-----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, ADUftydxMEbjftsfgoxsK0I9V4UZXrgeDwNvlxrwxVN/FCfCIO3Lf1RvaB6typr/ 4xd7AWhZHxpQbR8L2HP8sw== 0001157523-06-003101.txt : 20060330 0001157523-06-003101.hdr.sgml : 20060330 20060330080005 ACCESSION NUMBER: 0001157523-06-003101 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20060328 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060330 DATE AS OF CHANGE: 20060330 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: 06720621 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 a5113142.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) March 28, 2006 ---------------------------- 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 1.01 Entry into a Material Definitive Agreement. On March 28, 2006, the Compensation Committee of the Board of Directors (the "Compensation Committee") of Conn's, Inc. (the "Company") adopted a cash bonus program for the 2007 fiscal year. The Company's named executive officers, as well as certain other executive officers and certain employees, are eligible to participate in the 2007 bonus program. Below is a description of the 2007 bonus program, as adopted by the Compensation Committee. The purpose of the 2007 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 the Company attract and retain key employees by providing attractive compensation opportunities linked to performance results. The Company has established three bonus levels for its 2007 bonus program: Level 1, Level 2 and Level 3. Each of the levels represent the attainment by the Company of certain operating pre-tax profit (excluding charges to the Company for options and other share-based compensation) targets established by the Compensation Committee (each, a "Profit Goal"). If the Company does not achieve the Level 1 Profit Goal, no bonus will be paid to any named executive officer, other executive officer or employee pursuant to the 2007 bonus program. The bonuses that may become distributable based upon the Company's achievement of the Level 1 through Level 3 Profit Goals will be distributed by the Chief Executive Officer with approval from the Compensation Committee. The Company's Chief Executive Officer will receive a bonus under the 2007 bonus program that varies based upon achievement by the Company of the Level 1 through Level 3 Profit Goals. The Level 1 bonus amount for the Chief Executive Officer was established based upon the Compensation Committee's independent evaluation of his relative effect on the Company's performance. The Level 2 bonus is 20% greater than the Level 1 bonus, the Level 3 bonus is 50% greater than the Level 1 bonus. The Company's named executive officers (excluding the Chief Executive Officer), certain other executive officers and certain employees (each a "Participant" and collectively, the "Participants") will also receive a bonus under the 2007 bonus program that varies based upon achievement by the Company of the Level 1 through Level 3 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 41% greater than the Level 1 bonus and the Level 3 bonus is 100% greater than the Level 1 bonus. In addition, the Company has established a contingency bonus pool under the 2007 bonus program that varies based upon the Company's achievement of the Level 1 through Level 3 Profit Goals and additional funds which may accrue for exceptional performance beyond the Level 3 Profit Goal. The contingency bonus pool will be distributed at the discretion of the Chairman and Chief Executive Officer with approval from the Compensation Committee. 2 Payment of bonuses (if any) is normally made in February after the end of the performance period during which the bonuses were earned. In order to be eligible for a bonus under the 2007 bonus program, eligible participants must be employed through the end of fiscal year ending January 31, 2007. Bonuses normally will be paid in cash in a single lump sum, subject to payroll taxes and tax withholdings. Item 2.02 Results of Operations and Financial Condition. On March 30, 2006, the Company issued a press release announcing earnings for the fiscal year ended January 31, 2006. A copy of the press release is furnished herewith as Exhibit 99.1, and is incorporated herein by reference. Item 5.02 Appointment of Principal Officer. On May 28, 2006, our Board of Directors took the following actions, to be effective April 1, 2006: 1. Expanded the number of members of our board of directors to nine, and appointed Dr. William C. Nylin, Jr., who is 63 years old, to the board as Executive Vice Chairman of our Board of Directors. Dr. Nylin will continue as our Chief Operating Officer. Dr. Nylin has served as our President