' Equity...............................64

Consolidated Statements of Cash Flows.........................................65

Notes to Consolidated Financial Statements....................................66

                                       58

<PAGE>

        Management's Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal
control  over  financial   reporting  as  defined  in  Rule  13a-15(f)  or  Rule
15(d)-15(f)  under  the  Exchange  Act.  Our  internal  control  over  financial
reporting is designed to provide reasonable  assurance regarding the reliability
of financial reporting and the preparation of financial  statements for external
purposes in accordance with generally accepted accounting principles.

Because of its inherent  limitations,  internal control over financial reporting
may  not  prevent  or  detect  misstatements.   Therefore,  even  those  systems
determined to be effective can provide only reasonable assurance with respect to
financial statement preparation and presentation.

Our management (with the  participation of our principal  executive  officer and
our principal  financial  officer)  assessed the  effectiveness  of our internal
control  over  financial  reporting  as of  January  31,  2008.  In making  this
assessment,  management  used  the  criteria  set  forth  by  the  Committee  of
Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control -
Integrated  Framework.  Based on our assessment and those  criteria,  management
believes  that,  as of January 31,  2008,  our internal  control over  financial
reporting is effective.

The effectiveness of our internal control over financial reporting as of January
31,  2008,  has been  audited by Ernst & Young LLP,  an  independent  registered
public  accounting  firm, as stated in their report which is included  elsewhere
herein.

Conn's, Inc.
Beaumont, Texas
March 27, 2008




          /s/ Michael J. Poppe
      -------------------------
         Michael J. Poppe
      Chief Financial Officer



          /s/ Thomas J. Frank
      -------------------------
         Thomas J. Frank
      Chief Executive  Officer


                                       59

<PAGE>

             Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of Conn's, Inc.

We have audited Conn's Inc.'s  internal  control over financial  reporting as of
January 31, 2008, based on criteria established in Internal  Control--Integrated
Framework  issued by the Committee of Sponsoring  Organizations  of the Treadway
Commission (the COSO  criteria).  Conn's,  Inc.'s  management is responsible for
maintaining  effective  internal  control over  financial  reporting and for its
assessment of the  effectiveness  of internal  control over financial  reporting
included in the accompanying Management's Report Internal Control Over Financial
Reporting. Our responsibility is to express an opinion on the Company's internal
control over financial reporting based on our audit.

We conducted  our audit in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain  reasonable  assurance  about whether  effective
internal  control  over  financial  reporting  was  maintained  in all  material
respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, testing
and evaluating the design and operating  effectiveness of internal control based
on the assessed  risk,  and  performing  such other  procedures as we considered
necessary in the circumstances.  We believe that our audit provides a reasonable
basis for our opinion.

A company's  internal control over financial  reporting is a process designed to
provide reasonable  assurance  regarding the reliability of financial  reporting
and the preparation of financial  statements for external purposes in accordance
with generally accepted accounting principles. A company's internal control over
financial  reporting  includes those policies and procedures that (1) pertain to
the  maintenance  of records that, in reasonable  detail,  accurately and fairly
reflect the  transactions  and  dispositions  of the assets of the company;  (2)
provide  reasonable  assurance  that  transactions  are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting  principles,  and that receipts and  expenditures  of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of  unauthorized  acquisition,  use, or  disposition  of the company's
assets that could have a material effect on the financial statements.

Because of its inherent  limitations,  internal control over financial reporting
may not prevent or detect misstatements.  Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate  because of changes in  conditions,  or that the degree of compliance
with the policies or procedures may deteriorate.

In our opinion,  Conn's, Inc.  maintained,  in all material respects,  effective
internal  control over financial  reporting as of January 31, 2008, based on the
COSO criteria.

We also have  audited,  in accordance  with the standards of the Public  Company
Accounting  Oversight Board (United States),  the consolidated balance sheets of
Conn's,  Inc.  as of January 31,  2008 and 2007,  and the  related  consolidated
statements of operations,  stockholders'  equity, and cash flows for each of the
three years in the period ended January 31, 2008 of Conn's,  Inc. and our report
dated March 26, 2008 expressed an unqualified opinion thereon.

                                                               Ernst & Young LLP

Houston, Texas
March 26, 2008


                                       60

<PAGE>

             Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of Conn's, Inc.

We have audited the accompanying  consolidated balance sheets of Conn's, Inc. as
of  January  31,  2008 and 2007,  and the  related  consolidated  statements  of
operations,  stockholders' equity, and cash flows for each of the three years in
the period  ended  January 31,  2008.  Our audits also  included  the  financial
statement schedule listed in the Index at Item 15(a). These financial statements
and  schedule  are  the   responsibility  of  the  Company's   management.   Our
responsibility  is to  express  an opinion  on these  financial  statements  and
schedule based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the consolidated  financial position of Conn's,  Inc. at
January 31, 2008 and 2007,  and the  consolidated  results of its operations and
its cash flows for each of the three years in the period ended January 31, 2008,
in conformity with U.S. generally accepted accounting  principles.  Also, in our
opinion,  the related financial statement schedule,  when considered in relation
to the  basic  financial  statements  taken as a whole,  presents  fairly in all
material respects the information set forth therein.

As discussed in Note 1 to the consolidated financial statements,  on February 1,
2006, the Company changed its method of accounting for share-based compensation.

As discussed in Note 2 to the consolidated financial statements,  on February 1,
2007, the Company  changed its method of accounting for interests in securitized
assets and its method of accounting for servicing liabilities.

We also have  audited,  in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States),  Conn's Inc.'s internal control over
financial  reporting as of January 31, 2008,  based on criteria  established  in
Internal  Control -- Integrated  Framework issued by the Committee of Sponsoring
Organizations  of the Treadway  Commission  and our report dated March 26, 2008,
expressed an unqualified opinion thereon.

                                                              Ernst & Young LLP


Houston, Texas
March 26, 2008



                                       61

<PAGE>
                                  Conn's, Inc.
                           CONSOLIDATED BALANCE SHEETS
                        (in thousands, except share data)

<TABLE>
<CAPTION>
<S>                                                                            <C>           <C>
                                                                                  January 31,
                                                                            ------------------------
                                   Assets                                       2007        2008
                                                                            ----------- ------------
Current Assets
Cash and cash equivalents                                                       $56,570      $11,015
Accounts receivable, net of allowance for doubtful accounts of $821 and
 $960, respectively                                                              31,737       36,100
Interest in securitized assets                                                  136,848      178,150
Inventories                                                                      87,098       81,495
Deferred income taxes                                                               551        2,619
Prepaid expenses and other assets                                                 4,958        4,449
                                                                            ----------- ------------
Total current assets                                                            317,762      313,828
Non-current deferred income tax asset                                             2,920            -
Property and equipment
Land                                                                              9,102        8,011
Buildings                                                                        13,896       13,626
Equipment and fixtures                                                           13,650       17,950
Transportation equipment                                                          3,022        2,741
Leasehold improvements                                                           66,761       74,120
                                                                            ----------- ------------
Subtotal                                                                        106,431      116,448
Less accumulated depreciation                                                  (46,991)     (57,195)
                                                                            ----------- ------------
Total property and equipment, net                                                59,440       59,253
Goodwill, net                                                                     9,617        9,617
Other assets, net                                                                   208          154
                                                                            ----------- ------------
Total assets                                                                   $389,947     $382,852
                                                                            =========== ============

                    Liabilities and Stockholders' Equity
Current Liabilities
Current portion of long-term debt                                                  $110         $102
Accounts payable                                                                 51,028       28,179
Accrued compensation and related expenses                                         9,234        9,748
Accrued expenses                                                                 20,424       21,487
Income taxes payable                                                              3,693          600
Deferred revenues and allowances                                                 12,533       16,949
                                                                            ----------- ------------
Total current liabilities                                                        97,022       77,065
Long-term debt                                                                       88           17
Non-current deferred tax liability                                                    -          131
Deferred gain on sale of property                                                   309        1,221
Stockholders' equity
Preferred stock ($0.01 par value, 1,000,000 shares authorized; none issued
 or outstanding)                                                                      -            -
Common stock ($0.01 par value, 40,000,000 shares authorized; 23,809,522 and
 24,098,171 shares issued and outstanding at January 31, 2007 and 2008,
  respectively)                                                                     238          241
Accumulated other comprehensive income                                            6,305            -
Additional paid in capital                                                       93,365       99,514
Retained earnings                                                               196,417      241,734
Treasury stock at cost (168,000 and 1,723,205 shares at January 31, 2007 and
 2008, respectively)                                                            (3,797)     (37,071)
                                                                            ----------- ------------
Total stockholders' equity                                                      292,528      304,418
                                                                            ----------- ------------
Total liabilities and stockholders' equity                                     $389,947     $382,852
                                                                            =========== ============
</TABLE>


See notes to consolidated financial statements.

                                       62

<PAGE>
                                  Conn's, Inc.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                        (in thousands, except earnings per share)

<TABLE>
<CAPTION>
<S>                                                           <C>       <C>        <C>
                                                                 Year Ended January 31,
                                                              -----------------------------
                                                                2006      2007     2008
                                                              --------  -------- ----------
Revenues
  Product sales                                               $569,877  $623,959   $671,571
  Service maintenance agreement commissions (net)               30,583    30,567     36,424
  Service revenues                                              20,278    22,411     22,997
                                                              --------  -------- ----------
    Total net sales                                            620,738   676,937    730,992
  Finance charges and other                                     80,410    83,720     93,136
                                                              --------  -------- ----------
    Total revenues                                             701,148   760,657    824,128

Cost and expenses
  Cost of goods sold, including warehousing and 
   occupancy costs                                             422,533   466,279    508,787
  Cost of service parts sold, including warehousing 
   and occupancy cost                                            5,310     6,785      8,379
  Selling, general and administrative expense                  208,259   224,979    245,317
  Provision for bad debts                                        1,133     1,476      1,908
                                                              --------  -------- ----------
    Total cost and expenses                                    637,235   699,519    764,391
                                                              --------  -------- ----------
Operating income                                                63,913    61,138     59,737
Interest (income) expense                                          400     (676)      (515)
Other (income) expense                                              69     (772)      (943)
                                                              --------  -------- ----------
Income before income taxes                                      63,444    62,586     61,195
Provision for income taxes                                      22,341    22,275     21,509
                                                              --------  -------- ----------
Net Income                                                     $41,103   $40,311    $39,686
                                                              ========  ======== ==========
Earnings per share
  Basic                                                          $1.76     $1.70      $1.71
  Diluted                                                        $1.71     $1.66      $1.68
Average common shares outstanding
  Basic                                                         23,412    23,663     23,193
  Diluted                                                       24,088    24,289     23,673
</TABLE>


See notes to consolidated financial statements.

                                       63

<PAGE>

<TABLE>
<CAPTION>
<S>                                         <C>       <C>         <C>          <C>        <C>       <C>        <C>         <C>
                                                                          Conn's, Inc.
                                                      CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                                                         (in thousands)


                                                                  Accum.
                                                                  Other
                                            Common Stock          Compre-                               Treasury Stock
                                       -----------------------    hensive      Paid in    Retained   ----------------------
                                         Shares      Amount       Income       Capital    Earnings   Shares      Amount      Total
                                       ----------- ----------- ------------- ----------- ---------- --------- ------------ ---------
Balance January 31, 2005                    23,268    $    233    $   8,408    $  85,090  $ 115,003        -   $        -  $208,734

Exercise of options
  including tax benefit                        293           3                     2,579                                      2,582
Issuance of common stock under
  Employee Stock Purchase Plan                  11                                   192                                        192
Forfeiture of restricted shares                                                                                                   -
Stock-based compensation                                                           1,166                                      1,166
Comprehensive Income:
Net income                                                                                   41,103                          41,103
Reclassification adjustments
  on derivative instruments
  (net of tax of $ 86)                                                  160                                                     160
Adjustment of fair value of
  securitized assets (net of
  tax of $1,038), net of reclass-
  ification adjustments of
  $12,626 (net of tax of $6,828)                                      1,924                                                   1,924
                                                                                                                           ---------
Total comprehensive income                                                                                                   43,187
                                                   ----------- ------------- ----------- ---------- --------- ------------ ---------
Balance January 31, 2006                    23,572         236       10,492       89,027    156,106        -            -   255,861

Exercise of options,
  including tax benefit                        226           2                     2,370                                      2,372
Issuance of common stock under
  Employee Stock Purchase Plan                  12                                   245                                        245
Stock-based compensation                                                           1,723                                      1,723
Purchase of treasury stock                                                                              (168)      (3,797)   (3,797)
Comprehensive Income:
Net income                                                                                   40,311                          40,311
Adjustment of fair value of
  securitized assets (net of
  tax of $2,154), net of reclass-
  ification adjustments of
  $12,732 (net of tax of $7,100)                                     (4,187)                                                 (4,187)
                                                                                                                           ---------
Total comprehensive income                                                                                                   36,124
                                       ----------- ----------- ------------- ----------- ---------- --------- ------------ ---------
Balance January 31, 2007                    23,810         238        6,305       93,365    196,417     (168)      (3,797)  292,528

Cumulative effect of changes in
  accounting principles                                              (6,305)                  5,631                            (674)
Exercise of options,
  including tax benefit                        279           2                     3,241                                      3,243
Issuance of common stock under
  Employee Stock Purchase Plan                  13           1                       247                                        248
Stock-based compensation                                                           2,661                                      2,661
Purchase of treasury stock                                                                            (1,555)     (33,274)  (33,274)
Comprehensive Income:
Net income                                                                                   39,686                          39,686
                                                   ----------- ------------- ----------- ---------- --------- ------------ ---------
Balance January 31, 2008                    24,102    $    241    $       -    $  99,514  $ 241,734   (1,723)  $  (37,071) $304,418
                                       =========== =========== ============= =========== ========== ========= ============ =========
</TABLE>


See notes to consolidated financial statements.

                                       64

<PAGE>

<TABLE>
<CAPTION>
<S>                                                        <C>          <C>          <C>
                                  Conn's, Inc.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (in thousands)


                                                               Year Ended January 31,
                                                        ------------------------------------
                                                             2006        2007         2008
                                                        ----------- ----------- ------------
Cash flows from operating activities
Net income                                                  $41,103     $40,311      $39,686
Adjustments to reconcile net income to net cash provided by
 operating activities:
  Depreciation                                               11,271      12,520       12,441
  Accretion, net                                               (318)       (461)        (758)
  Provision for bad debts                                     1,133       1,476        1,908
  Stock-based compensation                                    1,166       1,723        2,661
  Gains on interests in securitized assets                  (26,724)    (23,874)     (28,043)
  Decrease in fair value of interests in securitized
   assets                                                         -           -        5,789
  Provision for deferred income taxes                          (707)     (1,080)        (747)
  Loss (gain) from sale of property and equipment                69        (772)        (943)
  Discounts on promotional credit                             3,080       5,347        7,236
  Losses from derivatives                                        69           -            -
Change in operating assets and liabilities:
  Accounts receivable                                         6,582       4,950      (32,549)
  Inventory                                                 (11,641)    (13,111)       5,603
  Prepaid expenses and other assets                            (452)       (954)         509
  Accounts payable                                           13,812      10,108      (22,849)
  Accrued expenses                                           15,751      (6,569)       1,577
  Income taxes payable                                        8,833      (5,120)        (987)
  Deferred revenues and allowances                            1,330       4,380        3,832
                                                        ----------- ----------- ------------
Net cash provided by (used in) operating activities          64,357      28,874       (5,634)
                                                        ----------- ----------- ------------
Cash flows from investing activities
  Purchase of property and equipment                        (18,490)    (18,425)     (18,955)
  Proceeds from sales of property                                34       2,278        8,921
                                                        ----------- ----------- ------------
Net cash used in investing activities                       (18,456)    (16,147)     (10,034)
                                                        ----------- ----------- ------------
Cash flows from financing activities
  Net proceeds from stock issued under employee 
        benefit plans, including tax benefit                  2,640       2,407        3,188
  Excess tax benefits from stock-based compensation             134         210          303
  Purchase of treasury stock                                      -      (3,797)     (33,274)
  Borrowings under lines of credit                           77,150      25,200       40,475
  Payments on lines of credit                               (87,650)    (25,200)     (40,475)
  Increase in debt issuance costs                              (130)          -            -
  Borrowings on promissory notes                                136           -            -
  Payment of promissory notes                                   (32)       (153)        (104)
                                                        ----------- ----------- ------------
Net cash used in financing activities                        (7,752)     (1,333)     (29,887)
                                                        ----------- ----------- ------------
Net change in cash                                           38,149      11,394      (45,555)
  Cash and cash equivalents
  Beginning of the year                                       7,027      45,176       56,570
                                                        ----------- ----------- ------------
  End of the year                                           $45,176     $56,570      $11,015
                                                        =========== =========== ============
Supplemental disclosure of cash flow information
  Cash interest paid                                           $635        $366         $435
  Cash income taxes paid, net of refunds                     13,179      28,262       22,935
  Cash interest received from interests in securitized
   assets                                                    14,633      19,055       23,339
  Cash proceeds from new securitizations                    285,529     338,222      378,699
  Cash flows from servicing fees                             18,572      20,997       24,288
Supplemental disclosure of non-cash activity
  Customer receivables exchanged for interests in
   securitized assets                                        58,835      63,067       63,789
  Amounts reinvested in interests in securitized assets     (76,133)    (61,880)    (108,067)
  Purchases of property and equipment with debt financing         -         215           23

 See notes to consolidated financial statements.
</TABLE>


                                       65

<PAGE>
                                  CONN'S , INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                January 31, 2008

1.     Summary of Significant Accounting Policies

       Principles  of  Consolidation.   The  consolidated  financial  statements
include the accounts of Conn's,  Inc. and its  subsidiaries,  limited  liability
companies  and  limited  partnerships,   all  of  which  are  wholly-owned  (the
"Company").  All  material  intercompany  transactions  and  balances  have been
eliminated in consolidation.

       The Company enters into  securitization  transactions  to sell its retail
installment   and  revolving   customer   receivables   and  retains   servicing
responsibilities and subordinated interests.  These securitization  transactions
are accounted for as sales in accordance with Statement of Financial  Accounting
Standards  (SFAS) No. 140,  Accounting  for Transfers and Servicing of Financial
Assets and Extinguishment of Liabilities, as amended by SFAS No. 155, Accounting
for Certain Hybrid Financial  Instruments,  because the Company has relinquished
control of the  receivables.  Additionally,  the  Company  has  transferred  the
receivables to a qualifying special purpose entity (QSPE). Accordingly,  neither
the  transferred  receivables  nor the  accounts of the QSPE are included in the
consolidated  financial  statements  of  the  Company.  The  Company's  retained
interest in the transferred receivables is valued under the requirements of SFAS
No. 159, The Fair Value Option for Financial  Assets and  Liabilities,  and SFAS
No. 157, Fair Value Measurements.

