CONNS INC - FORM 8-K - EX-99.2 - July 7, 2010

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8-K - FORM 8-K - CONNS INCh74249e8vk.htm
EX-99.1 - EX-99.1 - CONNS INCh74249exv99w1.htm
EX-99.3 - EX-99.3 - CONNS INCh74249exv99w3.htm
EX-23.1 - EX-23.1 - CONNS INCh74249exv23w1.htm
EX-99.4 - EX-99.4 - CONNS INCh74249exv99w4.htm
EX-12.1 - EX-12.1 - CONNS INCh74249exv12w1.htm
Exhibit 99.2
ITEM 6. SELECTED FINANCIAL DATA
     The following tables set forth selected historical financial information as of and for the periods indicated and reflects our retrospective adoption, for all periods presented, of a change in our accounting for our interest in our variable interest entity, or VIE. See Note 2 in our Notes to Consolidated Financial Statements for the year ended January 31, 2010 for additional information. We have provided the following selected historical financial information for your reference. We have derived the selected statement of operations and balance sheet data as of January 31, 2010 and 2009 and for each of the years ended January 31, 2010, 2009 and 2008 from our audited consolidated financial statements included as Exhibit 99.4 to this Current Report on Form 8-K. Balance sheet data as of January 31, 2008 and statement of operations data for the years ended January 31, 2007 and 2006 have been derived from our unaudited consolidated financial statements which do not appear in this in this Current Report on Form 8-K.
                                         
    Year Ended January 31,
    (dollars and shares in thousands, except per share amounts)
    2006   2007   2008   2009   2010
     
Statement Operations:
                                        
Revenues:
                                        
Product sales
   $ 569,877     $ 623,959     $ 671,571     $ 743,729     $ 667,401  
Repair service agreement commissions, net (1)
     30,583       30,567       36,424       40,199       33,272  
Service revenues (2)
     20,278       22,411       22,997       21,121       22,115  
Total net sales
     620,738       676,937       730,992       805,049       722,788  
Finance charges and other (3)
     109,250       122,649       139,538       154,492       152,797  
Total revenues
   $ 729,988     $ 799,586     $ 870,530     $ 959,541     $ 875,585  
Costs and expenses:
                                        
Cost of goods sold, including warehousing and occupancy cost
     422,533       466,279       508,787       580,423       534,299  
Cost of parts sold, including warehousing and occupancy costs
     5,310       6,785       8,379       9,638       10,401  
Selling, general and administrative expense
     208,652       225,434       245,761       254,172       255,942  
Goodwill impairment (4)
     —       —       —       —       9,617  
Provision for bad debts
     14,519       22,173       19,465       27,952       36,843  
Total costs and expenses
   $ 651,014     $ 720,671     $ 782,392     $ 872,185     $ 847,102  
Operating income
     78,974       78,915       88,138       87,356       28,483  
Interest expense, net
     17,423       21,454       24,839       23,597       20,571  
Other (income) expense (5)
     69       (772 )     (943 )     117       (123 )
Income before income taxes
     61,482       58,233       64,242       63,642       8,035  
Provision for income taxes
     21,380       20,613       22,575       23,624       4,111  
Net income
   $ 40,102     $ 37,620     $ 41,667     $ 40,018     $ 3,924  
Earnings per common share:
                                        
Basic
   $ 1.71     $ 1.59     $ 1.80     $ 1.79     $ 0.17  
Diluted
   $ 1.66     $ 1.55     $ 1.76     $ 1.77     $ 0.17  
Average common shares outstanding:
                                        
Basic
     23,412       23,663       23,193       22,413       22,456  
Diluted
     24,088       24,289       23,673       22,577       22,610  
 
                                        
Other Financial Data:
                                        
Stores open at end of period
     56       62       69       76       76  
Same stores sales growth (6)
     16.9 %     3.6 %     3.2 %     2.0 %     (13.8 )%
Inventory turns (7)
     6.1       5.7       5.7       6.0       6.1  
Gross margin percentage (8)
     41.4 %     40.8 %     40.6 %     38.5 %     37.8 %