and Chief Operating Officer since 1995. He was a member of our Board commencing in 1993, and remained a member until September 2003, when the Company became a publicly held entity. In addition to performing responsibilities as President and Chief Operating Officer, he has direct responsibility for credit granting and collections, information technology, human resources, distribution, service and training. From 1984 to 1995, Dr. Nylin held several executive management positions, including Deputy Chancellor and Executive Vice President of Finance and Operation at Lamar University in Beaumont, Texas. Dr. Nylin obtained his B.S. degree in mathematics from Lamar University, and holds both a masters and doctorate degree in computer sciences from Purdue University. He has also completed a post-graduate program at Harvard University. Dr Nylin continues to be employed by us under the terms of his current employment agreement with us. 2. Appointed Timothy L. Frank as our President. Mr. Frank, who is 38 years old, has served as our Senior Vice President - Retail since May 2005. He joined us in September 1995 and has served in various roles throughout our Company, including Director of Advertising, Director of Credit, Director of Legal Collections, Director of Direct Marketing, and as Vice President of Special Projects. Prior to joining our Company, Mr. Frank served in various marketing positions with a nationally known marketing consulting company. Mr. Frank holds a BS in Liberal Arts from Texas A & M University and an MBA in Marketing from the University of North Texas. Mr. Frank has also completed a post-graduate program at Harvard University. Mr. Frank is the son of Thomas J. Frank, Sr., our Chief Executive Officer and Chairman of our Board of Directors. We do not have an employment agreement with Mr. Frank. Mr. Frank will be eligible for bonuses under the terms approved by the compensation committee of the board and other benefits provided to our executive officers. 3. Appointed David W. Trahan as our Senior Vice President - Retail. Mr. Trahan, who is 45 years old, has served as our Senior Vice President - Merchandising since October 2001. He joined us in1986 and has served in various capacities, including sales, store operations and merchandising. He has been directly responsible for our merchandising and product purchasing functions, as well as product display and pricing operations, for the last five years. Mr. Trahan has completed special study programs at Harvard University, Rice University and Lamar University. We do not have an employment agreement with Mr. Trahan. Mr. Trahan continues to be eligible for bonuses under the terms approved by the compensation committee of the board and other benefits provided to our executive officers. 3 On March 30, 2006, the Company issued a press release announcing these changes. A copy of the press release is furnished herewith as Exhibit 99.2, and is incorporated herein by reference. Item 9.01(c) Exhibits. Exhibit 99.1 Press Release, dated March 30, 2006, January 31, 2006 Earnings Exhibit 99.2 Press Release, dated March 30, 2006, Appointment of Director and Principal Officers 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: March 30, 2006 By: /s/ David L. Rogers -------------------------------- David L. Rogers Chief Financial Officer 4 EXHIBIT INDEX ------------- Exhibit No. Description - ----------- ----------- 99.1 Press Release, dated March 30, 2006, January 31, 2006 Earnings 99.2 Press Release, dated March 30, 2006, Appointment of Director and Principal Officers 5 EX-99.1 2 a5113142ex99_1.txt EXHIBIT 99.1 Exhibit 99.1 Conn's, Inc. Reports Record Earnings for Fourth Quarter and Fiscal Year Ending January 31, 2006 BEAUMONT, Texas--(BUSINESS WIRE)--March 30, 2006--Conn's, Inc. (NASDAQ/NM:CONN), a specialty retailer of home appliances, consumer electronics, computers, mattresses, furniture and lawn and garden products, today announced record earnings results for the fourth quarter and year ended January 31, 2006. Net income available for common stockholders for the fourth quarter increased 39.8% to $12.9 million compared to $9.2 million for the fourth quarter of last year. Diluted earnings per share available for common stockholders were $0.53 compared with $0.39 for the fourth quarter of last year. Total revenues for the quarter ended January 31, 2006 increased 27.0% to $206.6 million compared with $162.7 million for the quarter ended January 31, 2005. This increase in revenue included net sales increases of $43.2 million, or 30.5%, and increases from "Finance charges and other" of $709,000, or 3.4%. Same store sales (revenues earned in stores operated for the entirety