       Business  Activities.  The Company,  through its retail stores,  provides
products  and  services to its  customer  base in seven  primary  market  areas,
including  southern  Louisiana,  southeast  Texas,  Houston,  South  Texas,  San
Antonio/Austin,  Dallas/Fort  Worth and Oklahoma.  Products and services offered
through retail sales outlets include home appliances, consumer electronics, home
office  equipment,  lawn and garden  products,  mattresses,  furniture,  service
maintenance  agreements,  installment and revolving credit account programs, and
various credit insurance  products.  These  activities are supported  through an
extensive service,  warehouse and distribution system. For the reasons discussed
below, the aggregation of operating  companies  represent one reportable segment
under SFAS No. 131,  Disclosures  About  Segments of an  Enterprise  and Related
Information.  Accordingly,  the accompanying  consolidated  financial statements
reflect the operating  results of the Company's single reportable  segment.  The
Company's  retail stores bear the "Conn's"  name,  and deliver the same products
and services to a common customer group. The Company's  customers  generally are
individuals rather than commercial accounts. All of the retail stores follow the
same  procedures  and  methods  in  managing  their  operations.  The  Company's
management evaluates  performance and allocates resources based on the operating
results  of the  retail  stores  and  considers  the  credit  programs,  service
contracts and distribution system to be an integral part of the Company's retail
operations.

       Use of Estimates.  The preparation of financial  statements in conformity
with  generally  accepted  accounting  principles  requires  management  to make
estimates  and  assumptions  that affect the amounts  reported in the  financial
statements  and  accompanying  notes.  Actual  results  could  differ from those
estimates.  See the discussion  under Note 2 regarding the change in assumptions
used in the Company's valuation of its Interests in securitized assets.

       Vendor  Programs.  The  Company  receives  funds from  vendors  for price
protection,  product  and  volume  rebates  (earned  upon  purchase  or sales of
product), marketing, training and promotional programs which are recorded as the
amounts are earned,  as a reduction of the related  product cost or  advertising
expense,  according to the nature of the program.  The Company  accrues  rebates
based on the  satisfaction  of terms of the program even though funds may not be
received  until the end of a quarter or year.  If the  programs  are  related to
product  purchases,  which would include price protection,  and sales and volume
rebates,  the  allowances,  credits,  or payments are recorded as a reduction of
product cost and are reflected in cost of goods sold when the related product is
sold. If the programs are related to product sales,  the allowances,  credits or
payments  are  recorded as a reduction  of cost of goods sold.  If the  programs
relate to marketing,  training and promotions that are not for  reimbursement of
specific incremental costs, the allowances, credits or payments are reflected as
a  reduction  of product  cost.  If the  programs  are related to  promotion  or
marketing of the product, the allowances, credits, or payments for reimbursement
of specific,  incremental,  identifiable,  advertising-related costs incurred in
selling the vendors' products are recorded as a reduction of advertising expense
and are reflected in selling, general and administrative expenses in the period

                                       66

<PAGE>
in which the  expense is  incurred.  Vendor  rebates  earned and  recorded  as a
reduction of product  inventory  cost totaled $19.5  million,  $20.0 million and
$29.5 million for the years ended January 31, 2006, 2007 and 2008, respectively.

       Earnings Per Share. In accordance with SFAS No. 128,  Earnings per Share,
the Company  calculates  basic  earnings per share by dividing net income by the
weighted average number of common shares outstanding. Diluted earnings per share
include the dilutive effects of any stock options  granted,  which is calculated
using the  treasury-stock  method.  The  following  table  sets forth the shares
outstanding for the earnings per share calculations (shares in thousands):

<TABLE>
<CAPTION>
<S>                                                       <C>        <C>          <C>
                                                             Year Ended January 31,
                                                        --------------------------------
                                                             2006      2007         2008
                                                        --------- --------- ------------
Common stock outstanding, beginning of period              23,268    23,571       23,642
Weighted average common stock issued in stock
  option exercises                                            142       111          111
Weighted average common stock issued to employee
  stock purchase plan                                           2         5            5
Less: Weighted average treasury shares purchased                -      (24)        (565)
                                                        --------- --------- ------------
Shares used in computing basic earnings per share          23,412    23,663       23,193
Dilutive effect of stock options, net of assumed
 repurchase of treasury stock                                 676       626          480
                                                        --------- --------- ------------
Shares used in computing diluted earnings per share        24,088    24,289       23,673
                                                        ========= ========= ============
</TABLE>


       During the periods presented, options with an exercise price in excess of
the average  market price of the  Company's  common stock are excluded  from the
calculation  of the dilutive  effect of stock  options for diluted  earnings per
share  calculations.  The weighted average number of options not included in the
calculation  of the  dilutive  effect  of stock  options  was 0.1  million,  0.2
million, and 0.4 million for each of the years ended January 31, 2006, 2007, and
2008 respectively.

       Cash and Cash  Equivalents.  The Company considers all highly liquid debt
instruments  purchased  with a  maturity  of  three  months  or  less to be cash
equivalents.  Credit card deposits  in-transit of $1.2 million and $1.3 million,
as of January 31,  2007 and 2008,  respectively,  are  included in cash and cash
equivalents.

       Inventories.  Inventories  consist  of  finished  goods or parts  and are
valued at the lower of cost (moving weighted average method) or market.

       Property  and  Equipment.  Property and  equipment  are recorded at cost.
Costs associated with major additions and betterments that increase the value or
extend the lives of assets are capitalized and  depreciated.  Normal repairs and
maintenance that do not materially improve or extend the lives of the respective
assets are  charged to  operating  expenses  as  incurred.  Depreciation,  which
includes  amortization of capitalized  leases,  is computed on the straight-line
method  over  the  estimated  useful  lives  of the  assets,  or in the  case of
leasehold  improvements,  over the shorter of the estimated  useful lives or the
remaining  terms of the respective  leases.  The estimated lives used to compute
depreciation expense are summarized as follows:

Buildings...............................................................30 years

Equipment and fixtures...............................................3 - 5 years

Transportation equipment.................................................3 years

Leasehold improvements..............................................5 - 15 years

       Property and equipment  are evaluated for  impairment at the retail store
level.  The Company  performs a periodic  assessment  of assets for  impairment.
Additionally,  an impairment  evaluation is performed whenever events or changes
in  circumstances  indicate that the carrying  amount of the assets might not be
recoverable.  The most likely  condition  that would  necessitate  an assessment
would be an adverse  change in  historical  and  estimated  future  results of a
retail store's performance. For property and equipment to be held and used, the

                                       67

<PAGE>
Company  recognizes an impairment loss if its carrying amount is not recoverable
through its  undiscounted  cash flows and measures the impairment  loss based on
the difference between the carrying amount and fair value.

       All gains and losses on sale of assets  are  included  in Other  (income)
expense in the consolidated statements of operations.

                                            Year Ended January 31,
                                        -------------------------------
(in thousands of dollars)                    2006      2007        2008
----------------------------------      --------- --------- -----------
Gain (loss) on sale of assets                (69)       772         943


During the year ended  January 31,  2007,  the Company  completed a  nonmonetary
transaction in an exchange of real estate assets.  As required under  Accounting
Principles Board No. 29, Accounting for Nonmonetary Transactions, a gain of $0.7
million was recorded in Other  (income)  expense.  During the year ended January
31,  2008,  the Company  completed  transactions  involving  certain real estate
assets that qualified for sales-leaseback  treatment.  As a result, a portion of
the gains resulting from the  transactions are being deferred and amortized as a
reduction of rent expense on a straight-line  basis over the minimum lease term.
The deferred  gains of $1.3 million  recorded  during the year ended January 31,
2008, are included in Deferred gains on sales of property.

       Receivable  Sales and Interests in Securitized  Receivables.  The Company
enters into securitization  transactions to sell customer retail installment and
revolving  receivable  accounts.  In these  transactions,  the  Company  retains
interest-only  strips and  subordinated  securities,  all of which are  retained
interests in the securitized receivables. Securitization income, which includes,
gains and losses on sales of receivables, changes in the fair value of interests
in  securitized  assets  due  to  assumption  changes,  impairment  on  retained
interests,  interest  income from  retained  interests  and  servicing  fees, is
included  in  Finance  charges  and  other  in  the  consolidated  statement  of
operations.  Gains and losses from the sales of receivables  are recorded at the
time of the transfer to the QSPE, based on the difference between the fair value
and the carrying amount at that time.

       Receivables Not Sold. Certain  receivables are not eligible for inclusion
in the  securitization  transactions and are therefore  carried on the Company's
balance sheet in Accounts  receivable.  Such  receivables are recorded net of an
allowance for doubtful accounts, which is calculated based on historical losses.
Typically,  a  receivable  is  considered  delinquent  if a payment has not been
received on the  scheduled  due date.  Generally,  an account that is delinquent
more than 120 days and for which no payment has been  received in the past seven
months will be charged-off against the allowance and interest accrued subsequent
to the last payment will be reversed.  Interest income is accrued using the Rule
of 78's method for  installment  contracts  and the simple  interest  method for
revolving  charge  accounts.  Typically,  interest  income is accrued  until the
contract  or  account  is paid off or  charged-off.  The  Company  has a secured
interest in the merchandise  financed by these receivables and therefore has the
opportunity to recover a portion of the charged-off value. (See also Note 3.)

       Goodwill.  Goodwill represents the excess of purchase price over the fair
market value of net assets acquired. The Company performs an assessment annually
regarding  the  impairment  of  goodwill,  or at any other time when  impairment
indicators  exist.  In fiscal 2006,  2007 and 2008,  the Company  concluded that
goodwill was not impaired based on its annual impairment testing.

       Income Taxes.  The Company follows the liability method of accounting for
income  taxes.  Under this  method,  deferred  tax assets  and  liabilities  are
determined  based on differences  between  financial  reporting and tax bases of
assets and  liabilities  and are measured  using the tax rates and laws that are
expected be in effect when the differences are expected to reverse.

       Sales Taxes. The Company records and reports all sales taxes collected on
a net basis in the financial statements.

       Revenue  Recognition.  Revenues  from the  sale of  retail  products  are
recognized  at the time the  customer  takes  possession  of the  product.  Such
revenues are recognized net of any adjustments  for sales incentive  offers such
as discounts,  coupons,  rebates or other free products or services. The Company
sells service maintenance agreements and credit insurance contracts on behalf of
unrelated  third parties.  For contracts  where third parties are the obligor on
the contract, commissions are recognized in revenues at the time of sale, and in
the case of retrospective commissions, at the time that they are earned. The

                                       68

<PAGE>
Company records a receivable for earned but unremitted retrospective commissions
and reserves for future  cancellations  of service  maintenance  agreements  and
credit insurance  contracts estimated based on historical  experience.  When the
Company  sells  service  maintenance  agreements in which it is deemed to be the
obligor on the contract at the time of sale, revenue is recognized ratably, on a
straight-line basis, over the term of the service maintenance  agreement.  These
Company-obligor  service  maintenance  agreements  are renewal  contracts  which
provide our customers  protection against product repair costs arising after the
expiration of the manufacturer's warranty and the third-party obligor contracts.
These agreements typically have terms ranging from 12 months to 36 months. These
agreements  are  separate  units of  accounting  under EITF No.  00-21,  Revenue
Arrangements with Multiple  Deliverables and are valued based on the agreed upon
retail  selling  price.  The amounts of service  maintenance  agreement  revenue
deferred  at  January  31,  2007 and 2008 were $3.6  million  and $5.4  million,
respectively,  and are  included  in  Deferred  revenue  and  allowances  in the
accompanying balance sheets. Under the renewal contracts, the Company defers and
amortizes  its direct  selling  expenses  over the contract term and records the
cost of the service work performed as products are repaired.

       The  classification  of the amounts included as Finance charges and other
is summarized as follows (in thousands):

                                                     Year Ended January 31,
                                                 -------------------------------
                                                    2006      2007       2008
                                                 --------- --------- -----------
Securitization income:
Servicing fees received                            $18,572   $20,997     $24,288
Gains on sale of receivables, net                   26,724    23,874      28,043
Change in fair value of securitized assets               -         -     (5,789)
Impairment recorded on retained interests (1)        (895)   (1,495)           -
Interest earned on retained interests               14,633    19,055      23,339
                                                 --------- --------- -----------
Total securitization income                         59,034    62,431      69,881
Insurance commissions                               16,672    18,394      21,278
Other                                                4,704     2,895       1,977
                                                 --------- --------- -----------
Finance charges and other                          $80,410   $83,720     $93,136
                                                 ========= ========= ===========

       (1)    The  impairment  charge in the year ended January 31, 2006,  was
              due to higher expected credit losses as a result of changes in the
              bankruptcy-filing laws and the disruption to our credit operations
              as a  result  of  Hurricane  Rita,  which  hit the  Gulf  Coast in
              September  2005. The  impairment  charge in the year ended January
              31, 2007, was due to higher  expected credit losses as a result of
              the continued impact of the disruption to our credit operations as
              a result of Hurricane Rita.

       Sales on interest-free  promotional credit programs are recognized at the
time the customer  takes  possession of the product,  consistent  with the above
stated policy.  Considering the short-term  nature of interest free programs for
terms  less  than  one  year,  sales  are  recorded  at full  value  and are not
discounted.  Sales financed by longer-term (18-, 24- and 36-month) interest free
programs  are  recorded at their net present  value in  accordance  with APB 21,
Interest on Receivables and Payables.  The discount to net present value results
in a reduction in net sales,  which totaled $3.1 million,  $5.3 million and $7.2
million  for the years  ended  January 31,  3006,  2007 and 2008,  respectively.
Receivables arising out of the Company's  interest-free programs are transferred
to the Company's  QSPE,  net of the  discount,  with other  qualifying  customer
receivables.

       The Company  classifies  amounts billed to customers relating to shipping
and  handling  as  revenues.  Costs of $21.0  million,  $21.4  million and $22.0
million  associated with shipping and handling revenues are included in Selling,
general and  administrative  expense for the years ended January 31, 2006,  2007
and 2008, respectively.

       Fair  Value of  Financial  Instruments.  The fair  value of cash and cash
equivalents,  receivables,  and notes and  accounts  payable  approximate  their
carrying  amounts because of the short maturity of these  instruments.  The fair
value of the Company's  interests in  securitized  receivables  is determined by
estimating the present value of future expected cash flows using management's

                                       69

<PAGE>
best estimates of the key assumptions,  including  credit losses,  forward yield
curves and discount rates commensurate with the risks involved.  See Notes 2 and
3. The carrying value of the Company's  long-term debt  approximates  fair value
due to either the time to maturity or the existence of variable  interest  rates
that approximate current market rate.

       Share-Based  Compensation.  On February 1, 2006, the Company adopted SFAS
No. 123R,  Share-Based  Payment,  using the modified  retrospective  application
transition  method.  Under the  modified  retrospective  application  transition
method, all prior period financial  statements have been adjusted to give effect
to the fair-value-based method of accounting for share-based  compensation.  The
adoption  of the  statement  impacted  the  financial  statements  presented  as
follows:

       o    For the fiscal year 2007,  Income before income taxes and Net income
            was reduced by $1.7 million and $1.4  million,  respectively.  Basic
            earnings  per share and Diluted  earnings  per share were reduced by
            $.06. Cash flows from operating  activities were reduced by and cash
            flow from financing activities were increased by $0.2 million.

       For stock option grants after our IPO in November  2003,  the Company has
used the Black-Scholes model to determine fair value.  Share-based  compensation
expense is recorded, net of estimated forfeitures, on a straight-line basis over
the vesting period of the applicable  grant.  Prior to the IPO, the value of the
options issued was estimated using the minimum valuation  option-pricing  model.
Since the  minimum  valuation  option-pricing  model does not  qualify as a fair
value pricing  model under FAS 123R,  the Company  followed the intrinsic  value
method of accounting for share-based compensation to employees for these grants,
as prescribed by Accounting  Principles  Board (APB) Opinion No. 25,  Accounting
for Stock Issued to Employees, and related interpretations.  The following table
presents the impact to earnings per share as if the Company had adopted the fair
value  recognition  provisions of SFAS No. 123 (dollars in thousands  except per
share data):

                                                                   Year Ended
                                                                January 31, 2006
                                                                ----------------

Net income available for common stockholders as reported                $41,103
Add: Stock-based compensation recorded, net of tax                          963
Less: Stock-based compensation, net of tax,
  for all awards                                                        (1,313)
                                                                   ------------
Pro forma net income                                                    $40,753
                                                                   ============

Earnings per share-as reported:
  Basic                                                                   $1.76
  Diluted                                                                 $1.71
Pro forma earnings per share:
  Basic                                                                   $1.74
  Diluted                                                                 $1.69

       Self-insurance.  The Company is self-insured  for certain losses relating
to  group  health,  workers'  compensation,   automobile,  general  and  product
liability  claims.  The  Company has stop loss  coverage  to limit the  exposure
arising  from these  claims.  Self-insurance  losses for claims filed and claims
incurred,  but not reported,  are accrued based upon the Company's  estimates of
the aggregate  liability for claims incurred using development  factors based on
historical experience.

       Expense  Classifications.  The Company  records Cost of goods sold as the
direct cost of products sold, any related  in-bound freight costs, and receiving
costs,  inspection  costs,  internal  transfer costs, and other costs associated
with the operations of its distribution  system.  Advertising costs are expensed
as incurred. Advertising expense included in Selling, general and administrative
expense for the years ended January 31, 2006, 2007 and 2008, was:

                                       70

<PAGE>

<TABLE>
<CAPTION>
<S>                                                     <C>         <C>         <C>
                                                           Year Ended January 31,
                                                      ---------------------------------
                                                          2006       2007       2008
                                                      ---------- ---------- -----------
                                                               (in thousands)
Gross advertising expense                                $31,017    $33,680     $35,647
Less:
Vendor rebates                                           (5,793)    (7,188)     (6,591)
                                                      ---------- ---------- -----------
Net advertising expense in
    Selling, general and adminstrative expense           $25,224    $26,492     $29,056
                                                      ========== ========== ===========
</TABLE>


       In addition, the Company records as Cost of service parts sold the direct
cost of parts used in its  service  operation  and the related  inbound  freight
costs,  purchasing and receiving  costs,  inspection  costs,  internal  transfer
costs, and other costs associated with the parts distribution operation.

       The costs associated with the Company's merchandising function, including
product  purchasing,  advertising,  sales  commissions,  and all store occupancy
costs are included in Selling, general and administrative expense.

       Reclassifications.  Certain reclassifications have been made in the prior
years' financial  statements to conform to the current year's  presentation.  In
order to present the Company's  results on a basis that is more  comparable with
others in its industry, the Company has reclassified advertising expenditures of
$25.5  million,  $29.1  million  and $30.8  million  for the fiscal  years ended
January 31, 2006, 2007, and 2008, respectively, that were previously included in
costs of goods sold to selling, general and administrative expense.

       Accumulated Other Comprehensive  Income. The balance of accumulated other
comprehensive  income (net of tax) was  comprised of $6.3 million of  unrealized
gains on interests in securitized assets at January 31, 2007.

