-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FAshb+ezc0YmVdWQS/Vv7eRplMpmhI1YUUcrXg5IjpLBQFzEMS6Dp2BaQD8LLP/f Caabrds+3yVMFQqUanp4Zw== 0001157523-04-011173.txt : 20041202 0001157523-04-011173.hdr.sgml : 20041202 20041202070214 ACCESSION NUMBER: 0001157523-04-011173 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20041202 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20041202 DATE AS OF CHANGE: 20041202 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONNS INC CENTRAL INDEX KEY: 0001223389 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-RADIO TV & CONSUMER ELECTRONICS STORES [5731] IRS NUMBER: 061672840 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-50421 FILM NUMBER: 041178843 BUSINESS ADDRESS: STREET 1: 3295 COLLEGE STREEET CITY: BEAUMONT STATE: TX ZIP: 77701 BUSINESS PHONE: 4098321696 MAIL ADDRESS: STREET 1: 3295 COLLEGE ST CITY: BEAUMONT STATE: TX ZIP: 77701 8-K 1 a4776212.txt CONN'S, INC. 8-K ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report: (Date of earliest event reported) December 2, 2004 ---------------------------- CONN'S, INC. (Exact name of registrant as specified in charter) Delaware (State or other Jurisdiction of Incorporation or Organization) 000-50421 06-1672840 (Commission File Number) (IRS Employer Identification No.) 3295 College Street Beaumont, Texas 77701 (Address of Principal Executive Offices and zip code) (409) 832-1696 (Registrant's telephone number, including area code) N/A (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Securities Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) 12 under the Securities Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) 12 under the Securities Act (17 CFR 240.13e-2(c)) ================================================================================ Item 2.02 Results of Operations and Financial Condition. On December 2, 2004, the Company issued a press release announcing earnings for the quarter and nine months ended October 31, 2004. A copy of the press release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference. Item 9.01(c) Exhibits. Exhibit 99.1 Press Release, dated December 2, 2004 All of the information contained in Item 2.02 and Item 9.01(c) in this Form 8-K and the accompanying exhibit shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be incorporated by reference in any filing under the Securities Act of 1933, as amended. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. CONN'S, INC. Date: December 2, 2004 By: /s/ C. William Frank ---------------------------- C. William Frank Executive Vice President and Chief Financial Officer EXHIBIT INDEX ------------- Exhibit No. Description - ----------- ----------- 99.1 Press Release, dated December 2, 2004 EX-99.1 2 a4776212ex991.txt CONN'S, INC. EXHIBIT 99.1 Exhibit 99.1 Conn's, Inc. Reports Record Third Quarter 2005 Earnings BEAUMONT, Texas--(BUSINESS WIRE)--Dec. 2, 2004--Conn's, Inc. (NASDAQ/NM:CONN), a specialty retailer of home appliances, consumer electronics, home office products, bedding and lawn and garden products, today announced record results for the quarter and nine months ended October 31, 2004. Net income available for common stockholders for the third quarter increased 33.3% to $6.3 million compared to $4.7 million for the third quarter of last year. Diluted earnings per share available for common stockholders decreased 3.6% to $0.27 from $0.28 in the prior year. On a pro forma basis, as though all shares issued in the initial public offering were outstanding in both periods for the full period and IPO proceeds were used to pay-off existing balance sheet debt, diluted earnings per share increased 12.5% to $0.27 for the quarter ended October 31, 2004 from $0.24 for the quarter ended October 31, 2003. Total revenues for the quarter ended October 31, 2004 increased 13.2% to $132.9 million compared with $117.4 million for the quarter ended October 31, 2003. This increase in revenue included net sales increases of $12.1 million, or 11.8%, and increases from Finance charges and other of $3.4 million, or 23.4%. Same store sales (revenues earned in stores operated for the entirety of both periods) increased 1.5% for the third quarter of fiscal 2005. Increased sales in bedding, computers and other new product categories included in the track accounted for much of the increase in same store sales. Seven retail locations that were not open for three