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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Conns Inc | NASDAQ:CONN | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.13 | -3.74% | 3.35 | 2.98 | 3.91 | 3.5451 | 3.29 | 3.53 | 38,153 | 23:55:23 |
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
06-1672840
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification Number)
|
|
|
|
4055 Technology Forest Blvd, Suite 210, The Woodlands, TX
|
|
77381
|
(Address of principal executive offices)
|
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(Zip Code)
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Large accelerated filer
|
o
|
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Accelerated filer
|
ý
|
|
|
|
|
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Non-accelerated filer
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o
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(Do not check if a smaller reporting company)
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Smaller reporting company
|
o
|
|
|
|
|
|
|
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Emerging growth company
|
o
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Class
|
|
Outstanding
|
Common stock, $0.01 par value per share
|
|
31,370,581
|
|
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Page No.
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PART I.
|
|
FINANCIAL INFORMATION
|
|
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Item 1.
|
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Financial Statements
|
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Item 2.
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Item 3.
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Item 4.
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PART II.
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OTHER INFORMATION
|
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Item 1.
|
|
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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PART I.
|
FINANCIAL INFORMATION
|
ITEM 1.
|
FINANCIAL STATEMENTS
|
|
October 31,
2017 |
|
January 31,
2017 |
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
12,742
|
|
|
$
|
23,566
|
|
Restricted cash (all held by VIEs)
|
71,099
|
|
|
110,698
|
|
||
Customer accounts receivable, net of allowances (includes VIE balance of $360,086 and $529,108, respectively)
|
635,700
|
|
|
702,162
|
|
||
Other accounts receivable
|
63,203
|
|
|
69,286
|
|
||
Inventories
|
235,479
|
|
|
164,856
|
|
||
Income taxes recoverable
|
1,194
|
|
|
2,150
|
|
||
Prepaid expenses and other current assets
|
14,721
|
|
|
14,955
|
|
||
Total current assets
|
1,034,138
|
|
|
1,087,673
|
|
||
Long-term portion of customer accounts receivable, net of allowances (includes VIE balance of $231,036 and $320,382, respectively)
|
616,665
|
|
|
615,904
|
|
||
Property and equipment, net
|
144,747
|
|
|
159,202
|
|
||
Deferred income taxes
|
72,554
|
|
|
71,442
|
|
||
Other assets
|
6,285
|
|
|
6,913
|
|
||
Total assets
|
$
|
1,874,389
|
|
|
$
|
1,941,134
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Current maturities of long-term debt and capital lease obligations (includes VIE balance of $64,952 and $0 respectively)
|
$
|
65,651
|
|
|
$
|
849
|
|
Accounts payable
|
109,738
|
|
|
101,612
|
|
||
Accrued compensation and related expenses
|
16,912
|
|
|
13,325
|
|
||
Accrued expenses
|
45,491
|
|
|
26,456
|
|
||
Income taxes payable
|
2,513
|
|
|
3,318
|
|
||
Deferred revenues and other credits
|
22,018
|
|
|
21,821
|
|
||
Total current liabilities
|
262,323
|
|
|
167,381
|
|
||
Deferred rent
|
87,152
|
|
|
87,957
|
|
||