2.     Adoption of  New Accounting Pronouncements

       On  February 1, 2007,  the  Company  was  required to adopt SFAS No. 155,
Accounting for Certain Hybrid Financial  Instruments.  Among other things,  this
statement  established  a  requirement  to  evaluate  interests  in  securitized
financial assets to identify interests that are freestanding derivatives or that
are hybrid financial  instruments that contain an embedded derivative  requiring
bifurcation.  Additionally,  the Company had the option to choose to early adopt
the  provisions of SFAS No. 159, The Fair Value Option for Financial  Assets and
Financial   Liabilities.   Essentially,   the  Company  had  to  decide  between
bifurcation of the embedded  derivative and the fair value option in determining
how it would  account  for its  Interests  in  securitized  assets.  The Company
elected to early  adopt SFAS No. 159  because  it  believes  it  provides a more
easily understood presentation for financial statement users. Historically,  the
Company had valued and reported  its  interests  in  securitized  assets at fair
value,   though  most  changes  in  the  fair  value  were   recorded  in  Other
comprehensive  income. The fair value option simplifies the treatment of changes
in the fair value of the asset,  by reflecting  all changes in the fair value of
its Interests in securitized assets in current earnings,  in Finance charges and
other,  beginning  February  1,  2007.  SFAS  Nos.  155 and 159 do not allow for
retrospective application of these changes in accounting principle and, as such,
no  adjustments  have  been  made  to the  amounts  disclosed  in the  financial
statements for periods ending prior to February 1, 2007. However, the balance in
Other  comprehensive  income,  as of January 31, 2007,  of $6.3  million,  which
represented unrecognized gains on the fair value of the Interests in securitized
assets,  was  included in a  cumulative-effect  adjustment  that was recorded in
Retained earnings, effective February 1, 2007.

       Because of its adoption of SFAS No. 159,  effective February 1, 2007, the
Company  was  required  to adopt the  provisions  of SFAS No.  157,  Fair  Value
Measurements.  This  statement  established a framework for measuring fair value
and defines  fair value as "the price that would be received to sell an asset or
paid  to  transfer  a  liability  in  an  orderly   transaction  between  market
participants at the measurement  date." The Company  estimates the fair value of
its Interests in securitized assets using a discounted cash flow model with most
of the inputs used being unobservable  inputs. The primary  unobservable inputs,
which are derived  principally from the Company's  historical  experience,  with
input from its investment bankers and financial advisors,  include the estimated
portfolio yield,  credit loss rate,  discount rate, payment rate and delinquency
rate and reflect the Company's judgments about the assumptions market

                                       71

<PAGE>
participants  would use in determining  fair value.  In determining  the cost of
borrowings,  the Company uses current actual  borrowing rates, and adjusts them,
as appropriate,  using interest rate futures data from market sources to project
interest  rates  over  time.  Changes in the  assumptions  over time,  including
varying  credit  portfolio  performance,  market  interest rate changes,  market
participant  risk premiums  required,  or a shift in the mix of funding sources,
could  result in  significant  volatility  in the fair value of the  Interest in
securitized assets, and thus the earnings of the Company.

       For the fiscal year ended  January 31,  2008,  Finance  charges and other
included  non-cash  decreases  in the fair value our  interests  in  securitized
assets of $4.7 million,  reflecting primarily a higher risk premium added to the
discount rate assumption resulting from the volatility in the financial markets,
plus  adjustments  for other  changes in the fair value  assumptions,  partially
offset by lower  interest  rates,  including  the  risk-free  interest rate (see
reconciliation  of the balance of Interests in securitized  assets  below).  The
change to fair value accounting,  including the servicing liability, resulted in
a charge  to  pretax  income of $4.8  million,  a charge  to net  income of $3.1
million,  and reduced  basic and diluted  earnings  per share by $0.13,  for the
fiscal year ended  January 31, 2008.  During the period ended  January 31, 2008,
returns  required  by  market   participants  on  many   investments   increased
significantly as a result of disruption in the asset-backed  securities  markets
due to increased losses and  delinquencies  on sub-prime real estate  mortgages.
Though the  Company  does not  anticipate  any  significant  variation  from the
current earnings and cash flow performance of the securitized  credit portfolio,
it increased the risk premium  included in the discount rate  assumption used in
the  determination  of the fair value of its interests in securitized  assets to
reflect the higher estimated risk premium it believes a market participant would
require if purchasing the asset. Based on a review of the changes in market risk
premiums  during the last six months of fiscal year ended January 31, 2008,  and
discussions  with its  investment  bankers and financial  advisors,  the Company
estimated that a market  participant  would require an  approximately  500 basis
point increase in the required risk premium.  As a result, the Company increased
the weighted average discount rate assumption from 14.6% at January 31, 2007, to
16.5% at January 31, 2008,  after  reflecting a 280 basis point  decrease in the
risk-free  interest rate included in the discount rate  assumption.  The Company
also included an expected  market  participant-based  assumption  related to the
estimated  cost of a bond issuance  contemplated  by the QSPE and an increase in
the credit loss rate on the credit  portfolio  we estimate a market  participant
would use in determining the fair value of our interest in securitized assets

       The  increase  in the  discount  rate will have the  effect of  deferring
income to future periods, but not permanently reducing  securitization income or
the earnings of the Company.  The deferred earnings will be recognized in future
periods as interest income on the Interests in securitized  assets as the actual
cash flows on the  receivables  are realized.  If a market  participant  were to
require a return on investment that is 100 basis points higher than estimated in
the Company's calculation, the fair value of its interests in securitized assets
would be decreased by an additional  $1.7 million.  The Company will continue to
monitor  financial  market  conditions  and, each quarter,  as it reassesses the
assumptions  used may  adjust its  assumptions  up or down,  including  the risk
premiums a market  participant  will use. As the financial  markets,  especially
with  respect  to  asset-backed  securities,  have  continued  to  experience  a
high-level  of  volatility,  the  Company  will  likely  be  required  to record
additional  non-cash  gains and  losses in future  periods,  until  such time as
financial market conditions  stabilize and liquidity  available for asset-backed
securities improves.

       Effective  February  1,  2007,  the  Company  was  required  to adopt the
provisions  SFAS No. 156,  Accounting  for  Servicing  of Financial  Assets,  an
Amendment  of FASB  Statement  No. 140.  This  statement  requires  companies to
measure  servicing  assets  or  servicing  liabilities  at  fair  value  at each
reporting  date and report  changes in fair value in  earnings in the period the
changes  occur,  or  amortize  servicing  assets  or  servicing  liabilities  in
proportion to and over the  estimated  net  servicing  income or loss and assess
servicing assets or servicing liabilities for impairment or increased obligation
based on the fair value at each reporting date. The Company receives a servicing
fee each month equal to 0.25% of the average outstanding sold portfolio balance,
plus late fees and other  customer  fees  collected.  Servicing  fees  collected
during the fiscal years ended  January 31, 2006,  2007 and 2008,  totaled  $18.6
million,  $21.0 million and $24.3  million,  respectively,  and are reflected in
Finance  charges and other.  In connection with the adoption of SFAS No. 156 the
Company elected to measure its servicing  asset or liability at fair value,  and
report changes in the fair value in earnings in the period of change. As such, a
$0.7 million  cumulative-effect  adjustment was recorded to Retained earnings at
February 1, 2007, net of related tax effects, to recognize a $1.1 million


                                       72

<PAGE>
servicing  liability.  The Company uses a discounted cash flow model to estimate
its  servicing  liability  using the  portfolio  performance  and discount  rate
assumptions  discussed  above,  and an  estimate of the  servicing  fee a market
participant would require to service the portfolio.  In developing its estimate,
based  on the  provisions  of SFAS  No.  157,  the  Company  reviewed  available
information  regarding  the  servicing  fees  received  by other  companies  and
estimated an expected risk premium a market participant would add to the current
fee structure to receive adequate compensation.

       The following are reconciliations of the beginning and ending balances of
the Interests in securitized assets and the beginning and ending balances of the
servicing liability for the fiscal year ended January 31, 2008 (in thousands):

<TABLE>
<CAPTION>
<S>                                                                               <C>
Reconciliation of Interests in Securitized
 Assets:
--------------------------------------------

 Balance of Interests in securitized assets at January 31, 2007                   $136,848

 Amounts recorded in Finance charges and other:
      Fair value increase associated with net increase in portfolio balances         1,130
      Fair value increase due to change in portfolio yield                             585
      Fair value increase due to lower projected interest rates                      2,969
      Fair value decrease due to expected funding mix                               (4,195)
      Fair value decrease due to higher portfolio loss rate                         (1,233)
      Fair value increase due to change in risk-free interest rate component
          of discount rate                                                           5,117
      Fair value decrease due to higher risk premium included in discount rate      (8,512)
      Other changes                                                                   (520)
                                                                               -----------
      Net change in fair value included in Finance charges and other                (4,659)

 Change in balance of subordinated security and equity interest due to
 transfers of receivables                                                           45,961

                                                                               -----------
 Balance of Interests in securitized assets at January 31, 2008                   $178,150
                                                                               ===========

Reconciliation of Servicing
 Liability:
-----------------------------------

 Balance of servicing liability at January 31, 2007                                 $1,052

 Amounts recorded in Finance charges and other:
      Increase associated with change in portfolio balances                            147
      Decrease due to higher discount rate                                             (13)
      Other changes                                                                     11
                                                                               -----------
      Net change included in Finance charges and other                                 145

 Balance of servicing liability at January 31, 2008                                 $1,197
                                                                               ===========
</TABLE>


       Prior to February 1, 2007,  gain or loss on the sales of the  receivables
depended  in  part on the  previous  carrying  amount  of the  financial  assets
involved in the  transfer,  allocated  between the assets sold and the  retained
interests, based on their relative fair value at the date of transfer.  Retained
interests  were  carried  at  fair  value  on the  Company's  balance  sheet  as
available-for-sale  securities in accordance  with SFAS No. 115,  Accounting for
Certain  Investments  in Debt and Equity  Securities.  Impairment  and  interest
income are recognized in accordance  with Emerging  Issues Task Force (EITF) No.
99-20,  Recognition of Interest  Income and Impairment on Purchased and Retained
Beneficial  Interests  in  Securitized  Financial  Assets.  Servicing  fees  are
recognized monthly as they are earned.

                                       73

<PAGE>

3.     Interests in Securitized Receivables

       The Company has an agreement  to sell  customer  receivables.  As part of
this  agreement,  the Company sells eligible  retail  installment  contracts and
revolving receivable accounts to a QSPE that pledges the transferred accounts to
a trustee for the benefit of  investors.  The  following  table  summarizes  the
availability  of funding under the Company's  securitization  program at January
31, 2008 (in thousands):

<TABLE>
<CAPTION>
<S>                                                <C>          <C>          <C>
                                                  Capacity     Utilized    Available
                                                 ----------   ----------   ----------
2002 Series A                                      $450,000     $278,000     $172,000
2002 Series B - Class A                              24,000       24,000            -
2002 Series B - Class B                              11,556       11,556            -
2002 Series B - Class C                               4,444        4,444            -
2006 Series A - Class A                              90,000       90,000            -
2006 Series A - Class B                              43,333       43,333            -
2006 Series A - Class C                              16,667       16,667            -
                                                 ----------   ----------   ----------
Total                                              $640,000     $468,000     $172,000
                                                 ==========   ==========   ==========
</TABLE>


       The 2002  Series A program  functions  as a credit  facility  to fund the
initial  transfer  of  eligible  receivables.  When the  facility  approaches  a
predetermined  amount,  the QSPE  (Issuer) is required to seek  financing to pay
down the  outstanding  balance in the 2002 Series A variable  funding note.  The
amount paid down on the facility then becomes  available to fund the transfer of
new receivables or to meet required  principal  payments on other series as they
become due. The new financing could be in the form of additional notes, bonds or
other instruments as the market and transaction  documents might allow. The 2002
Series A program,  which was increased  from $300 million to $450 million during
the year ended January 31, 2008,  is divided into two  tranches:  a $250 million
364-day  tranche  that  matures in July 2008,  and a $200  million  tranche that
matures in August 2011. The 364-day tranche was increased during the fiscal year
ended  January 31,  2008,  by $150  million.  The $150  million  increase in the
commitment  will  stay in  place  until  the  first to  occur  of:  (i) the QSPE
completes a medium-term  bond  issuance,  or (ii) the note is not renewed by the
note holders.  The 2002 Series B program (which was non-amortizing for the first
four years)  matures  officially  on September 1, 2010,  although it is expected
that the principal payments,  which began in October 2006, will retire the bonds
prior to that date. The 2006 Series A program,  which was  consummated in August
2006, is non-amortizing for the first four years and officially matures in April
2017.  However,  it is  expected  that the  principal  payments,  which begin in
September 2010, will retire the bonds prior to that date.

       The agreement  contains  certain  covenants  requiring the maintenance of
various financial ratios and receivables  performance standards.  The Issuer was
in compliance with the  requirements of the agreement as of January 31, 2008. As
part of the  securitization  program,  the Company and Issuer  arranged  for the
issuance  of a  stand-by  letter  of credit in the  amount of $20.0  million  to
provide  assurance  to the  trustee  on behalf  of the  bondholders  that  funds
collected  monthly by the  Company,  as  servicer,  will be remitted as required
under the base indenture and other related documents. The letter of credit has a
term of one year,  and the maximum  potential  amount of future  payments is the
face amount of the letter of credit.  The letter of credit is  callable,  at the
option of the trustee, if the Company,  as servicer,  fails to make the required
monthly payments of the cash collected to the trustee.

       Through  its retail  sales  activities,  the Company  generates  customer
retail  installment  contracts and revolving  receivable  accounts.  The Company
enters into  securitization  transactions to sell these accounts to the QSPE. In
these  securitizations,  the  Company  retains  servicing  responsibilities  and
subordinated  interests.  The Company  receives annual  servicing fees and other
benefits approximating 4.1% of the outstanding balance and rights to future cash
flows arising after the  investors in the  securities  issued by or on behalf of
the QSPE have received from the trustee all contractually required principal and
interest  amounts.  The  Company  records a servicing  liability  related to the
servicing obligations (See Note 2). The investors and the securitization trustee
have no recourse to the  Company's  other  assets for failure of the  individual
customers  of the Company and the QSPE to pay when due. The  Company's  retained
interests are subordinate to the investors' interests. Their value is subject to
credit, prepayment, and interest rate risks on the transferred financial assets.

       The fair values of the Company's  interest in securitized  assets were as
follows (in thousands):

                                       74

<PAGE>
                                                         January 31,
                                                ------------------------------
                                                     2007             2008
                                                -------------   --------------
Interest-only strip                                   $26,358          $31,866
Subordinated securities                               110,490          146,284
                                                -------------   --------------
Total fair value of interests in securitized
 assets                                              $136,848         $178,150
                                                =============   ==============

       The table below  summarizes  valuation  assumptions  used for each period
presented:

                                           Year Ended January 31,
                                      --------------------------------
                                         2006      2007       2008
                                      --------- --------- ------------
Net interest spread
   Primary installment                    12.8%     12.6%        13.6%
   Primary revolving                      12.8%     12.6%        13.6%
   Secondary installment                  14.7%     14.2%        14.1%
Expected losses
   Primary installment                     3.0%      3.0%         3.3%
   Primary revolving                       3.0%      3.0%         3.3%
   Secondary installment                   3.0%      3.0%         3.3%
Projected expense
   Primary installment                     4.1%      4.1%         4.1%
   Primary revolving                       4.1%      4.1%         4.1%
   Secondary installment                   4.1%      4.1%         4.1%
Discount rates
   Primary installment                    13.0%     13.6%        15.6%
   Primary revolving                      13.0%     13.6%        15.6%
   Secondary installment                  17.0%     17.6%        19.6%
Delinquency and deferral rates
   Primary installment                     9.3%      9.3%         9.5%
   Primary revolving                       7.3%      5.5%         5.4%
   Secondary installment                  14.0%     14.0%        14.3%

                                       75

<PAGE>
       At January 31, 2008, key economic  assumptions and the sensitivity of the
current fair value of the interests in  securitized  assets to immediate 10% and
20% adverse changes in those assumptions are as follows (dollars in thousands):

<TABLE>
<CAPTION>
<S>                                                    <C>           <C>             <C>
                                                         Primary       Primary      Secondary
                                                        Portfolio     Portfolio     Portfolio
                                                       Installment    Revolving    Installment
                                                      ------------- -------------- ------------
Fair value of interest in securitized assets              $124,964       $13,295       $39,891

Expected weighted average life                           1.1 years     1.2 years     1.6 years
 
Net interest spread assumption                               13.6%         13.6%         14.1%
   Impact on fair value of 10% adverse change               $4,245          $452        $2,051
   Impact on fair value of 20% adverse change               $8,436          $898        $4,054
Expected losses assumptions                                   3.3%          3.3%          3.3%
   Impact on fair value of 10% adverse change               $1,025          $109          $479
   Impact on fair value of 20% adverse change               $2,043          $217          $954
Projected expense assumption                                  4.1%          4.1%          4.1%
   Impact on fair value of 10% adverse change               $1,260          $134          $587
   Impact on fair value of 20% adverse change               $2,521          $268        $1,175
Discount rate assumption                                     15.6%         15.6%         19.6%
   Impact on fair value of 10% adverse change               $1,788          $190          $893
   Impact on fair value of 20% adverse change               $3,516          $374        $1,750
Delinquency and deferral                                      9.5%          5.4%         14.3%
   Impact on fair value of 10% adverse change (1)             $122           $13           $71
   Impact on fair value of 20% adverse change (1)             $264           $28          $158
-------------------------------------------------------
</TABLE>


(1)    For  purposes  of this  analysis,  an  adverse  change is assumed to be a
       decrease in the  delinquency  and deferral rate. A decrease  results in a
       faster repayment of the receivables,  which reduces the fair value of the
       interest-only  strip a greater amount than the resulting  increase in the
       fair value of the subordinated securities.  Since it is assumed that none
       of the other assumptions would change, an increase in the delinquency and
       deferral rate results in an increase in the fair value,  (i.e. losses are
       not assumed to increase as a result).

       These  sensitivities are hypothetical and should be used with caution. As
the  figures  indicate,  changes  in fair  value  based  on a 10%  variation  in
assumptions  generally  cannot be extrapolated  because the  relationship of the
change in  assumption to the change in fair value may not be linear.  Also,  the
effect of the  variation  in a  particular  assumption  on the fair value of the
interest-only  strip is calculated  without  changing any other  assumption;  in
reality,  changes in one factor may result in changes in another (i.e. increases
in market interest rates may result in lower  prepayments  and increased  credit
losses), which might magnify or counteract the sensitivities.

       The following  illustration presents  quantitative  information about the
receivables portfolios managed by the Company (in thousands):

<TABLE>
<CAPTION>
<S>                                  <C>          <C>         <C>           <C>
                                   Total Principal Amount  Principal Amount Over
                                      of Receivables        60 Days Past Due (1)
                                         January 31,            January 31,
                                   ----------------------- ----------------------
                                       2007        2008       2007       2008
                                   ----------- ----------- ---------- -----------
 Primary portfolio:
            Installment               $382,482    $463,257    $24,853     $29,997
            Revolving                   53,125      48,329      1,171       1,561
                                   ----------- ----------- ---------- -----------
 Subtotal                              435,607     511,586     26,024      31,558
 Secondary portfolio:
            Installment                133,944     143,281     11,638      18,220
                                   ----------- ----------- ---------- -----------
 Total receivables managed             569,551     654,867     37,662      49,778
 Less receivables sold                 559,619     645,862     35,677      47,778
                                   ----------- ----------- ---------- -----------
 Receivables not sold                    9,932       9,005     $1,985      $2,000
                                                           ========== ===========
 Non-customer receivables               21,805      27,095
                                   ----------- -----------
           Total accounts
            receivable, net            $31,737     $36,100
                                   =========== ===========

</TABLE>

                                       76

<PAGE>

<TABLE>
<CAPTION>
<S>                                 <C>         <C>         <C>          <C>
                                      Average Balances       Credit Charge-offs
                                         January 31,          January 31, (2)
                                  ----------------------- ----------------------
                                      2007        2008       2007       2008
                                  ----------- ----------- ---------- -----------
 Primary portfolio:
            Installment              $371,240    $414,558
            Revolving                  46,507      50,871
                                  ----------- -----------
 Subtotal                             417,747     465,429    $13,507     $12,429
 Secondary portfolio:
            Installment               116,749     141,202      3,896       4,989
                                  ----------- ----------- ---------- -----------
 Total receivables managed            534,496     606,631     17,403      17,418
 Less receivables sold                524,256     597,286     16,575      16,492
                                  ----------- ----------- ---------- -----------
 Receivables not sold                 $10,240      $9,345       $828        $926
                                  =========== =========== ========== ===========

       (1)  Amounts are based on end of period balances.
       (2)  Amounts represent total credit  charge-offs,  net of recoveries,  on
            total receivables. The higher level of net credit losses in the year
            ended January 31, 2007, relative to the average balance outstanding,
            is  primarily  a result of the  impact on our credit  operations  of
            Hurricane Rita that hit the Gulf Coast during September 2005.