 

 

                                         
    Year Ended January 31,
    (dollars and shares in thousands, except per share amounts)
    2006   2007   2008   2009   2010
     
Operating margin (9)
     10.8 %     9.9 %     10.1 %     9.1 %     3.3 %
Ratio of earnings to fixed charges (10)
     3.3       2.8       2.8       2.7       1.2  
Return on average equity (11)
     18.7 %     14.7 %     14.8 %     12.9 %     1.2 %
Capital expenditures
   $ 18,490     $ 18,425     $ 18,955     $ 17,597     $ 10,255  
 
                                        
Balance Sheet Data:
                                        
Working capital
   $ 307,948     $ 372,668     $ 387,730     $ 277,296     $ 340,122  
Cash and cash equivalents
   $ 45,179     $ 56,598     $ 11,024     $ 11,909     $ 12,247  
Inventory
     73,986       87,098       81,495       95,971       63,499  
Other accounts receivable, net
     17,796       22,329       27,722       32,505       23,254  
Total assets
     721,447       810,511       835,499       957,566       892,466  
Total debt, including current maturities
   $ 385,136     $ 438,198     $ 468,119     $ 505,417     $ 452,304  
Total stockholders’ equity
   $ 236,962     $ 274,182     $ 288,726     $ 332,784     $ 339,163  
                         
    Year Ended January 31,
    (dollars and shares in thousands)
    2008   2009   2010
     
Other Relevant Data:
                        
Rent expense (12)
   $ 18,905     $ 22,242     $ 23,703  
Percent of retail sales financed
     62.2 %     62.6 %     58.1 %
Allowance for bad debts as a percent of average outstanding balance (13)
     3.5 %     3.9 %     4.8 %
Weighted average monthly payment rate (14)
     5.7 %     5.5 %     5.2 %
 
  (1)   Includes commissions from sales of third-party repair service agreements and replacement product programs, and income from company-obligor repair service agreements.
 
  (2)   Includes revenues derived from parts sales and labor sales on products serviced for customers, both covered under manufacturer warranty and outside manufacturer’s warranty coverage.
 
  (3)   Includes primarily interest income and fees earned on credit accounts and commissions earned from the sale of third-party credit insurance products.
 
  (4)   Includes the write-off of the carrying amount of goodwill after interim testing in the third quarter of fiscal 2010 determined that the goodwill was fully impaired.
 
  (5)   Includes primarily gains or losses resulting from sales of fixed assets during the period.
 
  (6)   Same store sales is calculated by comparing the reported sales for all stores that were open during the entirety of a period and the entirety of the same period during the prior fiscal year. Sales from closed stores, if any, are 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.
 
  (7)   Inventory turns are defined as the cost of goods sold, excluding warehousing and occupancy cost, divided by the monthly average product inventory balance, excluding consigned goods.
 
  (8)   Gross margin percentage is defined as total revenues less cost of goods and parts sold, including warehousing and occupancy cost, divided by total revenues.
 
  (9)   Operating margin is defined as operating income divided by total revenues.
 
(10)   Ratio of earnings to fixed charges is calculated as income before provision for income taxes plus fixed charges (excluding capitalized interest), divided by fixed charges. Fixed charges consist of the sum of interest expensed and capitalized, amortized premiums, discounts and capitalized expenses related to indebtedness and an estimate of the interest within rental expense.

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(11)   Return on average equity is calculated as current period net income divided by the average of the beginning and ending equity.
 
(12)   Rent expense includes rent expense incurred on our properties, equipment and vehicles, and is net of any rental income received.
 
(13)   Includes Reserve for uncollectible interest.
 
(14)   Represents the monthly weighted average of gross cash collections received on the credit portfolio as a percentage of the average monthly portfolio balances for each period.

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