Long-term debt and capital lease obligations (includes VIE balance of $396,010 and $745,581, respectively)
|
973,278
|
|
|
1,144,393
|
|
||
Other long-term liabilities
|
22,245
|
|
|
23,613
|
|
||
Total liabilities
|
1,344,998
|
|
|
1,423,344
|
|
||
Commitments and contingencies
|
|
|
|
|
|
||
Stockholders' equity:
|
|
|
|
|
|
||
Preferred stock ($0.01 par value, 1,000,000 shares authorized; none issued or outstanding)
|
—
|
|
|
—
|
|
||
Common stock ($0.01 par value, 100,000,000 shares authorized; 31,365,028 and 30,961,898 shares issued, respectively)
|
314
|
|
|
310
|
|
||
Additional paid-in capital
|
98,611
|
|
|
90,276
|
|
||
Retained earnings
|
430,466
|
|
|
427,204
|
|
||
Total stockholders' equity
|
529,391
|
|
|
517,790
|
|
||
Total liabilities and stockholders' equity
|
$
|
1,874,389
|
|
|
$
|
1,941,134
|
|
|
Three Months Ended
October 31, |
|
Nine Months Ended
October 31, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Product sales
|
$
|
263,786
|
|
|
$
|
278,056
|
|
|
$
|
774,741
|
|
|
$
|
864,269
|
|
Repair service agreement commissions
|
24,488
|
|
|
26,354
|
|
|
72,703
|
|
|
82,849
|
|
||||
Service revenues
|
3,534
|
|
|
3,623
|
|
|
10,062
|
|
|
11,456
|
|
||||
Total net sales
|
291,808
|
|
|
308,033
|
|
|
857,506
|
|
|
958,574
|
|
||||
Finance charges and other revenues
|
81,364
|
|
|
68,740
|
|
|
238,139
|
|
|
205,469
|
|
||||
Total revenues
|
373,172
|
|
|
376,773
|
|
|
1,095,645
|
|
|
1,164,043
|
|
||||
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
||||||
Cost of goods sold
|
175,591
|
|
|
192,374
|
|
|
519,847
|
|
|
605,709
|
|
||||
Selling, general and administrative expenses
|
114,355
|
|
|
114,457
|
|
|
332,524
|
|
|
347,550
|
|
||||
Provision for bad debts
|
56,512
|
|
|
51,564
|
|
|
161,891
|
|
|
169,978
|
|
||||
Charges and credits
|
5,861
|
|
|
1,987
|
|
|
11,156
|
|
|
5,408
|
|
||||
Total costs and expenses
|
352,319
|
|
|
360,382
|
|
|
1,025,418
|
|
|
1,128,645
|
|
||||
Operating income
|
20,853
|
|
|
16,391
|
|
|
70,227
|
|
|
35,398
|
|
||||
Interest expense
|
18,095
|
|
|
23,470
|
|
|
62,142
|
|
|
73,504
|
|
||||
Loss on extinguishment of debt
|
461
|
|
|
—
|
|
|
2,907
|
|
|
—
|
|
||||
Income (loss) before income taxes
|
2,297
|
|
|
(7,079
|
)
|
|
5,178
|
|
|
(38,106
|
)
|
||||
Provision (benefit) for income taxes
|
728
|
|
|
(3,264
|
)
|
|
1,916
|
|
|
(12,618
|
)
|
||||
Net income (loss)
|
$
|
1,569
|
|
|
$
|
(3,815
|
)
|
|
$
|
3,262
|
|
|
$
|
(25,488
|
)
|
Income (loss) per share:
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
$
|
0.05
|
|
|
$
|
(0.12
|
)
|
|
$
|
0.10
|
|
|
$
|
(0.83
|
)
|
Diluted
|
$
|
0.05
|
|
|
$
|
(0.12
|
)
|
|
$
|
0.10
|
|
|
$
|
(0.83
|
)
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
31,292,913
|
|
|
30,816,319
|
|
|
31,121,177
|
|
|
30,736,636
|
|
||||
Diluted
|
31,764,594
|
|
|
30,816,319
|
|
|
31,457,420
|
|
|
30,736,636
|
|
|
Nine Months Ended October 31,
|
||||||
|
2017
|
|
2016
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income (loss)
|
$
|
3,262
|
|
|
$
|
(25,488
|
)
|
Adjustments to reconcile net income (loss) to net cash from operating activities:
|
|
|
|
|
|
||
Depreciation
|
23,138
|
|
|
21,209
|
|
||
Loss from retirement of leasehold improvement
|
—
|
|
|
1,980
|
|
||
Amortization of debt issuance costs
|
11,088
|
|
|
19,164
|
|
||
Provision for bad debts and uncollectible interest
|
192,354
|
|
|
200,349
|
|
||
Loss on extinguishment of debt
|
2,907
|
|
|
—
|
|
||
Stock-based compensation expense
|
5,899
|
|
|
3,928
|
|
||
Charges, net of credits, for store and facility closures
|
428
|
|
|
954
|
|
||
Deferred income taxes
|
(1,112
|
)
|
|
3,309
|
|
||
Loss (gain) on sale/write-off of fixed assets
|
5,636
|
|
|
(259
|
)
|
||
Tenant improvement allowances received from landlords