4.     Notes Payable and Long-Term Debt

       At January 31,  2008,  the  Company had $47.6  million of its $50 million
revolving credit facility  available for borrowings.  The amounts utilized under
the  revolving  credit  facility  reflected  $2.4 million  related to letters of
credit issued.  The letters of credit were issued under a $5.0 million  sublimit
provided under the facility for standby letters of credit.  Additionally,  there
were no amounts  outstanding  under a short-term  revolving  bank agreement that
provides  up to  $8.0  million  of  availability  on an  unsecured  basis.  This
unsecured  facility  matures in June 2008 and has a floating  rate of  interest,
equal to Prime minus 50 basis points, which totaled 5.50% at January 31, 2008.

      Long-term  debt  consists  of  the  following  (in  thousands,   except
repayment explanations):

                                                                          January 31,
                                                                      --------------------
                                                                         2007      2008
                                                                      --------- ----------
Revolving credit facility with interest at variable rates (4.15% at
 January 31, 2008)                                                           $-         $-
Promissory notes, due in monthly installments                               198        119
                                                                      --------- ----------
Total long-term debt                                                        198        119
Less amounts due within one year                                          (110)      (102)
                                                                      --------- ----------
Amounts classified as long-term                                             $88        $17
                                                                      ========= ==========
</TABLE>


       The  revolving  facility  is subject to the Company  maintaining  various
financial and non-financial  covenants.  In addition, the provisions of the bank
credit facility include a $50.0 million limit on the payment of dividends on the
Company's  common stock and purchase of treasury  stock.  As of January 31, 2007
and January 31,  2008,  the Company was in  compliance  with all  financial  and
non-financial covenants.

       The current agreement  provides for a revolving  facility capacity of $50
million,  with a $5  million  letter  of  credit  sublimit  and an $8.0  million
sublimit  for a  swingline  of  credit.  Interest  rates  are  variable  and are
determined,  at the  option of the  Company,  at the Base Rate (the  greater  of
Agent's  prime rate or federal  funds rate plus 0.50%) plus the Base Rate Margin
(which  ranges from 0.00% to 0.50%) or LIBOR Rate plus the LIBOR  Margin  (which
ranges from 0.75% to 1.75%).  Both the Base Rate Margin and the LIBOR Margin are
determined  quarterly  based  on a debt  coverage  ratio  equal  to the  rolling
four-quarter  relationship  of  total  debt  (including  lease  obligations)  to
earnings  before  interest,  taxes,  depreciation,  amortization  and rent.  The
Company  is  obligated  to  pay a  non-use  fee  on a  quarterly  basis  on  the
non-utilized  portion of the  revolving  facility at rates  ranging from .20% to
.375%.  The  revolving  facility  is secured by the  assets of the  Company  not
otherwise  encumbered  and a pledge  of  substantially  all of the  stock of the
Company's present and future subsidiaries and matures in November 2010.

                                       77

<PAGE>
       Interest  expense  incurred on notes payable and  long-term  debt totaled
$0.2, $0.4 and $0.5 million for the years ended January 31, 2006, 2007 and 2008,
respectively.  The Company  capitalized  borrowing  costs of $0.3 million during
each of the years  ended  January  31, 2007 and 2008.  Aggregate  maturities  of
long-term  debt as of  January  31 in the  year  indicated  are as  follows  (in
thousands):

2009                                   $       102
2010                                             5
2011                                             5
2012                                             5
2013                                             2
                                       -----------
Total                                  $       119
                                       ===========

5.     Letters of Credit

       The Company utilizes  unsecured  letters of credit to secure payments due
to the QSPE  related to its  asset-backed  securitization  program,  deductibles
under the Company's insurance programs and international  product purchases.  At
January 31, 2007 and January 31,  2008,  the Company had  outstanding  unsecured
letters  of  credit of $22.7  million  and $23.5  million,  respectively.  These
letters of credit were issued under the three following facilities:

o      The Company has a $5.0 million  sublimit  provided  under its revolving
       line of credit for  stand-by and import  letters of credit.  At January
       31,  2008,  $2.4  million  of letters of credit  were  outstanding  and
       callable  at the  option  of the  Company's  insurance  carrier  if the
       Company does not honor its  requirement to fund  deductible  amounts as
       billed under its insurance program.

o      The Company has arranged for a $20.0 million  stand-by letter of credit
       to provide assurance to the trustee of the asset-backed  securitization
       program that funds collected by the Company, as the servicer,  would be
       remitted  as  required  under  the base  indenture  and  other  related
       documents.  The letter of credit has a term of one year and  expires in
       August 2008.

o      The Company  obtained a $10.0 million  commitment  for trade letters of
       credit to secure product purchases under an international  arrangement.
       At  January  31,  2008,  there  were $1.1  million of letters of credit
       outstanding under this commitment.  The letter of credit commitment has
       a term of one year and expires in May 2008.

       The maximum  potential  amount of future  payments  under these letter of
credit  facilities is considered to be the aggregate  face amount of each letter
of credit commitment, which total $35.0 million as of January 31, 2008.

6.     Income Taxes

       Deferred  income  taxes  reflect  the net  effects  of  temporary  timing
differences between the carrying amounts of assets and liabilities for financial
reporting  purposes  and the amounts used for income tax  purposes.  Significant
components  of the  Company's  net deferred  tax assets  result  primarily  from
differences   between  financial  and  tax  methods  of  accounting  for  income
recognition on service contracts and residual interests, capitalization of costs
in inventory,  and deductions for  depreciation and doubtful  accounts,  and the
fair value of derivatives.

                                       78

<PAGE>
       The deferred tax assets and  liabilities  are  summarized  as follows (in
thousands):
                                                          January 31,
                                                      --------------------
                                                        2007      2008
                                                      -------- -----------
Deferred Tax Assets
Allowance for doubtful accounts and warranty and
  insurance cancellations                                 $431        $314
Deferred revenue                                         2,084       2,558
Stock-based compensation                                   606       1,033
Property and equipment                                   3,952         151
Inventories                                              1,177       1,327
Accrued vacation and other                               1,459       1,501
                                                      -------- -----------
Total deferred tax assets                                9,709       6,884
Deferred Tax Liabilities
Sales tax receivable                                   (1,002)     (1,026)
Interest in securitized assets                         (3,487)     (1,430)
Goodwill                                               (1,141)     (1,372)
Other                                                    (608)       (568)
                                                      -------- -----------
Total deferred tax liabilities                         (6,238)     (4,396)
                                                      -------- -----------
Net Deferred Tax Asset                                  $3,471      $2,488
                                                      ======== ===========

       Effective  February 1, 2007, the Company adopted FASB  Interpretation No.
48,  Accounting  for  Uncertainty  in Income Taxes,  an  interpretation  of FASB
Statement 109 (FIN 48). This statement clarifies the criteria that an individual
tax position must satisfy for some or all of the benefits of that position to be
recognized in a company's financial statements.  FIN 48 prescribes a recognition
threshold  of  more-likely-than-not,  and a  measurement  attribute  for all tax
positions  taken  or  expected  to be  taken  on a tax  return,  in  order to be
recognized in the financial statements. No cumulative adjustment was required to
effect the adoption of FIN 48 and the Company currently has no liability accrued
or potential penalties or interest recorded for uncertain tax positions.  To the
extent penalties and interest are incurred, the Company records these charges as
a component of its Provision  for income  taxes.  The Company is subject to U.S.
federal  income tax as well as income tax in multiple state  jurisdictions.  Tax
returns for the fiscal years  subsequent  to January 31,  2005,  remain open for
examination by the Company's major taxing jurisdictions.

       Income taxes were  impacted  during the years ended  January 31, 2007 and
2008,  by the  replacement  of the existing  franchise tax in Texas with a taxed
based on  margin.  Taxable  margin is  generally  defined as total  federal  tax
revenues  minus the greater of (a) cost of goods sold or (b)  compensation.  The
tax rate to be paid by  retailer  and  wholesalers  is 0.5% on  taxable  margin.
During June 2007, the Company  completed a reorganization  to simplify its legal
entity  structure,  by merging  certain of its Texas limited  partnerships  into
their  corporate  partners.  The  reorganization  also  resulted in the one-time
elimination  of the Texas  margin tax owed by those  partnerships,  representing
virtually  all of the margin tax owed by the Company.  Accordingly,  the Company
reversed approximately $0.9 million of accrued Texas margin tax as of June 2007,
net of federal tax. The Company  began  accruing the margin tax for the entities
that  acquired the  operations  through the mergers in July 2007 and expects its
effective  tax  rate  to  be  between  36.5%  and  37.5%  in  future   quarters.
Additionally,  the  acceleration  of certain  allowance  for  doubtful  accounts
deductions  resulted  in a decrease  in current  tax  expense and an increase in
deferred tax expense of $1.9 million in fiscal year 2007.

                                       79

<PAGE>
       The   significant   components  of  income  taxes  were  as  follows  (in
thousands):

                                                     Year Ended January 31,
                                               ---------------------------------
                                                  2006       2007       2008
                                               ---------- ---------- -----------
Current:
   Federal                                        $23,023    $22,439     $22,264
   State                                               25        916         (8)
                                               ---------- ---------- -----------
Total current                                      23,048     23,355      22,256
Deferred:
   Federal                                          (701)    (1,013)       (728)
   State                                              (6)       (67)        (19)
                                               ---------- ---------- -----------
Total deferred                                      (707)    (1,080)       (747)
                                               ---------- ---------- -----------
Total tax provision                               $22,341    $22,275     $21,509
                                               ========== ========== ===========

       A reconciliation of the statutory tax rate and the effective tax rate for
each of the periods presented in the statements of operations is as follows:

<TABLE>
<CAPTION>
<S>                                                       <C>         <C>      <C>
                                                                Year Ended January 31,
                                                           -----------------------------
                                                             2006       2007      2008
                                                           ---------  --------  --------

U.S. Federal statutory rate                                   35.0%     35.0%     35.0%
State and local income taxes, net of federal benefit           0.1       1.0       0.0
Non-deductible entertainment, tax-free interest income
  and other                                                    0.2       0.1       0.3
                                                           ---------  --------  --------
Effective tax rate attributable to continuing operations      35.3%     36.1%     35.3%
Other                                                         (0.1)     (0.5)     (0.2)
                                                           ---------  --------  --------
Effective tax rate                                            35.2%     35.6%     35.1%
                                                           =========  ========  ========
</TABLE>


7.    Leases

       The Company leases certain of its facilities and operating equipment from
outside parties and from a stockholder/officer. The real estate leases generally
have initial  lease  periods of from 5 to 15 years with  renewal  options at the
discretion of the Company;  the equipment leases  generally  provide for initial
lease  terms of three to seven  years and  provide  for a purchase  right by the
Company at the end of the lease term at the fair market value of the equipment.

       The  following  is a schedule  of future  minimum  base  rental  payments
required under the operating leases that have initial non-cancelable lease terms
in excess of one year (in thousands):

                                 Third      Related
Year Ended January 31,           Party       Party       Total
---------------------------- ------------- ---------- -----------
2009                               $20,073       $207     $20,280
2010                                19,540        207      19,747
2011                                18,339        207      18,546
2012                                16,703          -      16,703
2013                                14,672          -      14,672
 Thereafter                         64,235          -      64,235
                             ------------- ---------- -----------
  Total                           $153,562       $621    $154,183
                             ============= ========== ===========

       Total lease expense was  approximately  $15.7 million,  $17.3 million and
$19.3 million for the years ended January 31, 2006, 2007 and 2008, respectively,
including  approximately  $0.2  million,  $0.2  million and $0.2 million paid to
related parties, respectively.

       Certain of our leases are subject to scheduled  minimum rent increases or
escalation provisions,  the cost of which is recognized on a straight-line basis
over the minimum lease term. Tenant improvement allowances,  when granted by the
lessor, are deferred and amortized as contra-lease  expense over the term of the
lease.

                                       80

<PAGE>
8.     Share-Based Compensation

       The Company  originally  approved an  Incentive  Stock  Option Plan to be
granted to various officers and employees at prices equal to the market value on
the date of the grant. The options vest over one to five year periods (depending
on the  grant)  and  expire  ten years  after the date of grant.  As part of the
completion of the IPO in November 2003, the Company  amended the Incentive Stock
Option Plan,  adopted a Non-Employee  Director Stock Option Plan, and adopted an
Employee Stock  Purchase Plan. At the Company's  annual meeting on May 31, 2006,
amendments to the stock option plans were approved,  which  increased the shares
available  under the Incentive  Stock Option Plan to 3,859,767 and increased the
shares available under the  Non-Employee  Director Stock Option Plan to 600,000.
On July 2, 2007,  the Company  issued six  non-employee  directors  60,000 total
options to acquire the Company's stock at $29.24 per share. At January 31, 2008,
the Company  had  260,000  options  available  for grant under the  Non-Employee
Director Stock Option Plan.

       The  Employee  Stock  Purchase  Plan is  available  to a majority  of the
employees  of the Company and its  subsidiaries,  subject to minimum  employment
conditions  and maximum  compensation  limitations.  At the end of each calendar
quarter,  employee  contributions  are used to acquire shares of common stock at
85% of the lower of the fair  market  value of the common  stock on the first or
last day of the calendar  quarter.  During the year ended January 31, 2006, 2007
and 2008, the Company  issued 10,496,  11,720 and 13,316 shares of common stock,
respectively,  to employees  participating in the plan, leaving 1,222,889 shares
remaining reserved for future issuance under the plan as of January 31, 2008.

       A summary of the Company's  Incentive  Stock Option Plan activity  during
the year ended January 31, 2008 is presented below (shares in thousands):

<TABLE>
<CAPTION>
<S>                                       <C>        <C>       
                                                                   Weighted
                                                    Weighted        Average
                                                     Average       Remaining     Aggregate
                                                    Exercise      Contractual    Intrinsic
                                      Shares          Price      Life (in years)   Value
                                   ------------- --------------- --------------  ----------
Outstanding, beginning of year            1,755      $    18.36
Granted                                     298           19.97
Exercised                                  (211)          (9.43)
Forfeited                                  (142)         (23.99)
                                   -------------
Outstanding, end of year                  1,700      $    19.25             6.9    million
                                   =============
Exercisable, end of year                    891                             5.2    million
                                   =============


       During the years  ended  January  31,  2006,  2007 and 2008,  the Company
recognized total compensation cost for share-based compensation of approximately
$1.2 million,  $1.7 million and $2.7 million,  respectively,  and recognized tax
benefits related to that compensation cost of approximately  $0.2 million,  $0.3
million, and $0.5 million, respectively.

       The assumptions used in stock pricing model and valuation information for
the years ended January 31, 2006, 2007 and 2008 are as follows:

                                                                                         Year Ended January 31,
                                                                            -------------------------------------------------
                                                                                  2006             2007            2008
                                                                                  ----             ----            ----
   Weighted average risk free interest rate.................................       3.9%            4.4%            3.6%
   Weighted average expected lives in years .............................          4.6             6.4             6.4
   Weighted average volatility.................................................   32.0%           50.0%           45.0%
   Expected dividends..........................................................     -               -               -
   Weighted average grant date fair value of options granted
        during the period.....................................................  $ 11.09          $12.39          $ 9.94
   Weighted average fair value of options vested during the
        Period (1)............................................................  $  4.82          $ 6.88          $ 8.17
   Intrinsic value of options exercised during the period................       $  4.8 million   $ 3.9 million   $ 3.1 million

</TABLE>


       (1)  Does not include  pre-IPO options that were valued using the minimum
            value option-pricing method.

                                       81

<PAGE>

       As provided by Staff  Accounting  Bulletin  No. 107, and amended by Staff
Accounting  Bulletin No. 110,  which provides  guidance  relating to share-based
compensation  accounting,  the Company has used a shortcut method to compute the
weighted  average expected life for the stock options granted in the years ended
January  31,  2007 and 2008.  The  shortcut  method is an  average  based on the
vesting period and the  contractual  term. The Company uses the shortcut  method
due  to  the  lack  of  adequate  historical   experience  or  other  comparable
information.  The weighted  average  volatility  for the years ended January 31,
2007 and 2008, was  calculated  using the average  historical  volatility of the
Company's  peer  group.  As of January 31,  2008,  the total  compensation  cost
related to  non-vested  awards not yet  recognized  totaled  $8.6 million and is
expected to be recognized over a weighted average period of 3.5 years.

9.     Significant Vendors

       As shown in the table  below,  a  significant  portion  of the  Company's
merchandise  purchases for years ended January 31, 2006, 2007 and 2008 were made
from six vendors:

                                               Year Ended January 31,
                                          --------------------------------
Vendor                                       2006        2007       2008
---------------------------------------   ----------  ----------  ----------
A                                               12.2 %      12.1 %      13.1 %
B                                                7.8        12.7        13.0
C                                               17.0        12.9         9.1
D                                               11.4         7.1         7.5
E                                                1.7         2.1         6.2
F                                                6.8         5.3         5.9
                                          ----------  ----------  ----------
Totals                                          56.9 %      52.2 %      54.8 %
                                          ==========  ==========  ==========

       As part of a program to purchase product inventory from vendors overseas,
the Company had $1.1 million in obligations  under stand-by letters of credit at
January 31, 2008.

10.    Related Party Transactions

       The Company leases one of its stores from its Chief Executive Officer and
Chairman of the Board, under the terms of a lease it entered prior to becoming a
publicly  held  company.  It also leased six store  locations  from  Specialized
Realty Development  Services,  LP (SRDS), a real estate development company that
was  created  prior to the  Company's  becoming  publicly  held and was owned by
various members of management and individual  investors of Stephens Group,  Inc.
The Stephens Group, Inc. is a significant  shareholder of the Company.  Based on
independent  appraisals  that were performed on each project that was completed,
the Company  believes  that the terms of the leases were at least  comparable to
those that could be  obtained  in an arms'  length  transaction.  As part of the
ongoing operation of SRDS, the Company received a management fee associated with
the  administrative  functions that were provided to SRDS of $6,500 for the year
ended January 31, 2006.