of both periods) increased 22.6% for the fourth quarter of fiscal 2006. Total revenues for the year ended January 31, 2006 increased 23.9% to $702.4 million compared with $567.1 million for the year ended January 31, 2005. This increase in revenue included net sales increases of $126.5 million, or 25.6%, and increases from "Finance charges and other" of $8.8 million, or 12.1%. Same store sales increased 16.9% for the year ended January 31, 2006. Net income available for common stockholders for the year ended January 31, 2006 increased 36.7% to $41.2 million compared to $30.1 million for the year ended January 31, 2005. Diluted earnings per share available for the common stockholder increased 33.9% to $1.70 for the year ended January 31, 2006 from $1.27 in the prior year. During the year, the Company added six new stores to bring the store count to 56. By the end of January 2007, the Company expects to operate approximately 62 to 64 stores. "This was a remarkable year in so many ways," said Thomas J. Frank, Conn's Chairman and Chief Executive Officer. "We successfully made substantial modifications to our Retail Division management early in the year and in the second half of the year contended with two hurricanes and phenomenal sales growth. Our team was up to the challenge in every case and delivered excellent bottom line growth. We take what we learned with those successes into the new year where again we expect to encounter challenges and will apply ourselves in the same manner, demanding excellence from ourselves and our associates." EPS Guidance The Company also issued guidance for fiscal year 2007 (the year ending January 31, 2007) of earnings per diluted share of approximately $1.85 to $1.90. The earnings guidance does give effect for changes resulting from the required adoption of Statement of Financial Accounting Standards No. 123R, Share-Based Payment, during fiscal 2007. The effect on earnings per diluted share as a result of FAS 123R is estimated to be approximately $0.07. Earnings per diluted share on a comparable basis for the year ended January 31, 2006, had FAS 123R been in effect, would have been $1.66 or a reduction of approximately $0.04. Comparable store sales increases are projected in the mid to high single digit range. Conference Call Information Conn's, Inc. will host a conference call and audio webcast today, March 30, 2006, at 10:00 a.m., CST, to discuss financial results for the quarter and year ended January 31, 2006. The webcast will be available live at www.conns.com and will be archived for one year. Participants can join the call by dialing (877) 704-5386. About Conn's, Inc. The Company is a specialty retailer currently operating 56 retail locations in Texas and Louisiana: eighteen stores in the Houston area, twelve in the Dallas/Fort Worth Metroplex, eight in San Antonio, five in Austin, four in Southeast Texas, one in Corpus Christi, two in South Texas and six stores in Louisiana. It sells major home appliances, including refrigerators, freezers, washers, dryers and ranges, and a variety of consumer electronics, including projection, plasma, DLP and LCD televisions, camcorders, computers and computer peripherals, DVD players, portable audio and home theater products. The Company also sells lawn and garden products, furniture and mattresses, and continues to introduce additional product categories for the home to help respond to its customers' product needs and to increase same store sales. Unlike many of its competitors, the Company provides flexible in-house credit options for its customers. Historically, it has financed, on average, approximately 57% of retail sales. Customer receivables are financed substantially through an asset-backed securitization facility, from which the Company derives servicing fee income and interest income. The Company transfers receivables, consisting of retail installment contracts and revolving accounts for credit extended to its customers, to a qualifying special purpose entity in exchange for cash and subordinated securities represented by asset-backed and variable funding notes issued to third parties. This press release contains forward-looking statements that involve risks and uncertainties. Such forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will," "expect," "intend," "could," "estimate," "should," "anticipate," or "believe," or the negative thereof or variations thereon or similar terminology. Although the Company believes that the expectations reflected in such forward-looking statements will prove to be correct, the Company can give no assurance that such expectations will prove to be correct. The actual future performance of the