consecutive months in each period, accounted for substantially all of the remainder of the net sales increase. Total revenues for the nine months ended October 31, 2004 increased 13.8% to $404.4 million compared with $355.3 million for the nine months ended October 31, 2003. This increase in revenue included net sales increases of $40.1 million, or 12.8%, and increases from Finance charges and other of $9.0 million, or 21.0%. Same store sales increased 4.0% for the first nine months of fiscal 2005. Net income available for common stockholders for the nine months ended October 31, 2004 increased 47.3% to $20.9 million compared to $14.2 million for the first nine months of last year. Diluted earnings per share available for the common stockholder increased 3.5% to $0.88 from $0.85 in the prior year. On a pro forma basis, as though all shares issued in the initial public offering were outstanding in both periods for the full period and IPO proceeds were used to pay-off existing balance sheet debt, diluted earnings per share increased 18.9% to $0.88 for the nine months ended October 31, 2004 from $0.74 for the nine months ended October 31, 2003. "We continue to be pleased with our progress since becoming a public company," said Thomas J. Frank, Conn's Chairman and Chief Executive Officer. "Our strategy is to grow profitably by (1) increasing our market share in our core categories (major appliances and home electronics) in existing markets; (2) enhancing our assortment of new product categories (digital electronics and portable electric appliances, bedding, and lawn and garden) to stimulate increases in same store sales; and (3) opening new stores in selected markets. Because of our execution of this strategy, we continue to enjoy revenue increases, both from same store sales increases and new stores, over those reported in the previous periods. New stores that were added this quarter included our sixth store in the Dallas/Fort Worth Metroplex and our first store in McAllen, Texas, in the south Texas Rio Grande Valley along the US/Mexican border." EPS Guidance The Company also issued guidance for the fourth quarter ended January 31, 2005 of earnings per diluted share of approximately $0.36 to $0.38. Guidance issued for the entire year continues to include earnings per diluted share of approximately $1.24 to $1.26. Conference Call Information Conn's, Inc. will host a conference call and audio webcast today, December 2, 2004 at 10:00 AM, CST, to discuss financial results for the quarter and nine months ended October 31, 2004. The webcast will be available at www.conns.com and will be archived for one year. The webcast is also being distributed over CCBN's Investor Distribution Network to both institutional and individual investors. Individual investors can listen to the call through CCBN's individual investor center at www.fulldisclosure.com. Institutional investors can access the call via CCBN's password protected event management site at www.streetevents.com. About Conn's, Inc. The Company is a specialty retailer currently operating (49) retail locations in Texas and Louisiana. It sells major home appliances, including refrigerators, freezers, washers, dryers and ranges, and a variety of consumer electronics, including projection, plasma and LCD televisions, camcorders, VCRs, DVD players and home theater products. The Company also sells home office equipment, lawn and garden products and bedding, and continues to introduce additional product categories for the home to help increase same store sales and to respond to our customers' product needs. Unlike many of its competitors, the Company provides in-house credit options for its customers. Historically, it has financed over 56% of retail sales. Customer receivables are financed substantially through an asset-backed securitization facility, from which the Company derives servicing fee income and interest income from these assets. The Company transfers receivables, consisting of retail installment contracts and revolving accounts extended to its customers, to a qualifying special purpose entity, or the issuer, in exchange for cash and subordinated securities represented by asset-backed and variable funding notes issued to third parties. This press release contains forward-looking statements that involve risks and uncertainties. Such forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will," "expect," "intend," "could," "estimate," "should," "anticipate," or "believe," or the negative thereof or variations thereon or similar terminology. Although the Company believes that the expectations reflected in such forward-looking statements will prove to be correct, the Company can give no assurance that such expectations will prove to have been correct. The actual future performance of the Company could differ materially from such statements. Factors that could cause or contribute to such differences include, but are not limited to: the Company's growth strategy and plans regarding opening new stores and entering new markets; the Company's intention to update or expand existing stores; the Company's estimated capital expenditures and costs related to the opening of new stores or the update or expansion of existing stores; the Company's cash flow from operations, borrowings from its revolving line of credit and proceeds from securitizations to fund operations, debt repayment and expansion; growth trends and projected sales in the home appliance and consumer electronics industry and the Company's ability to capitalize on such growth; relationships with the Company's key suppliers; the results of the Company's litigation; interest rates; weather conditions in the Company's markets; changes in the Company's stock price; and the actual number of shares of common stock outstanding. Further information on these risk factors is included in the Company's filings with the Securities and Exchange Commission, including the Company's Form 10-K filed on April 16, 2004. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except as required by law, the Company is not obligated to publicly release any revisions to these forward-looking statements to reflect the events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events. Conn's, Inc. CONDENSED, CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (in thousands, except earnings per share) Three Months Ended Nine Months Ended October 31, October 31, ------------------- ------------------- 2003 2004 2003 2004 --------- --------- --------- --------- Revenues Total net sales $102,977 $115,121 $312,419 $352,514 Finance charges and other 14,413 17,789 42,887 51,874 --------- --------- --------- --------- Total revenues 117,390 132,910 355,306 404,388 Cost and Expenses Cost of goods sold, including warehousing and occupancy costs 72,687 82,523 222,558 253,002 Cost of parts sold, including warehousing and occupancy costs 1,038 1,159 3,091 3,354 Selling, general and administrative expense 33,405 37,738 97,559 110,121 Provision for bad debts 1,215 1,373 3,403 4,022 --------- --------- --------- --------- Total cost and expenses 108,345 122,793 326,611 370,499 --------- --------- --------- --------- Operating income 9,045 10,117 28,695 33,889 Interest expense 789 615 4,004 1,764 --------- --------- --------- --------- Income before minority interest and income taxes 8,256 9,502 24,691 32,125 Minority interest in limited partnership - 113 - 359 --------- --------- --------- --------- Income before income taxes 8,256 9,389 24,691 31,766 Total provision for income taxes 2,933 3,074 8,761 10,888 --------- --------- --------- --------- Net income 5,323 6,315 15,930 20,878 Less preferred dividends 587 - 1,759 - --------- --------- --------- --------- Net income available for common shareholders $4,736 $6,315 $14,171 $20,878 ========= ========= ========= ========= Earnings per share Basic $0.28 $0.27 $0.85 $0.90 Diluted $0.28 $0.27 $0.85 $0.88 Average common shares outstanding Basic 16,720 23,206 16,720 23,175 Diluted 16,720 23,681 16,720 23,716 Conn's, Inc. CONDENSED, CONSOLIDATED BALANCE SHEETS (in thousands) January 31, October 31, 2004 2004 -------------------------- Assets (unaudited) Current assets Cash and cash equivalents $12,942 $10,374 Interests in securitized assets and accounts receivable, net 93,940 117,366 Inventories 53,742 60,906 Deferred income taxes 4,148 4,859 Prepaid expenses and other assets 3,031 3,515 ------------- ------------ Total current assets 167,803 197,020 Non-current deferred tax asset 3,945 4,386 Total property and equipment, net 54,825 62,363 Goodwill and other assets, net 8,187 8,209 ------------- ------------ Total assets $234,760 $271,978 ============= ============ Liabilities and Stockholders' Equity Current Liabilities Notes payable $- $2,584 Current portion of long-term debt 338 307 