       The Company  engaged the  services of Direct  Marketing  Solutions,  Inc.
(DMS), for a substantial  portion of its direct mail  advertising.  DMS, Inc. is
partially  owned (less than 50%) by SF Holding  Corp.,  members of the  Stephens
family,  Jon E. M.  Jacoby,  and Douglas H.  Martin.  SF Holding  Corp.  and the
members of the Stephens family are significant  shareholders of the Company, and
Messrs.  Jacoby and Martin are members of the Company's Board of Directors.  The
fees the Company paid to DMS during the fiscal years ended 2006,  2007 and 2008,
amounted  to  approximately  $2.1  million,   $3.6  million  and  $2.5  million,
respectively.  Thomas J. Frank, the Chief Executive  Officer and Chairman of the
Board of  Directors  owned a small  percentage  (0.7%) at the end of fiscal year
2005, but divested his interest during the first half of fiscal year 2006.

       The Company  engaged the  services of Stephens  Inc. to act as its broker
under its stock  repurchase  program.  Stephens  Inc.  is a  shareholder  of the
Company,  and Doug Martin,  an Executive  Vice  President of Stephens Inc., is a
member of the Company's  Board of Directors.  During the years ended January 31,
2007 and 2008, the Company  incurred fees payable to Stephens Inc. of $5,040 and
$46,644, respectively, related to the purchase of 168,000 and 1,555,205 shares,

                                       82

<PAGE>
respectively,  of its  common  stock.  Based on a  review  of  competitive  bids
received from various broker candidates,  the Company believes the terms of this
arrangement are no less favorable than it could have obtained in an arms' length
transaction.

11.    Benefit Plans

       The  Company  has  established  a defined  contribution  401(k)  plan for
eligible  employees  who are at least 21 years old and have  completed  at least
one-year of service. Employees may contribute up to 20% of their eligible pretax
compensation  to the plan.  The  Company  will match 100% of the first 3% of the
employees' contributions and 50% of the next 2% of the employees' contributions.
At its option, the Company may make supplemental  contributions to the Plan, but
has  not  made  such  contributions  in  the  past  three  years.  The  matching
contributions made by the company totaled $1.6, $1.8 and $2.1 million during the
years ended January 31, 2006, 2007 and 2008, respectively.

12.    Contingencies

       Legal  Proceedings.   The  Company  is  involved  in  routine  litigation
incidental  to our business from time to time.  Currently,  the Company does not
expect the outcome of any of this routine  litigation to have a material  effect
on its financial  condition or results of  operations.  However,  the results of
these proceedings  cannot be predicted with certainty,  and changes in facts and
circumstances could impact the Company's estimate of reserves for litigation.

       Insurance.   Because  of  its   inventory,   vehicle  fleet  and  general
operations,  the Company has  purchased  insurance  covering a broad  variety of
potential  risks.  The Company  purchases  insurance  polices  covering  general
liability,  workers  compensation,   real  property,  inventory  and  employment
practices  liability,  among  others.  Additionally,  the Company  has  umbrella
policies with an aggregate  limit of $50.0  million.  The Company has retained a
portion of the risk under these policies and its group health insurance program.
See additional discussion under Note 1. The Company has a $2.4 million letter of
credit  outstanding  supporting its obligations  under the property and casualty
portion of its insurance program.

       Service  Maintenance  Agreement  Obligations.  The Company  sells service
maintenance  agreements  under which it is the obligor for payment of qualifying
claims.  The Company is responsible  for  administering  the program,  including
setting the pricing of the agreements sold and paying the claims. The pricing is
set based on historical claims experience and expectations  about future claims.
While the Company is unable to estimate maximum potential claim exposure, it has
a history of overall  profitability  upon the ultimate  resolution of agreements
sold. The revenues  related to the  agreements  sold are deferred at the time of
sales and recorded in revenues in the statement of  operations  over the life of
the  agreements.  The amounts  deferred are reflected on the face of the balance
sheet in  Deferred  revenues  and  allowances,  see also  Note 1 for  additional
discussion.

13.    Subsequent Event

       On March 26, 2008,  the Company  executed an amendment to its bank credit
facility,  to  increase  the  commitment  from $50 million to $100  million,  to
provide  additional  liquidity,  if needed,  to support  its  growth  plans.  In
addition to the expanded commitment, the interest margin added to the applicable
base rate was increased by 25 basis points. The maturity date did not change.



I
TEM  9.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE.

       None


ITEM 9A. CONTROLS AND PROCEDURES

       Evaluation of Disclosure Controls and Procedures

       Based on management's  evaluation  (with the  participation  of our Chief
Executive Officer (CEO) and Chief Financial Officer (CFO)), as of the end of the
period  covered  by  this  report,  our  CEO and CFO  have  concluded  that  our
disclosure  controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
under the Securities  Exchange Act of 1934, as amended (the Exchange Act)),  are
effective to ensure that  information  required to be disclosed by us in reports
that  we  file  or  submit  under  the  Exchange  Act  is  recorded,  processed,
summarized,  and  reported  within the time  periods  specified in SEC rules and
forms,  and  is  accumulated  and  communicated  to  management,  including  our
principal  executive officer and principal  financial officer, as appropriate to
allow timely decisions regarding required disclosure.

                                       83

<PAGE>

       Management's Report on Internal Control over Financial Reporting

       Please refer to  Management's  Report on Internal  Control over Financial
Reporting under Item 8 of this report.

       Changes in Internal Controls Over Financial Reporting

       There  have been no  changes  in our  internal  controls  over  financial
reporting  that  occurred in the quarter  ended  January  31,  2008,  which have
materially affected,  or are reasonably likely to materially affect our internal
controls over financial reporting.



ITEM 9B. OTHER INFORMATION

       Adoption of Bonus Program and Other Compensation Changes

       On March 25, 2008, the  Compensation  Committee of our Board of Directors
adopted a cash bonus  program  for our 2009  fiscal  year.  Our named  executive
officers, as well as certain other executive officers and certain employees, are
eligible to participate in the 2009 bonus program. Below is a description of the
2009 bonus program, as adopted by our Compensation Committee.

       The purpose of the 2009 bonus  program is to promote the interests of the
Company and its  stockholders by providing key employees with financial  rewards
upon achievement of specified  business  objectives,  as well as help us attract
and retain key  employees by  providing  attractive  compensation  opportunities
linked to performance results.

       The  Compensation  Committee  established  four bonus levels for its 2009
bonus  program:  Level 1,  Level 2,  Level 3 and  Level  4.  Each of the  levels
represent  the  attainment by us of certain  operating  pre-tax  profit  targets
established by the Compensation  Committee (each, a "Profit Goal"). If we do not
achieve the Level 1 Profit Goal, each named executive  officer,  other executive
officer or  employee  awarded a bonus  pursuant to the 2009 bonus  program  will
receive a prorata  portion of the Level 1 Profit Goal,  determined by the actual
pre tax profit as a percentage of the Level 1 Profit Level.

       The bonuses that may become  distributable  based upon our achievement of
the  Level 1  through  Level 4 Profit  Goals  will be  distributed  by our Chief
Executive Officer with approval from the Compensation Committee.

       Our Chief  Executive  Officer  will  receive a bonus under the 2009 bonus
program that varies based upon our  achievement  of the Level 1 through  Level 4
Profit  Goals.  The Level 1 bonus  amount for the Chief  Executive  Officer  was
established based upon the Compensation  Committee's  independent  evaluation of
his compensation relative to his effect on the Company's performance.  The Level
2 bonus is 16.6%  greater  than the  Level 1 bonus,  the  Level 3 bonus is 33.3%
greater  than the Level 1 bonus and the Level 4 bonus is 50.0%  greater than the
Level 1 bonus.

       Our named  executive  officers,  excluding our Chief  Executive  Officer,
certain  other  executive  officers and certain  employees  will receive a bonus
under the 2009 bonus program that varies based upon our achievement of the Level
1 through  Level 4 Profit Goals.  The Level 1 bonus amount for each  Participant
was established based upon the Compensation  Committee's  independent evaluation
of his or her relative effect on the Company's performance. The Level 2 bonus is
generally  30.8%  greater  than the  Level 1 bonus,  the  Level 3 bonus is 64.1%
greater  than the Level 1 bonus,  and the Level 4 bonus is 100% greater than the
Level 1 bonus.

       In addition, we established a contingency bonus pool under the 2009 bonus
program that varies based upon our  achievement  of the Level 1 through  Level 4
Profit Goals and additional  funds which may accrue for exceptional  performance
beyond the Level 4 Profit Goal. The  contingency  bonus pool will be distributed
at the  discretion  of our  Chairman  and Chief  Executive  Officer  with  prior
approval from the Compensation Committee.

                                       84

<PAGE>

       Payment of bonuses (if any) is normally made in February after the end of
the performance period during which the bonuses were earned.  Except for certain
executive  officers who have  executive  employment  agreements,  in order to be
eligible for a bonus under the 2009 bonus program, eligible participants must be
employed through the end of fiscal year ending January 31, 2009. Those executive
officers who have executive employment agreements with us are entitled to, under
certain  situations,  a prorata bonus if they resign or are terminated  prior to
the completion of the fiscal year ended January 31, 2009.

       Bonuses  normally  will be paid in cash in a single lump sum,  subject to
payroll taxes and tax withholdings.

       Effective  April 1, 2008, the base salary of Michael J. Poppe,  our chief
financial officer, was increased from $200,000 to $240,000.



                                    PART III

       The  information  required  by Items 10  through  14 is  included  in our
definitive Proxy Statement  relating to our 2008 Annual Meeting of Stockholders,
and is incorporated herein by reference.

CROSS REFERENCE TO ITEMS 10-14 LOCATED IN THE PROXY STATEMENT

<TABLE>
<CAPTION>
<S>        <C>                                           <C>
                                                                  Caption in the Conn's, Inc.
                            Item                                     2008 Proxy Statement
           ------------------------------------------    ------------------------------------------


ITEM 10.   DIRECTORS, EXECUTIVE OFFICERS AND             BOARD OF DIRECTORS, EXECUTIVE OFFICERS
           CORPORATE GOVERNANCE


ITEM 11.   EXECUTIVE COMPENSATION                        EXECUTIVE COMPENSATION


ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL      STOCK OWNERSHIP OF DIRECTORS, EXECUTIVE
           OWNERS AND MANAGEMENT                         OFFICERS AND PRINCIPAL STOCKHOLDERS


ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED             CERTAIN RELATIONSHIPS AND RELATED
           TRANSACTIONS AND DIRECTOR INDEPENDENCE        TRANSACTIONS


ITEM 14.   PRINCIPAL ACCOUNTANT FEES AND SERVICES        INDEPENDENT PUBLIC ACCOUNTANTS
</TABLE>


                                       85

<PAGE>

                                     PART IV


ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a)    The following documents are filed as a part of this report:

       (1)    The  financial  statements  listed in  response  to Item 8 of this
              report are as follows:

              Consolidated Balance Sheets as of January 31, 2007 and 2008

              Consolidated Statements of Operations for the Years Ended  January
              31, 2006, 2007 and 2008

              Consolidated Statements of  Stockholders'  Equity  for  the  Years
              Ended January 31, 2006, 2007 and 2008

              Consolidated Statements of Cash Flows for the Years Ended  January
              31, 2006, 2007 and 2008

       (2)    Financial  Statement Schedule:  Report of Independent  Auditors on
              Financial  Statement  Schedule  for the three  years in the period
              ended January 31, 2008;  Schedule II -- Valuation  and  Qualifying
              Accounts.  The  financial  statement  schedule  should  be read in
              conjunction with the consolidated financial statements in our 2008
              Annual Report to Stockholders.  Financial  statement schedules not
              included  in this report have been  omitted  because  they are not
              applicable   or  the   required   information   is  shown  in  the
              consolidated financial statements or notes thereto.

       (3)    Exhibits:  A list of the exhibits  filed as part of this report is
              set forth in the Index to  Exhibits,  which  immediately  precedes
              such exhibits and is incorporated herein by reference.

                                       86

<PAGE>

                                   SIGNATURES

       Pursuant  to the  requirements  of Section 13 or 15(d) of the  Securities
Exchange Act of l934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                           CONN'S, INC.
                                           (Registrant)

                                           /s/ Thomas J. Frank, Sr.,
                                           -------------------------------
Date: March 27, 2008                       Thomas J. Frank, Sr.
                                           Chairman of the Board and Chief
                                           Executive Officer

       Pursuant to the requirements of the Securities Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities and on the dates indicated.

             Signature                      Title                     Date
             ---------                      -----                     ----

       /s/ Thomas J. Frank, Sr.        Chairman of the Board and
-------------------------------------  Chief Executive Officer
       Thomas J. Frank, Sr.            (Principal Executive
                                       Officer)                   March 27, 2008


       /s/ Michael J. Poppe            Chief Financial Officer
-------------------------------------  (Principal Financial and
       Michael J. Poppe                Accounting Officer)        March 27, 2008


       /s/ Marvin D. Brailsford        Director                   March 27, 2008
-------------------------------------
       Marvin D. Brailsford


       /s/ Jon E. M. Jacoby            Director                   March 27, 2008
-------------------------------------
       Jon E. M. Jacoby


       /s/ Bob L. Martin               Director                   March 27, 2008
------------------------------------
       Bob L. Martin


       /s/ Douglas H. Martin           Director                   March 27, 2008
------------------------------------
       Douglas H. Martin


       /s/ Dr. William C. Nylin, Jr.   Executive Vice Chairman    March 27, 2008
------------------------------------
       Dr. William C. Nylin, Jr.


       /s/ Scott L. Thompson           Director                   March 27, 2008
------------------------------------
       Scott L. Thompson


       /s/ William T. Trawick          Director                   March 27, 2008
------------------------------------
       William T. Trawick


       /s/ Theodore M. Wright          Director                   March 27, 2008
------------------------------------
       Theodore M. Wright


                                       87

<PAGE>

                                  EXHIBIT INDEX

Exhibit
Number                                     Description
------                                     -----------

  2           Agreement  and Plan of Merger dated January 15, 2003, by and among
              Conn's,  Inc., Conn  Appliances,  Inc. and Conn's Merger Sub, Inc.
              (incorporated  herein by  reference  to Exhibit 2 to Conn's,  Inc.
              registration  statement on Form S-1 (file no. 333-109046) as filed
              with the  Securities  and Exchange  Commission  on  September  23,
              2003).

  3.1         Certificate of Incorporation of Conn's, Inc.  (incorporated herein
              by reference to Exhibit 3.1 to Conn's, Inc. registration statement
              on Form S-1 (file no. 333-109046) as filed with the Securities and
              Exchange Commission on September 23, 2003).

  3.1.1       Certificate of Amendment to the  Certificate of  Incorporation  of
              Conn's, Inc. dated June 3, 2004 (incorporated  herein by reference
              to  Exhibit  3.1.1 to  Conn's,  Inc.  Form 10-Q for the  quarterly
              period ended April 30, 2004 (File No. 000-50421) as filed with the
              Securities and Exchange Commission on June 7, 2004).

  3.2         Bylaws  of  Conn's,  Inc.  (incorporated  herein by  reference  to
              Exhibit 3.2 to Conn's,  Inc.  registration  statement  on Form S-1
              (file no.  333-109046)  as filed with the  Securities and Exchange
              Commission on September 23, 2003).

  3.2.1       Amendment to the Bylaws of Conn's,  Inc.  (incorporated  herein by
              reference to Exhibit  3.2.1 to Conn's Form 10-Q for the  quarterly
              period ended April 30, 2004 (File No. 000-50421) as filed with the
              Securities and Exchange Commission on June 7, 2004).

  3.2.2       Amendment to the Bylaws of Conn's,  Inc.  effective as of December
              18, 2007 (incorporated by reference to Exhibit 3.1 to Conn's, Inc.
              Current  Report  on Form 8-K as  filed  with  the  Securities  and
              Exchange   Commission  on  December  18,  2007.

  4.1         Specimen of certificate for shares of Conn's,  Inc.'s common stock
              (incorporated  herein by reference to Exhibit 4.1 to Conn's,  Inc.
              registration  statement on Form S-1 (file no. 333-109046) as filed
              with the Securities and Exchange  Commission on October 29, 2003).

 10.1         Amended   and   Restated   2003   Incentive   Stock   Option  Plan
              (incorporated  herein by reference to Exhibit 10.1 to Conn's, Inc.
              registration  statement on Form S-1 (file no. 333-109046) as filed
              with the  Securities  and Exchange  Commission  on  September  23,
              2003).t

 10.1.1       Amendment to the Conn's,  Inc. Amended and Restated 2003 Incentive
              Stock  Option Plan  (incorporated  herein by  reference to Exhibit
              10.1.1 to Conn's Form 10-Q for the  quarterly  period  ended April
              30, 2004 (File No.  000-50421)  as filed with the  Securities  and
              Exchange Commission on June 7, 2004).t

 10.1.2       Form of Stock Option Agreement  (incorporated  herein by reference
              to Exhibit 10.1.2 to Conn's,  Inc. Form 10-K for the annual period
              ended  January  31,  2005 (File No.  000-50421)  as filed with the
              Securities and Exchange Commission on April 5, 2005).t

 10.2         2003 Non-Employee  Director Stock Option Plan (incorporated herein
              by  reference  to  Exhibit  10.2  to  Conn's,  Inc.   registration
              statement  on Form S-1  (file  no.  333-109046)as  filed  with the
              Securities and Exchange Commission on September 23, 2003).t

 10.2.1       Form of Stock Option Agreement  (incorporated  herein by reference
              to Exhibit 10.2.1 to Conn's,  Inc. Form 10-K for the annual period
              ended  January  31,  2005 (File No.  000-50421)  as filed with the
              Securities and Exchange Commission on April 5, 2005).t

                                       88

<PAGE>
 10.3         Employee Stock Purchase Plan (incorporated  herein by reference to
              Exhibit 10.3 to Conn's,  Inc.  registration  statement on Form S-1
              (file no.  333-109046)  as filed with the  Securities and Exchange
              Commission on September 23, 2003).t

 10.4         Conn's  401(k)  Retirement  Savings Plan  (incorporated  herein by
              reference to Exhibit 10.4 to Conn's, Inc.  registration  statement
              on Form S-1 (file no. 333-109046) as filed with the Securities and
              Exchange Commission on September 23, 2003).t

 10.5         Shopping  Center Lease Agreement dated May 3, 2000, by and between
              Beaumont  Development  Group,  L.P.,  f/k/a Fiesta Mart,  Inc., as
              Lessor, and CAI, L.P., as Lessee, for the property located at 3295
              College Street,  Suite A, Beaumont,  Texas (incorporated herein by
              reference to Exhibit 10.5 to Conn's, Inc.  registration  statement
              on Form S-1 (file no. 333-109046) as filed with the Securities and
              Exchange Commission on September 23, 2003).

 10.5.1       First Amendment to Shopping Center Lease Agreement dated September
              11, 2001, by and among Beaumont  Development  Group,  L.P.,  f/k/a
              Fiesta Mart,  Inc., as Lessor,  and CAI, L.P., as Lessee,  for the
              property located at 3295 College Street, Suite A, Beaumont,  Texas
              (incorporated  herein by  reference  to Exhibit  10.5.1 to Conn's,
              Inc.  registration  statement on Form S-1 (file no. 333-109046) as
              filed with the Securities and Exchange Commission on September 23,
              2003).

 10.6         Industrial  Real Estate Lease dated June 16, 2000,  by and between
              American National Insurance Company,  as Lessor, and CAI, L.P., as
              Lessee, for the property located at 8550-A Market Street, Houston,
              Texas (incorporated herein by reference to Exhibit 10.6 to Conn's,
              Inc.  registration  statement on Form S-1 (file no. 333-109046) as
              filed with the Securities and Exchange Commission on September 23,
              2003).