|
5,072
|
|
|
23,674
|
|
||
Change in operating assets and liabilities:
|
|
|
|
|
|
||
Customer accounts receivable
|
(126,654
|
)
|
|
(131,943
|
)
|
||
Other accounts receivable
|
5,641
|
|
|
13,281
|
|
||
Inventories
|
(70,623
|
)
|
|
(2,568
|
)
|
||
Other assets
|
964
|
|
|
1,483
|
|
||
Accounts payable
|
8,186
|
|
|
32,342
|
|
||
Accrued expenses
|
21,371
|
|
|
11,542
|
|
||
Income taxes
|
151
|
|
|
(355
|
)
|
||
Deferred rent, revenues and other credits
|
(4,971
|
)
|
|
10,409
|
|
||
Net cash provided by operating activities
|
82,737
|
|
|
183,011
|
|
||
Cash flows from investing activities:
|
|
|
|
|
|
||
Purchase of property and equipment
|
(11,995
|
)
|
|
(41,804
|
)
|
||
Proceeds from sale of property
|
—
|
|
|
686
|
|
||
Net cash used in investing activities
|
(11,995
|
)
|
|
(41,118
|
)
|
||
Cash flows from financing activities:
|
|
|
|
|
|
||
Proceeds from issuance of asset-backed notes
|
469,814
|
|
|
1,067,850
|
|
||
Payments on asset-backed notes
|
(816,243
|
)
|
|
(736,266
|
)
|
||
Changes in restricted cash balances
|
39,599
|
|
|
(87,900
|
)
|
||
Borrowings from revolving credit facility
|
1,257,052
|
|
|
529,352
|
|
||
Payments on revolving credit facility
|
(1,082,552
|
)
|
|
(858,559
|
)
|
||
Borrowings on warehouse facility
|
79,940
|
|
|
—
|
|
||
Payments on warehouse facility
|
(23,066
|
)
|
|
—
|
|
||
Payment of debt issuance costs and amendment fees
|
(8,172
|
)
|
|
(9,775
|
)
|
||
Proceeds from stock issued under employee benefit plans
|
3,011
|
|
|
824
|
|
||
Other
|
(949
|
)
|
|
(608
|
)
|
||
Net cash used in financing activities
|
(81,566
|
)
|
|
(95,082
|
)
|
||
Net change in cash and cash equivalents
|
(10,824
|
)
|
|
46,811
|
|
||
Cash and cash equivalents, beginning of period
|
23,566
|
|
|
12,254
|
|
||
Cash and cash equivalents, end of period
|
$
|
12,742
|
|
|
$
|
59,065
|
|
Non-cash investing and financing activities:
|
|
|
|
||||
Capital lease asset additions and related obligations
|
$
|
3,196
|
|
|
$
|
—
|
|
Property and equipment purchases not yet paid
|
$
|
1,021
|
|
|
$
|
1,805
|
|
Supplemental cash flow data:
|
|
|
|
||||
Cash interest paid
|
$
|
44,561
|
|
|
$
|
53,074
|
|
Cash income taxes paid (refunded), net
|
$
|
2,878
|
|
|
$
|
(15,624
|
)
|
|
Three Months Ended
October 31, |
|
Nine Months Ended
October 31, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Restricted stock awards ("RSUs")
(1)
|
2,740
|
|
|
14,502
|
|
|
646,033
|
|
|
343,369
|
|
||||
Performance stock awards ("PSUs")
(2)
|
—
|
|
|
—
|
|
|
501,012
|
|
|
131,759
|
|
||||
Total stock awards granted
|
2,740
|
|
|
14,502
|
|
|
1,147,045
|
|
|
475,128
|
|
||||
Aggregate grant date fair value (in thousands)
|
$
|
50
|
|
|
$
|
96
|
|
|
$
|
14,596
|
|
|
$
|
5,046
|
|
|
Three Months Ended
October 31, |
|
Nine Months Ended
October 31, |
||||||||
(in thousands)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Weighted-average common shares outstanding - Basic
|
31,292,913
|
|
|
30,816,319
|
|
|
31,121,177
|
|
|
30,736,636
|
|
Dilutive effect of stock options and restricted stock units
|
471,681
|
|
|
—
|
|
|
336,243
|
|
|
—
|
|
Weighted-average common shares outstanding - Diluted
|
31,764,594
|
|
|
30,816,319
|
|
|
31,457,420
|
|
|
30,736,636
|
|
•
|
Level 1 – Inputs represent unadjusted quoted prices in active markets for identical assets or liabilities.
|
•
|
Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (for example, quoted market prices for similar assets or liabilities in active markets or quoted market prices for identical assets or liabilities in markets not considered to be active, inputs other than quoted prices that are observable for the asset or liability, or market-corroborated inputs).