Company could differ materially from such statements. Factors that could cause or contribute to such differences include, but are not limited to: the Company's growth strategy and plans regarding opening new stores and entering new markets; the Company's intention to update or expand existing stores; the Company's estimated capital expenditures and costs related to the opening of new stores or the update or expansion of existing stores; the Company's cash flow from operations, borrowings from its revolving line of credit and proceeds from securitizations to fund operations, debt repayment and expansion; growth trends and projected sales in the home appliance and consumer electronics industry and the Company's ability to capitalize on such growth; relationships with the Company's key suppliers; the results of the Company's litigation; interest rates; weather conditions in the Company's markets; changes in the Company's stock price; and the actual number of shares of common stock outstanding. Further information on these risk factors is included in the Company's filings with the Securities and Exchange Commission, including the Company's annual report on Form 10-K filed on March 30, 2006 and the current report on Form 8-K filed in connection with this press release. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except as required by law, the Company is not obligated to publicly release any revisions to these forward-looking statements to reflect the events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events. Conn's, Inc. CONDENSED, CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except earnings per share) Three Months Ended Twelve Months Ended January 31, January 31, ------------------- ------------------- 2005 2006 2005 2006 --------- --------- --------- --------- Revenues Total net sales $141,721 $184,887 $494,235 $620,738 Finance charges and other 20,983 21,692 72,857 81,684 --------- --------- --------- --------- Total revenues 162,704 206,579 567,092 702,422 Cost and expenses Cost of goods sold, including warehousing and occupancy costs 102,157 133,544 355,159 448,064 Cost of parts sold, including warehousing and occupancy costs 1,197 1,515 4,551 5,310 Selling, general and administrative expense 42,779 50,568 152,900 181,631 Provision for bad debts 1,615 1,245 5,637 3,769 --------- --------- --------- --------- Total cost and expenses 147,748 186,872 518,247 638,774 --------- --------- --------- --------- Operating income 14,956 19,707 48,845 63,648 Interest expense (income), net 595 (88) 2,359 400 --------- --------- --------- --------- Income before minority interest and income taxes 14,361 19,795 46,486 63,248 Minority interest in limited partnership 241 - (118) - --------- --------- --------- --------- Income before income taxes 14,602 19,795 46,368 63,248 Total provision for income taxes 5,355 6,871 16,243 22,067 --------- --------- --------- --------- Net income $9,247 $12,924 $30,125 $41,181 ========= ========= ========= ========= Earnings per share Basic $0.40 $0.55 $1.30 $1.76 Diluted $0.39 $0.53 $1.27 $1.70 Average common shares outstanding Basic 23,230 23,523 23,192 23,412 Diluted 23,764 24,512 23,754 24,192 Conn's, Inc. CONDENSED, CONSOLIDATED BALANCE SHEETS (in thousands) January 31, ----------------------------- 2005 2006 -------------- -------------- Assets Current assets Cash and cash equivalents $7,027 $45,176 Interests in securitized assets and accounts receivable, net 131,887 146,991 Inventories 62,346 73,987 Deferred income taxes 4,901 4,670 Prepaid expenses and other assets 3,552 4,004 -------------- -------------- Total current assets 209,713 274,828 Non-current deferred tax asset 1,523 2,464 Total property and equipment, net 47,710 54,826 Goodwill and other assets, net 9,846 9,877 -------------- -------------- Total assets $268,792 $341,995 ============== ============== Liabilities and Stockholders' Equity Current Liabilities Notes payable $5,500 $- Current portion of long-term debt 29 136 Accounts payable 27,108 40,920 Accrued compensation 8,548 18,847 Accrued expense 11,928 17,380 Fair value of derivatives 177 - Other current liabilities 8,349 18,049 -------------- -------------- Total current liabilities 61,639 95,332 Long-term debt 5,003 - Non-current deferred tax liability 704 903 Deferred gain on sale of property 644 476 Total stockholders' equity 200,802 245,284 -------------- -------------- Total liabilities and stockholders' equity $268,792 $341,995 ============== ============== Conn's, Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) For the Years Ended January 31, ----------------------------- 2005 2006 -------------- -------------- Net cash provided by