 10.6.1       First  Renewal of Lease dated  November 24,  2004,  by and between
              American National Insurance Company,  as Lessor, and CAI, L.P., as
              Lessee, for the property located at 8550-A Market Street, Houston,
              Texas  (incorporated  herein by  reference  to  Exhibit  10.6.1 to
              Conn's,  Inc.  Form 10-K for the annual  period ended  January 31,
              2005  (File  No.  000-50421)  as  filed  with the  Securities  and
              Exchange Commission on April 5, 2005).

 10.7         Lease  Agreement  dated December 5, 2000, by and between  Prologis
              Development  Services,  Inc., f/k/a The  Northwestern  Mutual Life
              Insurance  Company,  as Lessor,  and CAI, L.P., as Lessee, for the
              property  located at 4810 Eisenhauer Road, Suite 240, San Antonio,
              Texas (incorporated herein by reference to Exhibit 10.7 to Conn's,
              Inc.  registration  statement on Form S-1 (file no. 333-109046) as
              filed with the Securities and Exchange Commission on September 23,
              2003).

 10.7.1       Lease  Amendment  No. 1 dated  November  2, 2001,  by and  between
              Prologis Development Services, Inc., f/k/a The Northwestern Mutual
              Life Insurance  Company,  as Lessor, and CAI, L.P., as Lessee, for
              the  property  located at 4810  Eisenhauer  Road,  Suite 240,  San
              Antonio, Texas (incorporated herein by reference to Exhibit 10.7.1
              to  Conn's,  Inc.  registration  statement  on Form S-1  (file no.
              333-109046) as filed with the  Securities and Exchange  Commission
              on September 23, 2003).

 10.8         Lease  Agreement  dated  June  24,  2005,  by  and  between  Cabot
              Properties,  Inc. as Lessor,  and CAI,  L.P.,  as Lessee,  for the
              property  located  at  1132  Valwood  Parkway,  Carrollton,  Texas
              (incorporated  herein by reference to Exhibit 99.1 to Conn's, Inc.
              Current Report on Form 8-K (file no.  000-50421) as filed with the
              Securities and Exchange Commission on June 29, 2005).

 10.9         Credit  Agreement  dated  October  31,  2005,  by and  among  Conn
              Appliances,  Inc. and the Borrowers thereunder,  the Lenders party
              thereto,   JPMorgan   Chase   Bank,   National   Association,   as
              Administrative Agent, Bank of America, N.A., as Syndication Agent,
              and SunTrust Bank, as Documentation Agent (incorporated  herein by
              reference to Exhibit 10.9 to Conn's, Inc. Quarterly Report on Form
              10-Q  (file  no.  000-50421)  as  filed  with the  Securities  and
              Exchange Commission on December 1, 2005).

                                       89

<PAGE>
 10.9.1       Letter of Credit  Agreement dated November 12, 2004 by and between
              Conn Appliances,  Inc. and CAI Credit Insurance Agency,  Inc., the
              financial  institutions listed on the signature pages thereto, and
              JPMorgan Chase Bank, as Administrative  Agent (incorporated herein
              by reference to Exhibit 99.2 to Conn's Inc. Current Report on Form
              8-K (File No. 000-50421) as filed with the Securities and Exchange
              Commission on November 17, 2004).

 10.9.2       First  Amendment to Credit  Agreement dated August 28, 2006 by and
              between Conn  Appliances,  Inc. and CAI Credit  Insurance  Agency,
              Inc.,  the financial  institutions  listed on the signature  pages
              thereto,   and  JPMorgan  Chase  Bank,  as  Administrative   Agent
              (incorporated  herein by  reference to Exhibit 10.1 to Conn's Inc.
              Current Report on Form 8-K (File No.  000-50421) as filed with the
              Securities and Exchange Commission on August 28, 2006).

 10.9.3       Second  Amendment to Credit  Agreement dated March 26, 2008 by and
              among Conn Appliances, Inc. and CAI Credit Insurance Agency, Inc.,
              the financial  institutions listed on the signature pages thereto,
              and JPMorgan Chase Bank, as Administrative Agent (filed herewith).

 10.10        Receivables  Purchase  Agreement  dated  September 1, 2002, by and
              among Conn Funding II, L.P., as Purchaser,  Conn Appliances,  Inc.
              and CAI, L.P.,  collectively  as Originator  and Seller,  and Conn
              Funding  I,  L.P.,  as  Initial  Seller  (incorporated  herein  by
              reference to Exhibit 10.10 to Conn's, Inc. registration  statement
              on Form S-1 (file no. 333-109046) as filed with the Securities and
              Exchange Commission on September 23, 2003).

 10.10.1      First Amendment to Receivables  Purchase Agreement dated August 1,
              2006,  by and among Conn  Funding II,  L.P.,  as  Purchaser,  Conn
              Appliances,  Inc. and CAI,  L.P.,  collectively  as Originator and
              Seller  (incorporated  herein by reference  to Exhibit  10.10.1 to
              Conn's,  Inc.  Form 10-Q for the  quarterly  period ended July 31,
              2006  (File  No.  000-50421)  as  filed  with the  Securities  and
              Exchange Commission on September 15, 2006).

 10.11        Base  Indenture  dated  September  1, 2002,  by and  between  Conn
              Funding  II,  L.P.,  as Issuer,  and Wells  Fargo Bank  Minnesota,
              National Association, as Trustee (incorporated herein by reference
              to Exhibit 10.11 to Conn's,  Inc.  registration  statement on Form
              S-1  (file  no.  333-109046)  as  filed  with the  Securities  and
              Exchange Commission on September 23, 2003).

 10.11.1      First Supplemental Indenture dated October 29, 2004 by and between
              Conn Funding II, L.P., as Issuer,  and Wells Fargo Bank,  National
              Association,  as  Trustee  (incorporated  herein by  reference  to
              Exhibit 99.1 to Conn's,  Inc. Current Report on Form 8-K (File No.
              000-50421) as filed with the Securities and Exchange Commission on
              November 4, 2004).

 10.11.2      Second Supplemental  Indenture dated August 1, 2006 by and between
              Conn Funding II, L.P., as Issuer,  and Wells Fargo Bank,  National
              Association,  as  Trustee  (incorporated  herein by  reference  to
              Exhibit 99.1 to Conn's,  Inc. Current Report on Form 8-K (File No.
              000-50421) as filed with the Securities and Exchange Commission on
              August 23, 2006).

 10.12        Amended and Restated Series 2002-A  Supplement dated September 10,
              2007, by and between Conn Funding II, L.P.,  as Issuer,  and Wells
              Fargo Bank, National Association,  as Trustee (incorporated herein
              by  reference to Exhibit 99.2 to Conn's,  Inc.  Current  Report on
              Form 8-K (File No.  000-50421)  as filed with the  Securities  and
              Exchange Commission on September 11, 2007).

 10.12.1      Amended and Restated Note Purchase  Agreement  dated September 10,
              2007 by and between Conn Funding II,  L.P.,  as Issuer,  and Wells
              Fargo Bank, National Association,  as Trustee (incorporated herein
              by  reference to Exhibit 99.3 to Conn's,  Inc.  Current  Report on
              Form 8-K (File No.  000-50421)  as filed with the  Securities  and
              Exchange Commission on September 11, 2007).

                                       90

<PAGE>
 10.13        Series 2002-B  Supplement  to Base  Indenture  dated  September 1,
              2002, by and between Conn Funding II, L.P.,  as Issuer,  and Wells
              Fargo   Bank   Minnesota,   National   Association,   as   Trustee
              (incorporated herein by reference to Exhibit 10.13 to Conn's, Inc.
              registration  statement on Form S-1 (file no. 333-109046) as filed
              with the  Securities  and Exchange  Commission  on  September  23,
              2003).

 10.13.1      Amendment to Series 2002-B Supplement dated March 28, 2003, by and
              between  Conn Funding II,  L.P.,  as Issuer,  and Wells Fargo Bank
              Minnesota,  National Association,  as Trustee (incorporated herein
              by reference to Exhibit 10.13.1 to Conn's,  Inc. Form 10-K for the
              annual period ended January 31, 2005 (File No. 000-50421) as filed
              with the Securities and Exchange Commission on April 5, 2005).

 10.14        Servicing  Agreement  dated  September 1, 2002,  by and among Conn
              Funding II, L.P., as Issuer,  CAI,  L.P.,  as Servicer,  and Wells
              Fargo   Bank   Minnesota,   National   Association,   as   Trustee
              (incorporated herein by reference to Exhibit 10.14 to Conn's, Inc.
              registration  statement on Form S-1 (file no. 333-109046) as filed
              with the  Securities  and Exchange  Commission  on  September  23,
              2003).

 10.14.1      First Amendment to Servicing Agreement dated June 24, 2005, by and
              among Conn Funding II, L.P.,  as Issuer,  CAI,  L.P., as Servicer,
              and  Wells   Fargo   Bank,   National   Association,   as  Trustee
              (incorporated  herein by reference  to Exhibit  10.14.1 to Conn's,
              Inc. Form 10-Q for the quarterly  period ended July 31, 2005 (File
              No.   000-50421)  as  filed  with  the   Securities  and  Exchange
              Commission on August 30, 2005).

 10.14.2      Second  Amendment to Servicing  Agreement dated November 28, 2005,
              by and among Conn Funding II, L.P., as 10.14.2 Issuer,  CAI, L.P.,
              as  Servicer,  and Wells  Fargo  Bank,  National  Association,  as
              Trustee  (incorporated  herein by reference to Exhibit  10.14.2 to
              Conn's,  Inc.  Form 10-Q for the  quarterly  period ended July 31,
              2005  (File  No.  000-50421)  as  filed  with the  Securities  and
              Exchange Commission on August 30, 2005).

 10.14.3      Third Amendment to Servicing  Agreement dated May 16, 2006, by and
              among Conn Funding II, L.P.,  as Issuer,  CAI,  L.P., as Servicer,
              and  Wells   Fargo   Bank,   National   Association,   as  Trustee
              (incorporated  herein by reference  to Exhibit  10.14.3 to Conn's,
              Inc. Form 10-Q for the quarterly  period ended July 31, 2006 (File
              No.   000-50421)  as  filed  with  the   Securities  and  Exchange
              Commission on September 15, 2006).

 10.14.4      Fourth  Amendment to Servicing  Agreement dated August 1, 2006, by
              and among  Conn  Funding  II,  L.P.,  as  Issuer,  CAI,  L.P.,  as
              Servicer,  and Wells Fargo Bank, National Association,  as Trustee
              (incorporated  herein by reference  to Exhibit  10.14.4 to Conn's,
              Inc. Form 10-Q for the quarterly  period ended July 31, 2006 (File
              No.   000-50421)  as  filed  with  the   Securities  and  Exchange
              Commission on September 15, 2006).

 10.15        Form of Executive  Employment  Agreement  (incorporated  herein by
              reference to Exhibit 10.15 to Conn's, Inc. registration  statement
              on Form S-1 (file no. 333-109046) as filed with the Securities and
              Exchange Commission on October 29, 2003).t

 10.15.1      First Amendment to Executive  Employment Agreement between Conn's,
              Inc. and Thomas J. Frank,  Sr.,  Approved by the  stockholders May
              26, 2005  (incorporated  herein by reference to Exhibit 10.15.1 to
              Conn's,  Inc.  Form 10-Q for the  quarterly  period ended July 31,
              2005  (file  No.  000-50421)  as  filed  with the  Securities  and
              Exchange Commission on August 30, 2005).t

 10.16        Form  of  Indemnification   Agreement   (incorporated   herein  by
              reference to Exhibit 10.16 to Conn's, Inc. registration  statement
              on Form S-1 (file no. 333-109046) as filed with the Securities and
              Exchange Commission on September 23, 2003).t

                                       91

<PAGE>
 10.17        Description  of  Compensation  Payable to  Non-Employee  Directors
              (incorporated herein by reference to Form 8-K (file no. 000-50421)
              filed  with the  Securities  and  Exchange  Commission  on June 2,
              2005).t

 10.18        Dealer Agreement between Conn Appliances, Inc. and Voyager Service
              Programs,  Inc.  effective  as of  January  1, 1998  (incorporated
              herein by reference to Exhibit 10.19 to Conn's, Inc. Form 10-K for
              the annual period ended  January 31, 2006 (File No.  000-50421) as
              filed with the  Securities  and Exchange  Commission  on March 30,
              2006).

 10.18.1      Amendment  #1 to Dealer  Agreement  by and among Conn  Appliances,
              Inc., CAI, L.P., Federal Warranty Service  Corporation and Voyager
              Service Programs,  Inc. effective as of July 1, 2005 (incorporated
              herein by reference to Exhibit  10.19.1 to Conn's,  Inc. Form 10-K
              for the annual period ended January 31, 2006 (File No.  000-50421)
              as filed with the Securities and Exchange  Commission on March 30,
              2006).

 10.18.2      Amendment  #2 to Dealer  Agreement  by and among Conn  Appliances,
              Inc., CAI, L.P., Federal Warranty Service  Corporation and Voyager
              Service Programs,  Inc. effective as of July 1, 2005 (incorporated
              herein by reference to Exhibit  10.19.2 to Conn's,  Inc. Form 10-K
              for the annual period ended January 31, 2006 (File No.  000-50421)
              as filed with the Securities and Exchange  Commission on March 30,
              2006).

 10.18.3      Amendment  #3 to Dealer  Agreement  by and among Conn  Appliances,
              Inc., CAI, L.P., Federal Warranty Service  Corporation and Voyager
              Service Programs,  Inc. effective as of July 1, 2005 (incorporated
              herein by reference to Exhibit  10.19.3 to Conn's,  Inc. Form 10-K
              for the annual period ended January 31, 2006 (File No.  000-50421)
              as filed with the Securities and Exchange  Commission on March 30,
              2006).

 10.18.4      Amendment  #4 to Dealer  Agreement  by and among Conn  Appliances,
              Inc., CAI, L.P., Federal Warranty Service  Corporation and Voyager
              Service Programs,  Inc. effective as of July 1, 2005 (incorporated
              herein by reference to Exhibit  10.19.4 to Conn's,  Inc. Form 10-K
              for the annual period ended January 31, 2006 (File No.  000-50421)
              as filed with the Securities and Exchange  Commission on March 30,
              2006).

 10.18.5      Amendment  #5 to Dealer  Agreement  by and among Conn  Appliances,
              Inc., CAI, L.P., Federal Warranty Service  Corporation and Voyager
              Service Programs, Inc. effective as of April 7, 2007 (incorporated
              herein by reference to Exhibit  10.18.5 to Conn's,  Inc. Form 10-Q
              for the quarterly period ended July 31, 2007 (File No.  000-50421)
              as filed with the Securities and Exchange Commission on August 30,
              2007).

 10.19        Service  Expense   Reimbursement   Agreement  between   Affiliates
              Insurance Agency, Inc. and American Bankers Life Assurance Company
              of Florida,  American Bankers Insurance Company Ranchers & Farmers
              County Mutual Insurance  Company,  Voyager Life Insurance  Company
              and Voyager Property and Casualty Insurance Company effective July
              1, 1998  (incorporated  herein by  reference  to Exhibit  10.20 to
              Conn's,  Inc.  Form 10-K for the annual  period ended  January 31,
              2006  (File  No.  000-50421)  as  filed  with the  Securities  and
              Exchange Commission on March 30, 2006).

 10.19.1      First Amendment to Service Expense Reimbursement  Agreement by and
              among CAI,  L.P.,  Affiliates  Insurance  Agency,  Inc.,  American
              Bankers  Life  Assurance  Company of Florida,  Voyager  Property &
              Casualty  Insurance  Company,   American  Bankers  Life  Assurance
              Company of Florida,  American Bankers Insurance Company of Florida
              and American Bankers General Agency,  Inc.  effective July 1, 2005
              (incorporated  herein by reference  to Exhibit  10.20.1 to Conn's,
              Inc.  Form 10-K for the annual period ended January 31, 2006 (File
              No.   000-50421)  as  filed  with  the   Securities  and  Exchange
              Commission on March 30, 2006).

                                       92

<PAGE>
 10.20        Service  Expense   Reimbursement   Agreement  between  CAI  Credit
              Insurance Agency, Inc. and American Bankers Life Assurance Company
              of Florida,  American Bankers Insurance Company Ranchers & Farmers
              County Mutual Insurance  Company,  Voyager Life Insurance  Company
              and Voyager Property and Casualty Insurance Company effective July
              1, 1998  (incorporated  herein by  reference  to Exhibit  10.21 to
              Conn's,  Inc.  Form 10-K for the annual  period ended  January 31,
              2006  (File  No.  000-50421)  as  filed  with the  Securities  and
              Exchange Commission on March 30, 2006).

 10.20.1      First Amendment to Service Expense Reimbursement  Agreement by and
              among CAI Credit  Insurance  Agency,  Inc.,  American Bankers Life
              Assurance   Company  of  Florida,   Voyager  Property  &  Casualty
              Insurance  Company,  American  Bankers Life  Assurance  Company of
              Florida,  American Bankers Insurance Company of Florida,  American
              Reliable Insurance  Company,  and American Bankers General Agency,
              Inc. effective July 1, 2005  (incorporated  herein by reference to
              Exhibit  10.21.1 to Conn's,  Inc.  Form 10-K for the annual period
              ended  January  31,  2006 (File No.  000-50421)  as filed with the
              Securities and Exchange Commission on March 30, 2006).

 10.21        Consolidated   Addendum   and   Amendment   to   Service   Expense
              Reimbursement  Agreements by and among Certain Member Companies of
              Assurant   Solutions,   CAI  Credit  Insurance  Agency,  Inc.  and
              Affiliates   Insurance  Agency,   Inc.  effective  April  1,  2004
              (incorporated herein by reference to Exhibit 10.22 to Conn's, Inc.
              Form 10-K for the annual  period ended  January 31, 2006 (File No.
              000-50421) as filed with the Securities and Exchange Commission on
              March 30, 2006).

 10.22        Series 2006-A Supplement to Base Indenture,  dated August 1, 2006,
              by and between Conn Funding II, L.P.,  as Issuer,  and Wells Fargo
              Bank, National  Association,  as Trustee  (incorporated  herein by
              reference  to  Exhibit  10.23 to  Conn's,  Inc.  Form 10-Q for the
              quarterly period ended July 31, 2006 (File No. 000-50421) as filed
              with the  Securities  and Exchange  Commission  on  September  15,
              2006).

 10.23        Fourth Amended and Restated  Subordination and Priority Agreement,
              dated  August 31,  2006,  by and among Bank of America,  N.A.  and
              JPMorgan Chase Bank, as Agent,  and Conn  Appliances,  Inc. and/or
              its  subsidiary  CAI,  L.P  (incorporated  herein by  reference to
              Exhibit 10.24 to Conn's,  Inc. Form 10-Q for the quarterly  period
              ended  October  31,  2006 (File No.  000-50421)  as filed with the
              Securities and Exchange Commission on November 30, 2006).