|
•
|
Level 3 – Inputs that are not observable from objective sources such as our internally developed assumptions used in pricing an asset or liability (for example, an estimate of future cash flows used in our internally developed present value of future cash flows model that underlies the fair-value measurement).
|
|
Total Outstanding Balance
|
||||||||||||||||||||||
|
Customer Accounts Receivable
|
|
60 Days Past Due
(1)
|
|
Re-aged
(1)
|
||||||||||||||||||
(in thousands)
|
October 31,
2017 |
|
January 31,
2017 |
|
October 31, 2017
(2)
|
|
January 31,
2017 |
|
October 31, 2017
(3)
|
|
January 31,
2017 |
||||||||||||
Customer accounts receivable
|
$
|
1,341,939
|
|
|
$
|
1,417,581
|
|
|
$
|
110,382
|
|
|
$
|
127,747
|
|
|
$
|
208,047
|
|
|
$
|
111,585
|
|
Restructured accounts
|
146,967
|
|
|
138,858
|
|
|
37,484
|
|
|
38,010
|
|
|
146,967
|
|
|
138,858
|
|
||||||
Total customer portfolio balance
|
1,488,906
|
|
|
1,556,439
|
|
|
$
|
147,866
|
|
|
$
|
165,757
|
|
|
$
|
355,014
|
|
|
$
|
250,443
|
|
||
Allowance for uncollectible accounts
|
(202,906
|
)
|
|
(210,175
|
)
|
|
|
|
|
|
|
|
|
||||||||||
Allowances for no-interest option credit programs
|
(19,616
|
)
|
|
(21,207
|
)
|
|
|
|
|
|
|
|
|
||||||||||
Deferred fees and origination costs, net
|
(14,019
|
)
|
|
(6,991
|
)
|
|
|
|
|
|
|
|
|
||||||||||
Total customer accounts receivable, net
|
1,252,365
|
|
|
1,318,066
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term portion of customer accounts receivable, net
|
(635,700
|
)
|
|
(702,162
|
)
|
|
|
|
|
|
|
|
|
||||||||||
Long-term portion of customer accounts receivable, net
|
$
|
616,665
|
|
|
$
|
615,904
|
|
|
|
|
|
|
|
|
|
||||||||
Securitized receivables held by the VIEs
|
$
|
712,727
|
|
|
$
|
1,015,837
|
|
|
$
|
99,763
|
|
|
$
|
156,344
|
|
|
$
|
246,333
|
|
|
$
|
238,375
|
|
Receivables not held by the VIEs
|
776,179
|
|
|
540,602
|
|
|
48,103
|
|
|
9,413
|
|
|
108,681
|
|
|
12,068
|
|
||||||
Total customer portfolio balance
|
$
|
1,488,906
|
|
|
$
|
1,556,439
|
|
|
$
|
147,866
|
|
|
$
|
165,757
|
|
|
$
|
355,014
|
|
|
$
|
250,443
|
|
(1)
|
Due to the fact that an account can become past due after having been re-aged, accounts could be represented as both past due and re-aged. As of
October 31, 2017
and
January 31, 2017
, the amounts included within both 60 days past due and re-aged were
$64.8 million
and
$66.7 million
, respectively. As of
October 31, 2017
and
January 31, 2017
, the total customer portfolio balance past due one day or greater was
$394.5 million
and
$406.1 million
, respectively. These amounts include the
60 days
past due balances shown.
|
(2)
|
The balance of accounts 60 days past due as of October 31, 2017 reflects the impact of first time re-ages related to customers within FEMA-designated Hurricane Harvey disaster areas.
|
(3)
|
The re-aged receivable balance as of October 31, 2017 includes
$71.8 million
in first time re-ages related to customers within FEMA-designated Hurricane Harvey disaster areas.