operating activities $170 $64,318 Cash flows from investing activities Purchase of property and equipment (19,619) (18,490) Proceeds from sale of property 1,131 34 -------------- -------------- Net cash used by investing activities (18,488) (18,456) Cash flows from financing activities Net borrowings (payments) under bank credit facilities 10,500 (10,500) Net proceeds from stock issued under employee benefit plans 1,603 2,813 Debt issuance costs (118) (130) Borrowings on promissory notes - 136 Payment of promissory notes (60) (32) -------------- -------------- Net cash provided by (used in) financing activities 11,925 (7,713) -------------- -------------- Impact on cash of consolidation of SRDS 478 - -------------- -------------- Net change in cash (5,915) 38,149 Cash and cash equivalents Beginning of the year 12,942 7,027 -------------- -------------- End of the year $7,027 $45,176 ============== ============== CALCULATION OF GROSS MARGIN PERCENTAGE (dollars in thousands) Three Months Ended Years Ended January 31, January 31, ------------------- ------------------- 2005 2006 2005 2006 --------- --------- --------- --------- Total revenues $162,704 $206,579 $567,092 $702,422 Less cost of goods and parts sold, including warehousing and occupancy cost (103,354) (135,059) (359,710) (453,374) --------- --------- --------- --------- Gross margin dollars $59,350 $71,520 $207,382 $249,048 ========= ========= ========= ========= Gross margin percentage 36.5% 34.6% 36.6% 35.5% PORTFOLIO STATISTICS For the periods ended January 31, 2003, 2004, 2005 and 2006 (dollars in thousands, except average outstanding balance per account) 2003 2004 2005 2006 --------- --------- --------- --------- Total accounts 285,247 299,717 350,251 415,338 Total outstanding balance $303,825 $349,470 $428,700 $519,721 Average outstanding balance per account $1,065 $1,166 $1,224 $1,251 60 day delinquency $16,176 $18,267 $23,143 $35,537 Percent delinquency 5.3% 5.2% 5.4% 6.8% Loan loss ratio 3.5% 3.4% 2.9% 2.5% CONTACT: Conn's, Inc., Beaumont Thomas J. Frank, 409-832-1696 Ext. 3218 EX-99.2 3 a5113142ex99_2.txt EXHIBIT 99.2 Exhibit 99.2 Conn's, Inc. Announces Management Changes BEAUMONT, Texas--(BUSINESS WIRE)--March 30, 2006--Conn's, Inc. (NASDAQ/NM:CONN), a specialty retailer of home appliances, consumer electronics, computers, mattresses, furniture and lawn and garden products, today announced that its Board of Directors appointed Dr. William C. Nylin, Jr. as Executive Vice Chairman of the Board effective April 1, 2006. The action came at the March 28, 2006, Board of Directors meeting after the Board increased from eight to nine the number of board members. Nylin, who has served as the Company's President and will remain as its Chief Operating Officer, joins other Board members Thomas J. Frank, Sr. (Chairman of the Board and Chief Executive Officer), Marvin D. Brailsford, Jon E.M. Jacoby, Bob L. Martin, Douglas H. Martin, Scott L. Thompson, William T. Trawick, and Theodore M. Wright. Nylin continues to report to Thomas J. Frank, Sr., Chairman of the Board and Chief Executive Officer. Rey de la Fuente, President of Conn Credit and Senior Vice President of Conn's, Inc. will continue to report to Nylin. Dr. Nylin has served as President and Chief Operating Officer since 1995. He was a member of our Board commencing in 1993, and remained a member until September 2003, when the Company became a publicly held entity. In addition to performing responsibilities as President and Chief Operating Officer, he had direct responsibility for credit granting and collections, information technology, human resources, distribution, service and training. From 1984 to 1995, Dr. Nylin held several executive management positions, including Deputy Chancellor and Executive Vice President of Finance and Operation at Lamar University in Beaumont, Texas. Dr. Nylin obtained his B.S. degree in mathematics from Lamar University, and holds both a masters and doctorate degree in computer sciences from Purdue University. He has also completed a post-graduate program at Harvard University. The Board also appointed Timothy L. Frank as President of Conn's, Inc. who will be primarily focused on retail operations. Additionally, the Board appointed David W. Trahan as Senior Vice President -- Retail. Rey de la Fuente remains as President of Conn Credit and leads the Company's credit operations. Timothy L. Frank has served as Senior Vice President -- Retail since May, 2005. He joined the Company in September 1995 and has served in various roles, including Director of Advertising, Director of Credit, Director of Legal Collections, Director of Direct Marketing, and as Vice President of Special