 10.23.1      Fourth Amended and Restated Security  Agreement,  dated August 31,
              2006, by and among Conn Appliances, Inc. and CAI, L.P. and Bank of
              America,  N.A (incorporated herein by reference to Exhibit 10.24.1
              to Conn's,  Inc. Form 10-Q for the quarterly  period ended October
              31, 2006 (File No.  000-50421)  as filed with the  Securities  and
              Exchange Commission on November 30, 2006).

 10.24        Letter of Credit and Reimbursement  Agreement,  dated September 1,
              2002, by and among CAI,  L.P.,  Conn Funding II, L.P. and SunTrust
              Bank (incorporated herein by reference to Exhibit 10.25 to Conn's,
              Inc.  Form 10-Q for the  quarterly  period ended  October 31, 2006
              (File No.  000-50421)  as filed with the  Securities  and Exchange
              Commission on November 30, 2006).

 10.24.1      Amendment to Standby  Letter of Credit  dated August 23, 2006,  by
              and among CAI,  L.P.,  Conn  Funding II, L.P.  and  SunTrust  Bank
              (incorporated  herein by reference  to Exhibit  10.25.1 to Conn's,
              Inc.  Form 10-Q for the  quarterly  period ended  October 31, 2006
              (File No.  000-50421)  as filed with the  Securities  and Exchange
              Commission on November 30, 2006).

 10.24.2      Amendment to Standby Letter of Credit dated September 20, 2006, by
              and among CAI,  L.P.,  Conn  Funding II, L.P.  and  SunTrust  Bank
              (incorporated  herein by reference  to Exhibit  10.25.2 to Conn's,
              Inc.  Form 10-Q for the  quarterly  period ended  October 31, 2006
              (File No.  000-50421)  as filed with the  Securities  and Exchange
              Commission on November 30, 2006).

 11.1         Statement re:  computation of earnings per share is included under
              Note 1 to the financial statements.

 21           Subsidiaries of Conn's, Inc.  (incorporated herein by reference to
              Exhibit  21 to Conn's,  Inc.  Form 10-Q for the  quarterly  period
              ended  July 31,  2007  (File  No.  000-50421)  as  filed  with the
              Securities  and  Exchange  Commission  on August 30,  2007).

 23.1         Consent of Ernst & Young LLP (filed herewith).

 31.1         Rule  13a-14(a)/15d-14(a)  Certification (Chief Executive Officer)
              (filed herewith).

                                       93

<PAGE>
 31.2         Rule  13a-14(a)/15d-14(a)  Certification (Chief Financial Officer)
              (filed herewith).

 32.1         Section  1350  Certification  (Chief  Executive  Officer and Chief
              Financial Officer) (furnished herewith).

 99.1         Subcertification  by  Executive  Vice-Chairman  of  the  Board  in
              support of Rule 13a-14(a)/15d-14(a) Certification (Chief Executive
              Officer) (filed herewith).

 99.2         Subcertification  by Chief  Operating  Officer  in support of Rule
              13a-14(a)/15d-14(a) Certification (Chief Executive Officer) (filed
              herewith).

 99.3         Subcertification    by    Treasurer    in    support    of    Rule
              13a-14(a)/15d-14(a) Certification (Chief Financial Officer) (filed
              herewith).

 99.4         Subcertification    by    Secretary    in    support    of    Rule
              13a-14(a)/15d-14(a) Certification (Chief Financial Officer) (filed
              herewith).

 99.5         Subcertification  of Executive  Vice-Chairman of the Board,  Chief
              Operating  Officer,  Treasurer and Secretary in support of Section
              1350  Certifications  (Chief Executive Officer and Chief Financial
              Officer) (furnished herewith).

   t          Management contract or compensatory plan or arrangement.

                                       94

<PAGE>

<TABLE>
<CAPTION>
<S>                                                               <C>          <C>      <C>          <C>             <C>
                                     Schedule II-Valuation and Qualifying Accounts
                                                      Conn's, Inc.
------------------------------------------------------------------------------------------------------------------------
                          Col A                               Col B             Col C              Col D       Col E
------------------------------------------------------------------------------------------------------------------------
                                                                              Additions
------------------------------------------------------------------------------------------------------------------------
                                                                                      Charged
                                                           Balance at   Charged to   to Other                 Balance
                                                          Beginning of   Costs and   Accounts-  Deductions-  at End of
                       Description                           Period      Expenses    Describe   Describe(1)    Period
------------------------------------------------------------------------------------------------------------------------

Year ended January 31, 2006
Reserves and allowances from asset accounts:
Allowance for doubtful accounts                                   2,211        1,133     -           (2,430)         914

Year ended January 31, 2007
Reserves and allowances from asset accounts:
Allowance for doubtful accounts                                     914        1,476     -           (1,569)         821

Year ended January 31, 2008
Reserves and allowances from asset accounts:
Allowance for doubtful accounts                                     821        1,908     -           (1,769)         960


1 Uncollectible accounts written off, net of recoveries
</TABLE>





                      SECOND AMENDMENT TO CREDIT AGREEMENT
                      ------------------------------------


         THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is made
and entered into effective as of March 26, 2008 by and among CONN APPLIANCES,
INC., a Texas corporation ("CAI") and CAI CREDIT INSURANCE AGENCY, INC., a
Louisiana corporation ("Louisiana Insurance Company") (CAI and Louisiana
Insurance Company being herein collectively called "Borrowers"); each of the
Lenders which is or may from time to time become a party to the Credit Agreement
(as defined below) (individually, a "Lender" and, collectively, the "Lenders"),
and JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, acting as administrative agent
for the Lenders (in such capacity, together with its successors in such
capacity, the "Administrative Agent").

                                    RECITALS
                                    --------

         A. The Borrowers, the Lenders and the Administrative Agent executed and
delivered that certain Credit Agreement dated as of October 31, 2005, as amended
by instrument dated as of August 28, 2006. Said Credit Agreement, as amended,
supplemented and restated, is herein called the "Credit Agreement". Any
capitalized term used in this Amendment and not otherwise defined shall have the
meaning ascribed to it in the Credit Agreement.

         B. The Borrowers, the Lenders and the Administrative
 Agent desire to
amend the Credit Agreement in certain respects.

         NOW, THEREFORE, in consideration of the premises and the mutual
agreements, representations and warranties herein set forth, and further good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrowers, the Lenders and the Administrative Agent do hereby
agree as follows:

         SECTION 1.  Amendments to Credit Agreement.

         (a) The  definition  of "Base Rate Margin" set forth in Section 1.01 of
the Credit Agreement is hereby amended to read in its entirety as follows:

                  "Base Rate Margin" means, with respect to any ABR Loan, the
         applicable margin set forth below under the caption "Base Rate Margin,"
         based upon the ratio of (i) the sum of (x) Consolidated Total Debt
         (exclusive of the undrawn face amounts of the Collection Account
         Letters of Credit, the undrawn face amounts of the Bank of America
         Letters of Credit and the undrawn face amounts of the Letters of Credit
         issued under this Agreement) plus (y) eight times Consolidated Rent
         Expense divided by (ii) Consolidated EBITDA plus Consolidated Rent
         Expense, as determined quarterly on a rolling four quarter basis

                 Ratio                              Base Rate Margin
                 -----                              ----------------

                 x => 2.75                          0.75%

                 2.25 =>  x < 2.75                  0.50%

                 x < 2.25                           0.25%


                                       1

<PAGE>

         For purposes of the foregoing, each change in the Base Rate Margin
         resulting from a change in the above described ratio shall be effective
         during the period commencing on and including the date of delivery to
         the Administrative Agent of the consolidated financial statements
         indicating such change and ending on the date immediately preceding the
         effective date of the next such change.

         (b) The definition of  "Commitment  Fee Rate" set forth in Section 1.01
of the Credit Agreement is hereby amended to read in its entirety as follows:

                  "Commitment Fee Rate" means, with respect to the commitment
         fees payable hereunder, the applicable fee rate as set forth below
         under the caption "Commitment Fee," based upon the ratio of (i) the sum
         of (x) Consolidated Total Debt (exclusive of the undrawn face amounts
         of the Collection Account Letters of Credit, the undrawn face amounts
         of the Bank of America Letters of Credit and the undrawn face amounts
         of the Letters of Credit issued under this Agreement) plus (y) eight
         times Consolidated Rent Expense divided by (ii) Consolidated EBITDA
         plus Consolidated Rent Expense, as determined quarterly on a rolling
         four quarter basis

                 Ratio                            Commitment Fee Rate
                 -----                            -------------------

                 x => 2.75                              0.375%

                 2.25 => x <  2.75                      0.300%

                 1.75 => x <  2.25                      0.250%

                 1.25 => x <  1.75                      0.225%

                 x < 1.25                               0.200%

         For purposes of the foregoing, each change in the Commitment Fee Rate
         resulting from a change in the above described ratio shall be effective
         during the period commencing on and including the date of delivery to
         the Administrative Agent of the consolidated financial statements
         indicating such change and ending on the date immediately preceding the
         effective date of the next such change.

         (c) The  definition of "LIBOR  Margin" set forth in Section 1.01 of the
Credit Agreement is hereby amended to read in its entirety as follows:

                  "LIBOR Margin" means, with respect to any Eurodollar Loan, the
         applicable margin set forth below under the caption "LIBOR Margin,"
         based upon the ratio of (i) the sum of (x) Consolidated Total Debt
         (exclusive of the undrawn face amounts of the Collection Account
         Letters of Credit, the undrawn face amounts of the Bank of America
         Letters of Credit and the undrawn face amounts of the Letters of Credit
         issued under this Agreement) plus (y) eight times Consolidated Rent
         Expense divided by (ii) Consolidated EBITDA plus Consolidated Rent
         Expense, as determined quarterly on a rolling four quarter basis


                                       2

<PAGE>

                 Ratio                           LIBOR Margin
                 -----                           ------------

                 x => 2.75                          2.00%

                 2.25 =>  x < 2.75                  1.75%

                 1.75 =>  x < 2.25                  1.50%

                 1.25 =>  x < 1.75                  1.25%

                 x < 1.25                           1.00%

         For purposes of the foregoing, each change in the LIBOR Margin
         resulting from a change in the above described ratio shall be effective
         during the period commencing on and including the date of delivery to
         the Administrative Agent of the consolidated financial statements
         indicating such change and ending on the date immediately preceding the
         effective date of the next such change.

         (d)  Schedule  2.02 of the  Credit  Agreement  is hereby  amended to be
identical to Schedule 2.02 attached hereto.

         SECTION 2. Conditions. No part of this Amendment shall become effective
until the Borrowers  shall have delivered (or shall have caused to be delivered)
to the Administrative Agent each of the following:

         (i) certificates dated as of the date hereof of the Secretary or any
Assistant Secretary of each of the Borrowers authorizing the execution, delivery
and performance of this Amendment and each other applicable Loan Document and
certifying to the current organizational documents for the Borrowers, and such
other related documents and information as the Administrative Agent may
reasonably request;

         (ii) an opinion of counsel for the Borrowers covering such matters
related to this Amendment and the other Loan Documents as the Administrative
Agent may reasonably request;

         (iii) payment to the Lenders of amendment fees equal to 0.125% of the
amount (if any) by which each Lender's allocated Revolving Loan Commitment is
increased by reason of this Amendment; and

         (iv) new Revolving Notes evidencing the Revolving Loan Commitments,
duly executed by the Borrowers.


                                       3

<PAGE>

         SECTION 3. Ratification. Except as expressly amended by this Amendment,
the Credit Agreement and the other Loan Documents shall remain in full force and
effect. None of the rights, title and interests existing and to exist under the
Credit Agreement are hereby released, diminished or impaired, and the Borrowers
hereby reaffirm all covenants, representations and warranties in the Credit
Agreement.

         SECTION 4. Expenses. The Borrowers shall pay to the Administrative
Agent all reasonable fees and expenses of Administrative Agent's legal counsel
incurred in connection with the execution of this Amendment.

         SECTION 5. Certifications. The Borrowers hereby certify that (a) no
event or condition has occurred or arisen since the Effective Date which has had
a Material Adverse Effect and (b) no Default or Event of Default has occurred
and is continuing or will occur as a result of this Amendment.

         SECTION 6. Miscellaneous. This Amendment (a) shall be binding upon and
inure to the benefit of the Borrowers, the Lenders and the Administrative Agent
and their respective successors, assigns, receivers and trustees; (b) may be
modified or amended only by a writing signed by the required parties; (c) shall
be governed by and construed in accordance with the laws of the State of Texas
and the United States of America; (d) may be executed in several counterparts by
the parties hereto on separate counterparts, and each counterpart, when so
executed and delivered either in original form or by telecopy, shall constitute
an original agreement, and all such separate counterparts shall constitute but
one and the same agreement and (e) together with the other Loan Documents,
embodies the entire agreement and understanding between the parties with respect
to the subject matter hereof and supersedes all prior agreements, consents and
understandings relating to such subject matter. The headings herein shall be
accorded no significance in interpreting this Amendment.

               NOTICE PURSUANT TO TEX. BUS. & COMM. CODE ss.26.02

         THE CREDIT AGREEMENT, AS AMENDED BY THIS AMENDMENT, AND ALL OTHER LOAN
DOCUMENTS EXECUTED BY ANY OF THE PARTIES PRIOR HERETO OR SUBSTANTIALLY
CONCURRENTLY HEREWITH CONSTITUTE A WRITTEN LOAN AGREEMENT WHICH REPRESENTS THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.


                                       4

<PAGE>

         IN WITNESS WHEREOF, the Borrowers, the Lenders and the Administrative
Agent have caused this Amendment to be signed by their respective duly
authorized officers, effective as of the date first above written.

                                  CONN APPLIANCES, INC.,
                                  a Texas corporation


                                  By:    /s/ David R. Atnip
                                        ----------------------------------------
                                  Name:  David R. Atnip                         
                                        ----------------------------------------
                                  Title: Treasurer                             
                                        ----------------------------------------



                                  CAI CREDIT INSURANCE AGENCY, INC.,
                                  a Louisiana corporation


                                  By:    /s/ David R. Atnip
                                        ----------------------------------------
                                  Name:  David R. Atnip                         
                                        ----------------------------------------
                                  Title: President                             
                                        ----------------------------------------




            [signature page for Second Amendment to Credit Agreement]



<PAGE>

                                  JPMORGAN CHASE BANK, NATIONAL
                                  ASSOCIATION, as Administrative Agent and as a
                                  Lender


                                  By:    /s/ Robert L. Mendoza
                                        ----------------------------------------
                                  Name:  Robert L. Mendoza
                                        ----------------------------------------
                                  Title: Vice-President
                                        ----------------------------------------




            [signature page for Second Amendment to Credit Agreement]



<PAGE>

                                  SUNTRUST BANK,
                                  as Documentation Agent and as a Lender


                                  By:    /s/ Michael J. Vegh
                                        ----------------------------------------
                                  Name:  Michael J. Vegh                        
                                        ----------------------------------------
                                  Title: Vice-President                         
                                        ----------------------------------------




            [signature page for Second Amendment to Credit Agreement]



<PAGE>

                                  CAPITAL ONE, N.A.


                                  By:    /s/ Charles Cox                        
                                        ----------------------------------------
                                  Name:  Charles Cox                            
                                        ----------------------------------------
                                  Title: President Southeast Texas              
                                        ----------------------------------------




            [signature page for Second Amendment to Credit Agreement]



<PAGE>

                                  GUARANTY BANK


                                  By:    /s/ Eric Luttrell                      
                                        ----------------------------------------
                                  Name:  Eric Luttrell                          
                                        ----------------------------------------
                                  Title: Sr. Vice-President                     
                                        ----------------------------------------




            [signature page for Second Amendment to Credit Agreement]



<PAGE>

                                  BANK OF AMERICA, N.A.,
                                  as Syndication Agent and as a Lender


                                  By:    /s/ Robert I. Burnett                  
                                        ----------------------------------------
                                  Name:  Robert I. Burnett                      
                                        ----------------------------------------
                                  Title: Sr. Vice-President                     
                                        ----------------------------------------




            [signature page for Second Amendment to Credit Agreement]



<PAGE>



         The undersigned Guarantors hereby join in this Amendment to evidence
their consent to execution by Borrower of this Amendment, to confirm that each
Loan Document now or previously executed by the undersigned applies and shall
continue to apply to the Credit Agreement, as amended hereby, to acknowledge
that without such consent and confirmation, Lender would not execute this
Amendment and to join in the notice pursuant to Tex. Bus. & Comm. Code ss.26.02
set forth above.

                                  "GUARANTORS"

                                  CAI HOLDING CO., a Delaware corporation, CONN
                                  APPLIANCES, L.L.C., a Delaware limited 
                                  liability company


                                  By:    /s/ Thomas J. Frank                    
                                        ----------------------------------------
                                  Name:  Thomas J. Frank                        
                                        ----------------------------------------
                                  Title: Chief Executive Officer                
                                        ----------------------------------------


                                  CONN'S, INC, a Delaware corporation


                                  By:    /s/ Thomas J. Frank                    
                                        ----------------------------------------
                                  Name:  Thomas J. Frank                        
                                        ----------------------------------------
                                  Title: Chief Executive Officer                
                                        ----------------------------------------




            [signature page for Second Amendment to Credit Agreement]



<PAGE>




                                  SCHEDULE 2.02
                                  -------------

                              REVOLVING COMMITMENTS
                              ---------------------


JPMorgan Chase Bank, National Association                 $22,000,000
SunTrust Bank                                             $20,000,000
Capital One, N.A.                                         $20,000,000
Guaranty Bank                                             $20,000,000
Bank of America, N.A.                                     $18,000,000

TOTAL                                                    $100,000,000

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statements:

(1) Form S-8 No. 333-111280
(2) Form S-8 No. 333-111281
(3) Form S-8 No. 333-111282
(4) Form S-8 No. 333-111208

of our report  dated March 26,  2008,  with  respect to the  consolidated 
financial statements of Conn's Inc., and our report dated March 26, 2008, with 
respect to the effectiveness of internal control over financial  reporting of 
Conn's Inc., included herein in this Annual  Report  (Form 10-K) of Conn's Inc. 
for the year ended January 31, 2008.

                                                  Ernst & Young LLP

Houston, Texas
March 26, 2008



                                                                    EXHIBIT 31.1

                     RULE 13a-14(a)/15d-14(a) CERTIFICATION
                            (CHIEF EXECUTIVE OFFICER)

I, Thomas J. Frank, Sr., certify that:

       1. I have reviewed this annual report on Form 10-K of Conn's, Inc.;

       2.  Based on my  knowledge,  this  report  does not  contain  any  untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not misleading with respect to the period covered by this report;

       3. Based on my knowledge,  the financial statements,  and other financial
information included in this report, fairly present in all material respects the
financial  condition,  results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;

       4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal  control over financial
reporting  (as defined in Exchange Act Rules  13a-15(f) and  15d-15(f))  for the
registrant and have:

       (a)    Designed such disclosure  controls and procedures,  or caused such
              disclosure  controls  and  procedures  to be  designed  under  our
              supervision,  to ensure
 that material  information relating to the
              registrant, including its consolidated subsidiaries, is made known
              to us by others  within those  entities,  particularly  during the
              period in which this report is being prepared;

       (b)    Designed such internal control over financial reporting, or caused
              such  internal  control  over  financial  reporting to be designed
              under our supervision,  to provide reasonable  assurance regarding
              the  reliability  of financial  reporting and the  preparation  of
              financial  statements  for external  purposes in  accordance  with
              generally accepted accounting principles;

       (c)    Evaluated  the   effectiveness  of  the  registrant's   disclosure
              controls  and   procedures   and  presented  in  this  report  our
              conclusions about the effectiveness of the disclosure controls and
              procedures,  as of the end of the period  covered  by this  report
              based on such evaluation; and

       (d)    Disclosed in this report any change in the  registrant's  internal
              control  over  financial   reporting  that  occurred   during  the
              registrant's most recent fiscal quarter (the  registrant's  fourth
              fiscal  quarter  in  the  case  of  an  annual  report)  that  has
              materially affected, or is reasonably likely to materially affect,
              the registrant's internal control over financial reporting; and

       5. The  registrant's  other  certifying  officer(s) and I have disclosed,
based  on  our  most  recent  evaluation  of  internal  control  over  financial
reporting,  to  the  registrant's  auditors  and  the  audit  committee  of  the
registrant's   board  of  directors  (or  persons   performing   the  equivalent
functions):

       (a)    All significant deficiencies and material weaknesses in the design
              or operation of internal  control over financial  reporting  which
              are reasonably likely to adversely affect the registrant's ability
              to record,  process,  summarize and report financial  information;
              and

       (b)    Any fraud,  whether or not material,  that involves  management or
              other  employees who have a significant  role in the  registrant's
              internal control over financial reporting.