|
|
Nine Months Ended October 31, 2017
|
|
Nine Months Ended October 31, 2016
|
||||||||||||||||||||
(in thousands)
|
Customer
Accounts
Receivable
|
|
Restructured
Accounts
|
|
Total
|
|
Customer
Accounts
Receivable
|
|
Restructured
Accounts
|
|
Total
|
||||||||||||
Allowance at beginning of period
|
$
|
158,992
|
|
|
$
|
51,183
|
|
|
$
|
210,175
|
|
|
$
|
149,226
|
|
|
$
|
41,764
|
|
|
$
|
190,990
|
|
Provision
(1)
|
139,406
|
|
|
52,948
|
|
|
192,354
|
|
|
156,063
|
|
|
44,286
|
|
|
200,349
|
|
||||||
Principal charge-offs
(2)
|
(133,033
|
)
|
|
(44,657
|
)
|
|
(177,690
|
)
|
|
(132,028
|
)
|
|
(31,802
|
)
|
|
(163,830
|
)
|
||||||
Interest charge-offs
|
(21,884
|
)
|
|
(7,346
|
)
|
|
(29,230
|
)
|
|
(22,400
|
)
|
|
(5,405
|
)
|
|
(27,805
|
)
|
||||||
Recoveries
(2)
|
5,463
|
|
|
1,834
|
|
|
7,297
|
|
|
3,727
|
|
|
899
|
|
|
4,626
|
|
||||||
Allowance at end of period
|
$
|
148,944
|
|
|
$
|
53,962
|
|
|
$
|
202,906
|
|
|
$
|
154,588
|
|
|
$
|
49,742
|
|
|
$
|
204,330
|
|
Average total customer portfolio balance
|
$
|
1,352,137
|
|
|
$
|
141,155
|
|
|
$
|
1,493,292
|
|
|
$
|
1,422,473
|
|
|
$
|
126,493
|
|
|
$
|
1,548,966
|
|
(1)
|
Includes provision for uncollectible interest, which is included in finance charges and other revenues.
|
(2)
|
Charge-offs include the principal amount of losses (excluding accrued and unpaid interest). Recoveries include principal collections of previously charged-off balances. Net charge-offs are calculated as the net of principal charge-offs and recoveries.
|
|
Nine Months Ended
October 31, |
||||||
(in thousands)
|
2017
|
|
2016
|
||||
Balance at beginning of period
|
$
|
1,874
|
|
|
$
|
1,866
|
|
Accrual for additional closures
|
1,314
|
|
|
954
|
|
||
Adjustments
|
16
|
|
|
(74
|
)
|
||
Cash payments, net of sublease income
|
(2,010
|
)
|
|
(767
|
)
|
||
Balance at end of period
|
1,194
|
|
|
1,979
|
|
||
Current portion, included in accrued expenses
|
(170
|
)
|
|
(923
|
)
|
||
Long-term portion, included in other long-term liabilities
|
$
|
1,024
|
|
|
$
|
1,056
|
|
|
Three Months Ended
October 31, |
|
Nine Months Ended
October 31, |
||||||||||||
(in thousands)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Store and facility closure costs
|
$
|
—
|
|
|
$
|
954
|
|
|
$
|
1,349
|
|
|
$
|
954
|
|
Impairments from disposals
|
—
|
|
|
595
|
|
|
—
|
|
|
1,980
|
|
||||
Legal and professional fees related to the exploration of strategic alternatives and securities-related litigation
|
—
|
|
|
158
|
|
|
34
|
|
|
747
|
|
||||
Employee severance
|
—
|
|
|
280
|
|
|
1,317
|
|
|
1,493
|
|
||||
Indirect tax audit reserve
|
—
|
|
|
—
|
|
|
2,595
|
|
|
—
|
|
||||
Write-off of capitalized software costs
|
5,861
|
|
|
—
|
|
|
5,861
|
|
|
—
|
|
||||
Executive management transition costs
|
—
|
|
|
—
|
|
|
—
|
|
|
234
|
|
||||
|
$
|
5,861
|
|
|
$
|
1,987
|
|
|
$
|
11,156
|
|
|
$
|
5,408
|
|
|
Three Months Ended
October 31, |
|
Nine Months Ended
October 31, |