Projects. Prior to joining the Company, Mr. Frank served in various marketing positions with a nationally known marketing consulting company. Mr. Frank holds a B.S. in Liberal Arts from Texas A & M University and an MBA in Marketing from the University of North Texas. Mr. Frank has also completed a post-graduate program at Harvard University. David W. Trahan has served as Senior Vice President -- Merchandising since October 2001. He has been employed since 1986 in various capacities, including sales, store operations and merchandising. He has been directly responsible for merchandising and product purchasing functions, as well as product display and pricing operations, for the last four years. Mr. Trahan has completed special study programs at Harvard University, Rice University and Lamar University. All appointments were in recognition of the Company's successful, long-term performance and provides for orderly management development for continued growth in the future. About Conn's, Inc. The Company is a specialty retailer currently operating 56 retail locations in Texas and Louisiana: eighteen stores in the Houston area, twelve in the Dallas/Fort Worth Metroplex, eight in San Antonio, five in Austin, four in Southeast Texas, one in Corpus Christi, two in South Texas and six stores in Louisiana. It sells major home appliances, including refrigerators, freezers, washers, dryers and ranges, and a variety of consumer electronics, including projection, plasma, DLP and LCD televisions, camcorders, computers and computer peripherals, DVD players, portable audio and home theater products. The Company also sells lawn and garden products, furniture and mattresses, and continues to introduce additional product categories for the home to help respond to its customers' product needs and to increase same store sales. Unlike many of its competitors, the Company provides flexible in-house credit options for its customers. Historically, it has financed, on average, approximately 57% of retail sales. Customer receivables are financed substantially through an asset-backed securitization facility, from which the Company derives servicing fee income and interest income. The Company transfers receivables, consisting of retail installment contracts and revolving accounts for credit extended to its customers, to a qualifying special purpose entity in exchange for cash and subordinated securities represented by asset-backed and variable funding notes issued to third parties. This press release contains forward-looking statements that involve risks and uncertainties. Such forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will," "expect," "intend," "could," "estimate," "should," "anticipate," or "believe," or the negative thereof or variations thereon or similar terminology. Although the Company believes that the expectations reflected in such forward-looking statements will prove to be correct, the Company can give no assurance that such expectations will prove to be correct. The actual future performance of the Company could differ materially from such statements. Factors that could cause or contribute to such differences include, but are not limited to: the Company's growth strategy and plans regarding opening new stores and entering new markets; the Company's intention to update or expand existing stores; the Company's estimated capital expenditures and costs related to the opening of new stores or the update or expansion of existing stores; the Company's cash flow from operations, borrowings from its revolving line of credit and proceeds from securitizations to fund operations, debt repayment and expansion; growth trends and projected sales in the home appliance and consumer electronics industry and the Company's ability to capitalize on such growth; relationships with the Company's key suppliers; the results of the Company's litigation; interest rates; weather conditions in the Company's markets; changes in the Company's stock price; and the actual number of shares of common stock outstanding. Further information on these risk factors is included in the Company's filings with the Securities and Exchange Commission, including the Company's annual report on Form 10-K filed on March 30, 2006 and the current report on Form 8-K filed in connection with this press release. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except as required by law, the Company is not obligated to publicly release any revisions to these forward-looking statements to reflect the events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events. CONTACT: Conn's, Inc., Beaumont Thomas J. Frank, 409-832-1696 Ext. 3218 -----END PRIVACY-ENHANCED MESSAGE-----