                                           /s/ Thomas J. Frank, Sr.
                                           -------------------------------------
                                           Thomas J. Frank, Sr.
                                           Chairman of the Board
                                           and Chief Executive Officer


Date:  March 27, 2008

                                                                    EXHIBIT 31.2

                     RULE 13a-14(a)/15d-14(a) CERTIFICATION
                            (CHIEF FINANCIAL OFFICER)

I, Michael J. Poppe, certify that:

       1. I have reviewed this annual report on Form 10-K of Conn's, Inc.;

       2.  Based on my  knowledge,  this  report  does not  contain  any  untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not misleading with respect to the period covered by this report;

       3. Based on my knowledge,  the financial statements,  and other financial
information included in this report, fairly present in all material respects the
financial  condition,  results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;

       4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal  control over financial
reporting  (as defined in Exchange Act Rules  13a-15(f) and  15d-15(f))  for the
registrant and have:

       (a)    Designed such disclosure  controls and procedures,  or caused such
              disclosure  controls  and  procedures  to be  designed  under  our
              supervision,  to ensure that
 material  information relating to the
              registrant, including its consolidated subsidiaries, is made known
              to us by others  within those  entities,  particularly  during the
              period in which this report is being prepared;

       (b)    Designed such internal control over financial reporting, or caused
              such  internal  control  over  financial  reporting to be designed
              under our supervision,  to provide reasonable  assurance regarding
              the  reliability  of financial  reporting and the  preparation  of
              financial  statements  for external  purposes in  accordance  with
              generally accepted accounting principles;

       (c)    Evaluated  the   effectiveness  of  the  registrant's   disclosure
              controls  and   procedures   and  presented  in  this  report  our
              conclusions about the effectiveness of the disclosure controls and
              procedures,  as of the end of the period  covered  by this  report
              based on such evaluation; and

       (d)    Disclosed in this report any change in the  registrant's  internal
              control  over  financial   reporting  that  occurred   during  the
              registrant's most recent fiscal quarter (the  registrant's  fourth
              fiscal  quarter  in  the  case  of  an  annual  report)  that  has
              materially affected, or is reasonably likely to materially affect,
              the registrant's internal control over financial reporting; and

       5. The  registrant's  other  certifying  officer(s) and I have disclosed,
based  on  our  most  recent  evaluation  of  internal  control  over  financial
reporting,  to  the  registrant's  auditors  and  the  audit  committee  of  the
registrant's   board  of  directors  (or  persons   performing   the  equivalent
functions):

       (a)    All significant deficiencies and material weaknesses in the design
              or operation of internal  control over financial  reporting  which
              are reasonably likely to adversely affect the registrant's ability
              to record,  process,  summarize and report financial  information;
              and

       (b)    Any fraud,  whether or not material,  that involves  management or
              other  employees who have a significant  role in the  registrant's
              internal control over financial reporting.

                                           /s/ Michael J. Poppe
                                           -------------------------------------
                                           Michael J. Poppe
                                           Chief Financial Officer


Date:  March 27, 2008

                                                                    EXHIBIT 32.1


                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

       In connection  with the Annual Report of Conn's,  Inc. (the "Company") on
Form 10-K for the period ended January 31, 2008 as filed with the Securities and
Exchange Commission on the date hereof (the "Report"), we, Thomas J. Frank, Sr.,
Chairman of the Board and Chief Executive  Officer of the Company and Michael J.
Poppe,  Chief Financial Officer of the Company,  hereby certify,  pursuant to 18
U.S.C.  Section 1350, as adopted  pursuant to Section 906 of the  Sarbanes-Oxley
Act of 2002, that, to the best of our knowledge:

(1)    The Report fully complies with the requirements of Section 13(a) or 15(d)
       of the Securities Exchange Act of 1934; and

(2)    The information  contained in the Report fairly presents, in all material
       respects,  the  financial  condition  and  results of  operations  of the
       Company.



                                       /s/ Thomas J. Frank Sr.
                                       -----------------------------------------
                                       Thomas J. Frank, Sr.
                                       Chairman of the Board and
                                       Chief Executive Officer


                                       /s/ Michael J. Poppe
                                       -----------------------------------------
                                       Michael J. Poppe
                                       Chief Financial Officer





Dated:  March 27, 2008




A signed  original of this  written  statement  required by Section 906 has been
provided to Conn's,  Inc. and will be retained by Conn's,  Inc. and furnished to
the Securities and Exchange
 Commission or its staff upon request.  The foregoing
certification is being furnished  solely pursuant to 18 U.S.C.  Section 1350 and
is not being filed as part of the Report or as a separate disclosure document.

                                                                    EXHIBIT 99.1


     SUBCERTIFICATION OF EXECUTIVE VICE-CHAIRMAN OF THE BOARD IN SUPPORT OF
        RULE 13a-14(a)/15d-14(a) CERTIFICATION (CHIEF EXECUTIVE OFFICER)

I, William C. Nylin Jr., certify that:

       1. I have reviewed this quarterly report on Form 10-K of Conn's, Inc.;

       2.  Based on my  knowledge,  this  report  does not  contain  any  untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not misleading with respect to the period covered by this report;

       3. Based on my knowledge,  the financial statements,  and other financial
information included in this report, fairly present in all material respects the
financial  condition,  results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;

       4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal  control over financial
reporting  (as defined in Exchange Act Rules  13a-15(f) and  15d-15(f))  for the
registrant and have:

       (a)    Designed such disclosure  controls and procedures,  or caused such
              disclosure
  controls  and  procedures  to be  designed  under  our
              supervision,  to ensure that material  information relating to the
              registrant, including its consolidated subsidiaries, is made known
              to us by others  within those  entities,  particularly  during the
              period in which this report is being prepared;

       (b)    Designed such internal control over financial reporting, or caused
              such  internal  control  over  financial  reporting to be designed
              under our supervision,  to provide reasonable  assurance regarding
              the  reliability  of financial  reporting and the  preparation  of
              financial  statements  for external  purposes in  accordance  with
              generally accepted accounting principles;

       (c)    Evaluated  the   effectiveness  of  the  registrant's   disclosure
              controls  and   procedures   and  presented  in  this  report  our
              conclusions about the effectiveness of the disclosure controls and
              procedures,  as of the end of the period  covered  by this  report
              based on such evaluation; and

       (d)    Disclosed in this report any change in the  registrant's  internal
              control  over  financial   reporting  that  occurred   during  the
              registrant's most recent fiscal quarter (the  registrant's  fourth
              fiscal  quarter  in  the  case  of  an  annual  report)  that  has
              materially affected, or is reasonably likely to materially affect,
              the registrant's internal control over financial reporting; and

       5. The  registrant's  other  certifying  officer(s) and I have disclosed,
based  on  our  most  recent  evaluation  of  internal  control  over  financial
reporting,  to  the  registrant's  auditors  and  the  audit  committee  of  the
registrant's   board  of  directors  (or  persons   performing   the  equivalent
functions):

       (a)    All significant deficiencies and material weaknesses in the design
              or operation of internal  control over financial  reporting  which
              are reasonably likely to adversely affect the registrant's ability
              to record,  process,  summarize and report financial  information;
              and

       (b)    Any fraud,  whether or not material,  that involves  management or
              other  employees who have a significant  role in the  registrant's
              internal control over financial reporting.

                                       /s/ William C. Nylin, Jr.
                                       -----------------------------------------
                                       William C. Nylin, Jr.
                                       Executive Vice-Chairman of the Board


Date:  March 27, 2008

                                                                    EXHIBIT 99.2


            SUBCERTIFICATION OF CHIEF OPERATING OFFICER IN SUPPORT OF
        RULE 13a-14(a)/15d-14(a) CERTIFICATION (CHIEF EXECUTIVE OFFICER)

I, Timothy L. Frank, certify that:

       1. I have reviewed this quarterly report on Form 10-K of Conn's, Inc.;

       2.  Based on my  knowledge,  this  report  does not  contain  any  untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not misleading with respect to the period covered by this report;

       3. Based on my knowledge,  the financial statements,  and other financial
information included in this report, fairly present in all material respects the
financial  condition,  results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;

       4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal  control over financial
reporting  (as defined in Exchange Act Rules  13a-15(f) and  15d-15(f))  for the
registrant and have:

       (a)    Designed such disclosure  controls and procedures,  or caused such
              disclosure  controls
  and  procedures  to be  designed  under  our
              supervision,  to ensure that material  information relating to the
              registrant, including its consolidated subsidiaries, is made known
              to us by others  within those  entities,  particularly  during the
              period in which this report is being prepared;

       (b)    Designed such internal control over financial reporting, or caused
              such  internal  control  over  financial  reporting to be designed
              under our supervision,  to provide reasonable  assurance regarding
              the  reliability  of financial  reporting and the  preparation  of
              financial  statements  for external  purposes in  accordance  with
              generally accepted accounting principles;

       (c)    Evaluated  the   effectiveness  of  the  registrant's   disclosure
              controls  and   procedures   and  presented  in  this  report  our
              conclusions about the effectiveness of the disclosure controls and
              procedures,  as of the end of the period  covered  by this  report
              based on such evaluation; and

       (d)    Disclosed in this report any change in the  registrant's  internal
              control  over  financial   reporting  that  occurred   during  the
              registrant's most recent fiscal quarter (the  registrant's  fourth
              fiscal  quarter  in  the  case  of  an  annual  report)  that  has
              materially affected, or is reasonably likely to materially affect,
              the registrant's internal control over financial reporting; and

       5. The  registrant's  other  certifying  officer(s) and I have disclosed,
based  on  our  most  recent  evaluation  of  internal  control  over  financial
reporting,  to  the  registrant's  auditors  and  the  audit  committee  of  the
registrant's   board  of  directors  (or  persons   performing   the  equivalent
functions):

       (a)    All significant deficiencies and material weaknesses in the design
              or operation of internal  control over financial  reporting  which
              are reasonably likely to adversely affect the registrant's ability
              to record,  process,  summarize and report financial  information;
              and

       (b)    Any fraud,  whether or not material,  that involves  management or
              other  employees who have a significant  role in the  registrant's
              internal control over financial reporting.

                                       /s/ Timothy L. Frank
                                       -----------------------------------------
                                       Timothy L. Frank
                                       President and Chief Operating Officer


Date:  March 27, 2008

                                                                    EXHIBIT 99.3


      SUBCERTIFICATION OF TREASURER IN SUPPORT OF RULE 13a-14(a)/15d-14(a)
                     CERTIFICATION (CHIEF FINANCIAL OFFICER)

I, David R. Atnip, certify that:

       1. I have reviewed this annual report on Form 10-K of Conn's, Inc.;

       2.  Based on my  knowledge,  this  report  does not  contain  any  untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not misleading with respect to the period covered by this report;

       3. Based on my knowledge,  the financial statements,  and other financial
information included in this report, fairly present in all material respects the
financial  condition,  results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;

       4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal  control over financial
reporting  (as defined in Exchange Act Rules  13a-15(f) and  15d-15(f))  for the
registrant and have:

       (a)    Designed such disclosure  controls and procedures,  or caused such
              disclosure  controls  and  procedures  to be
  designed  under  our
              supervision,  to ensure that material  information relating to the
              registrant, including its consolidated subsidiaries, is made known
              to us by others  within those  entities,  particularly  during the
              period in which this report is being prepared;

       (b)    Designed such internal control over financial reporting, or caused
              such  internal  control  over  financial  reporting to be designed
              under our supervision,  to provide reasonable  assurance regarding
              the  reliability  of financial  reporting and the  preparation  of
              financial  statements  for external  purposes in  accordance  with
              generally accepted accounting principles;

       (c)    Evaluated  the   effectiveness  of  the  registrant's   disclosure
              controls  and   procedures   and  presented  in  this  report  our
              conclusions about the effectiveness of the disclosure controls and
              procedures,  as of the end of the period  covered  by this  report
              based on such evaluation; and

       (d)    Disclosed in this report any change in the  registrant's  internal
              control  over  financial   reporting  that  occurred   during  the
              registrant's most recent fiscal quarter (the  registrant's  fourth
              fiscal  quarter  in  the  case  of  an  annual  report)  that  has
              materially affected, or is reasonably likely to materially affect,
              the registrant's internal control over financial reporting; and

       5. The  registrant's  other  certifying  officer(s) and I have disclosed,
based  on  our  most  recent  evaluation  of  internal  control  over  financial
reporting,  to  the  registrant's  auditors  and  the  audit  committee  of  the
registrant's   board  of  directors  (or  persons   performing   the  equivalent
functions):

       (a)    All significant deficiencies and material weaknesses in the design
              or operation of internal  control over financial  reporting  which
              are reasonably likely to adversely affect the registrant's ability
              to record,  process,  summarize and report financial  information;
              and

       (b)    Any fraud,  whether or not material,  that involves  management or
              other  employees who have a significant  role in the  registrant's
              internal control over financial reporting.

                                       /s/ David R. Atnip
                                       -----------------------------------------
                                       David R. Atnip
                                       Senior Vice President and Treasurer


Date:  March 27, 2008

                                                                    EXHIBIT 99.4


      SUBCERTIFICATION OF SECRETARY IN SUPPORT OF RULE 13a-14(a)/15d-14(a)
                     CERTIFICATION (CHIEF EXECUTIVE OFFICER)

I, Sydney K. Boone, Jr., certify that:

       1. I have reviewed this annual report on Form 10-K of Conn's, Inc.;

       2.  Based on my  knowledge,  this  report  does not  contain  any  untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not misleading with respect to the period covered by this report;

       3. Based on my knowledge,  the financial statements,  and other financial
information included in this report, fairly present in all material respects the
financial  condition,  results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;

       4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal  control over financial
reporting  (as defined in Exchange Act Rules  13a-15(f) and  15d-15(f))  for the
registrant and have:

       (a)    Designed such disclosure  controls and procedures,  or caused such
              disclosure  controls  and  procedures  to
 be  designed  under  our
              supervision,  to ensure that material  information relating to the
              registrant, including its consolidated subsidiaries, is made known
              to us by others  within those  entities,  particularly  during the
              period in which this report is being prepared;

       (b)    Designed such internal control over financial reporting, or caused
              such  internal  control  over  financial  reporting to be designed
              under our supervision,  to provide reasonable  assurance regarding
              the  reliability  of financial  reporting and the  preparation  of
              financial  statements  for external  purposes in  accordance  with
              generally accepted accounting principles;

       (c)    Evaluated  the   effectiveness  of  the  registrant's   disclosure
              controls  and   procedures   and  presented  in  this  report  our
              conclusions about the effectiveness of the disclosure controls and
              procedures,  as of the end of the period  covered  by this  report
              based on such evaluation; and

       (d)    Disclosed in this report any change in the  registrant's  internal
              control  over  financial   reporting  that  occurred   during  the
              registrant's most recent fiscal quarter (the  registrant's  fourth
              fiscal  quarter  in  the  case  of  an  annual  report)  that  has
              materially affected, or is reasonably likely to materially affect,
              the registrant's internal control over financial reporting; and

       5. The  registrant's  other  certifying  officer(s) and I have disclosed,
based  on  our  most  recent  evaluation  of  internal  control  over  financial
reporting,  to  the  registrant's  auditors  and  the  audit  committee  of  the
registrant's   board  of  directors  (or  persons   performing   the  equivalent
functions):

       (a)    All significant deficiencies and material weaknesses in the design
              or operation of internal  control over financial  reporting  which
              are reasonably likely to adversely affect the registrant's ability
              to record,  process,  summarize and report financial  information;
              and

       (b)    Any fraud,  whether or not material,  that involves  management or
              other  employees who have a significant  role in the  registrant's
              internal control over financial reporting.

                                       /s/ Sydney K. Boone, Jr.
                                       -----------------------------------------
                                       Sydney K. Boone, Jr.
                                       Corporate General Counsel and Secretary


Date:  March 27, 2008

                                                                    EXHIBIT 99.5


            SUBCERTIFICATION OF EXECUTIVE VICE-CHAIRMAN OF THE BOARD,
         CHIEF OPERATING OFFICER, TREASURER AND SECRETARY IN SUPPORT OF

                      18 U.S.C. SECTION 1350 CERTIFICATION,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

       In connection  with the Annual Report of Conn's,  Inc. (the "Company") on
Form 10-K for the period ended January 31, 2008 as filed with the Securities and
Exchange  Commission on the date hereof (the  "Report"),  we,  William C. Nylin,
Jr., Executive Vice-Chairman of the Board, Timothy L. Frank, President and Chief
Operating  Officer of the Company,  David R. Atnip,  Senior Vice  President  and
Treasurer of the Company,  and Sydney K. Boone,  Jr.,  Corporate General Counsel
and  Secretary of the Company,  hereby  certify,  pursuant to 18 U.S.C.  Section
1350,  as adopted  pursuant  to Section 906 of the  Sarbanes-Oxley  Act of 2002,
that, to the best of our knowledge:

(1)    The Report fully complies with the requirements of Section 13(a) or 15(d)
       of the Securities Exchange Act of 1934; and

(2)    The information  contained in the Report fairly presents, in all material
       respects,  the  financial  condition  and  results of  operations  of the
       Company.



                                       /s/ William C. Nylin, Jr.
                                       -----------------------------------------
                                       William C. Nylin, Jr.
                                       Executive Vice-Chairman of the Board


                                       /s/ Timothy L. Frank
                                       -----------------------------------------
                                       Timothy
 L. Frank
                                       President and Chief Operating Officer


                                       /s/ David R. Atnip
                                       -----------------------------------------
                                       David R. Atnip
                                       Senior Vice President and Treasurer


                                       /s/ Sydney K. Boone, Jr.
                                       -----------------------------------------
                                       Sydney K. Boone, Jr.
                                       Corporate General Counsel and Secretary





Dated:  March 27, 2008




A signed  original of this written  statement has been provided to Conn's,  Inc.
and will be  retained  by Conn's,  Inc.  The  foregoing  certification  is being
furnished solely to support  certifications  pursuant to 18 U.S.C.  Section 1350
and is not  being  filed  as  part of the  Report  or as a  separate  disclosure
document.