Accounts payable 26,412 29,936 Fair value of derivatives 1,121 439 Other current liabilities 22,866 24,053 ------------- ------------ Total current liabilities 50,737 57,319 Long-term debt 14,174 21,207 Non-current deferred tax liability 477 650 Deferred gain on sale of property 811 686 Fair value of derivatives 202 - Minority interest 1,769 2,053 Total stockholders' equity 166,590 190,063 ------------- ------------ Total liabilities and stockholders' equity $234,760 $271,978 ============= ============ CONN'S, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) For the Nine Months Ended October 31, ----------------------- 2003 2004 ----------- ----------- (unaudited) (unaudited) Net cash provided by operating activities $11,661 $881 Cash flows from investing activities Purchase of property and equipment (6,260) (14,957) Proceeds from sale of property 1,289 1,072 ----------- ----------- Net cash used by investing activities (4,971) (13,885) Cash flows from financing activities Net borrowings (payments) under bank credit facilities (5,192) 9,638 Net proceeds from stock issued under employee benefit plans - 925 Debt issuance costs (203) (75) Payment of promissory notes (1,457) (52) ----------- ----------- Net cash provided (used) by financing activities (6,852) 10,436 ----------- ----------- Net change in cash (162) (2,568) Cash and cash equivalents Beginning of the year 2,448 12,942 ----------- ----------- End of the year $2,286 $10,374 =========== =========== CONN'S, INC RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION PRO FORMA EARNINGS PER SHARE (in thousands, except earnings per share) Three Months Ended Nine Months Ended October 31, October 31, ------------------ ----------------- 2003 2004 2003 2004 --------- -------- -------- -------- Net income available for common stockholders $4,736 $6,315 $14,171 $20,878 Add interest savings, net of tax, due to debt payoff 309 - 1,098 - Add preferred dividends 587 - 1,759 - --------- -------- -------- -------- Pro forma net income $5,632 $6,315 $17,028 $20,878 ========= ======== ======== ======== Total shares outstanding pre-IPO 16,720 16,720 16,720 16,720 Shares issued in IPO, including over-allotment 4,622 4,622 4,622 4,622 Conversion of preferred stock into common 1,712 1,712 1,712 1,712 Weighted issuance of shares to benefit plans - 152 - 121 Dilution due to outstanding options - 475 - 541 --------- -------- -------- -------- Pro forma shares outstanding 23,054 23,681 23,054 23,716 ========= ======== ======== ======== Pro forma diluted earnings per share $0.24 $0.27 $0.74 $0.88 ========= ======== ======== ======== Reconciliation of pro forma shares outstanding to presentation according to GAAP: Pro forma shares outstanding 23,054 23,681 23,054 23,716 Adjustment since shares were not outstanding for the full year (6,334) - (6,334) - --------- -------- -------- -------- Weighted diluted outstanding shares according to GAAP 16,720 23,681 16,720 23,716 ========= ======== ======== ======== The use of pro forma information is considered necessary to provide the reader with more comparable earnings per share information year over year. As a result of the IPO transaction, the additional shares issued were significant relative to the shares outstanding in the prior year, the retirement of debt substantially reduced interest expense, and preferred dividends are no longer accrued or paid. Consequently, the shares outstanding have been adjusted to reflect the IPO transaction as though it took place on February 1, 2003, interest expense associated with the debt that would have been paid-off has been reduced, and preferred dividends have been eliminated in all periods in order to compute earnings per share on a more comparable basis. CALCULATION OF GROSS MARGIN PERCENTAGE (dollars in thousands) Three Months Ended Nine Months Ended October 31, October 31, ------------------- ------------------- 2003 2004 2003 2004 --------- --------- --------- --------- Total revenues $117,390 $132,910 $355,306 $404,388 Less cost of goods and parts sold, including warehousing and occupancy cost (73,725) (83,682) (225,649) (256,356) --------- --------- --------- --------- Gross margin dollars $43,665 $49,228 $129,657 $148,032 ========= ========= ========= ========= Gross margin percentage 37.2% 37.0% 36.5% 36.6% CONTACT: Conn's, Inc., Beaumont Thomas J. Frank, 409-832-1696 Ext. 3218 -----END PRIVACY-ENHANCED MESSAGE-----