||||||||||||
(in thousands)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Interest income and fees
|
$
|
74,144
|
|
|
$
|
58,404
|
|
|
$
|
210,765
|
|
|
$
|
173,527
|
|
Insurance income
|
7,125
|
|
|
9,999
|
|
|
27,107
|
|
|
30,674
|
|
||||
Other revenues
|
95
|
|
|
337
|
|
|
267
|
|
|
1,268
|
|
||||
|
$
|
81,364
|
|
|
$
|
68,740
|
|
|
$
|
238,139
|
|
|
$
|
205,469
|
|
(in thousands)
|
October 31,
2017 |
|
January 31,
2017 |
||||
Revolving credit facility
|
$
|
352,000
|
|
|
$
|
177,500
|
|
Senior Notes
|
227,000
|
|
|
227,000
|
|
||
2015 VIE Asset-backed Class A notes
|
—
|
|
|
12,166
|
|
||
2015 VIE Asset-backed Class B notes
|
—
|
|
|
165,900
|
|
||
2016-A VIE Asset-backed Class A notes
|
—
|
|
|
64,732
|
|
||
2016-A VIE Asset-backed Class B notes
|
—
|
|
|
70,510
|
|
||
2016-A VIE Asset-backed Class C notes
|
—
|
|
|
70,510
|
|
||
2016-B VIE Asset-backed Class A notes
|
8,563
|
|
|
256,513
|
|
||
2016-B VIE Asset-backed Class B notes
|
111,960
|
|
|
111,960
|
|
||
2017-A VIE Asset-backed Class A notes
|
129,583
|
|
|
—
|
|
||
2017-A VIE Asset-backed Class B notes
|
106,270
|
|
|
—
|
|
||
2017-A VIE Asset-backed Class C notes
|
50,340
|
|
|
—
|
|
||
2017 Warehouse Class A Notes
|
56,874
|
|
|
—
|
|
||
Capital lease obligations
|
5,213
|
|
|
2,393
|
|
||
Total debt and capital lease obligations
|
1,047,803
|
|
|
1,159,184
|
|
||
Less:
|
|
|
|
||||
Discount on debt
|
(2,668
|
)
|
|
(3,089
|
)
|
||
Deferred debt issuance costs
|
(6,206
|
)
|
|
(10,853
|
)
|
||
Current maturities of long-term debt and capital lease obligations
|
(65,651
|
)
|
|
(849
|
)
|
||
Long-term debt and capital lease obligations
|
$
|
973,278
|
|
|
$
|
1,144,393
|
|
Asset-Backed Notes
|
|
Original Principal Amount
|
|
Net Proceeds
(1)
|
|
Issuance Date
|
|
Maturity Date
|
|
Contractual Interest Rate
|
|
Effective Interest Rate
(2)
|
||||
2016-B Class A Notes
|
|
391,840
|
|
|
380,033
|
|
|
10/6/2016
|
|
10/15/2018
|
|
3.73%
|
|
5.47%
|
||
2016-B Class B Notes
|
|
111,960
|
|
|
108,586
|
|
|
10/6/2016
|
|
3/15/2019
|
|
7.34%
|
|
8.03%
|
||
2017-A Class A Notes
|
|
313,220
|
|
|
304,451
|
|
|
4/19/2017
|
|
7/15/2019
|
|
2.73%
|
|
4.96%
|
||
2017-A Class B Notes
|
|
106,270
|
|
|
103,300
|
|
|
4/19/2017
|
|
2/15/2020
|
|
5.11%
|
|
5.83%
|
||
2017-A Class C Notes
|
|
50,340
|
|
|
48,919
|
|
|
4/19/2017
|
|
10/15/2021
|
|
7.40%
|
|
7.91%
|
||
2017 Warehouse Class A Notes
|
|
79,940
|
|
|
78,777
|
|
|
8/15/2017
|
|
8/15/2018
|
|
1M CP + 4%
(3)
|
|
7.02%
|
||
Total
|
|
$
|
1,053,570
|
|
|
$
|
1,024,066
|
|
|
|
|
|
|
|
|
|
(1)
|
After giving effect to debt issuance costs and restricted cash held by the VIEs.
|
(2)
|
For the
nine
months ended
October 31, 2017
, and inclusive of changes in timing of actual and expected cash flows.
|
(3)
|
The rate on the 2017 Warehouse Class A Notes is defined as the one-month commercial paper rate, representing the purchaser's commercial paper cost, plus a
4%
fixed margin.
|
|
Actual
|
|
Required
Minimum/
Maximum
|
Interest Coverage Ratio must equal or exceed minimum
|
1.75:1.00
|
|
1.10:1.00
|
Leverage Ratio must not exceed maximum
|
2.49:1.00
|
|
4.00:1.00
|
ABS Excluded Leverage Ratio must not exceed maximum
|
1.71:1.00
|
|
2.00:1.00
|
Cash Recovery Percent must exceed stated amount
|
4.80%
|
|
4.45%
|
Capital Expenditures, net, must not exceed maximum
|
$1.0 million
|
|
$75.0 million
|
(in thousands)
|
October 31,
2017 |
|
January 31,
2017 |
||||
Assets:
|
|
|
|
||||
Restricted cash
|
$
|
71,099
|
|
|
$
|
110,698
|
|
Due from Conn's, Inc., net
|
2,387
|
|
|
7,368
|
|
||
Customer accounts receivable:
|
|
|
|
||||
Customer accounts receivable
|
603,584
|
|
|
884,367
|
|
||
Restructured accounts
|
109,143
|
|
|
131,470
|
|
||
Allowance for uncollectible accounts
|
(109,759
|
)
|
|
(150,435
|
)
|
||
Allowances for no-interest option credit programs
|
(8,661
|
)
|
|
(15,912
|
)
|
||
Deferred fees and origination costs
|
(3,185
|
)
|
|
—
|
|
||
Total customer accounts receivable, net
|
591,122
|
|
|
849,490
|
|
||
Total assets
|
$
|
664,608
|
|
|
$
|
967,556
|
|
Liabilities:
|
|
|
|
||||
Accrued expenses
|
$
|
3,602
|
|
|
$
|
6,525
|
|
Other liabilities
|
6,362
|
|
|
6,691
|
|
||
Current maturities of long-term debt:
|
|
|
|
||||
2016-B Class A Notes
|
8,563
|
|
|
|
|||
2017-A Warehouse Class A Notes
|
56,874
|
|
|
|
|||
Deferred debt issuance costs
|
(485
|
)
|
|
|
|||
|
64,952
|
|
|
—
|
|
||
Long-term debt:
|
|
|
|
||||
2015 Class A Notes
|
—
|
|
|
12,166
|
|
||
2015 Class B Notes
|
—
|
|
|
165,900
|
|
||
2016-A Class A Notes
|
—
|
|
|
64,732
|
|
||
2016-A Class B Notes
|
—
|
|
|
70,510
|
|
||
2016-A Class C Notes
|
—
|
|
|
70,510
|
|
||
2016-B Class A Notes
|
—
|
|
|
256,513
|
|
||
2016-B Class B Notes
|
111,960
|
|
|
111,960
|
|
||
2017-A Class A Notes
|
129,583
|
|
|
—
|
|
||
2017-A Class B Notes
|
106,270
|
|
|
—
|
|
||
2017-A Class C Notes
|
50,340
|
|
|
—
|
|
||
|
398,153
|
|
|
752,291
|
|
||
Less: deferred debt issuance costs
|
(2,143
|
)
|
|
(6,710
|
)
|
||
Total long-term debt
|
396,010
|
|
|
745,581
|
|
||
Total liabilities
|
$
|
470,926
|
|
|
$
|
758,797
|
|
|
Three Months Ended October 31, 2017
|
|
Three Months Ended October 31, 2016
|
||||||||||||||||||||
(in thousands)
|
Retail
|
|
Credit
|
|
Total
|
|
Retail
|
|
Credit
|
|
Total
|
||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Furniture and mattress
|
$
|
97,146
|
|
|
$
|
—
|
|
|
$
|
97,146
|
|
|
$
|
98,898
|
|
|
$
|
—
|
|
|
$
|
98,898
|
|
Home appliance
|
83,837
|
|
|
—
|
|
|
83,837
|
|
|
85,785
|
|
|
—
|
|
|
85,785
|
|
||||||
Consumer electronic
|
58,062
|
|
|
—
|
|
|
58,062
|
|
|
65,670
|
|
|
—
|
|
|
65,670
|
|
||||||
Home office
|
20,295
|
|
|
—
|
|
|
20,295
|
|
|
22,747
|
|
|
—
|
|
|
22,747
|
|
||||||
Other
|
4,446
|
|
|
—
|
|
|
4,446
|
|
|
4,956
|
|
|
—
|
|
|
4,956
|
|
||||||
Product sales
|
263,786
|
|
|
—
|
|
|
263,786
|
|
|
278,056
|
|
|
—
|
|
|
278,056
|
|
||||||
Repair service agreement commissions
|
24,488
|
|
|
—
|
|
|
24,488
|
|
|
26,354
|
|
|
—
|
|
|
26,354
|
|
||||||
Service revenues
|
3,534
|
|
|
—
|
|
|
3,534
|
|
|
3,623
|
|
|
—
|
|
|
3,623
|
|
||||||
Total net sales
|
291,808
|
|
|
—
|
|
|
291,808
|
|
|
308,033
|
|
|
—
|
|
|
308,033
|
|
||||||
Finance charges and other revenues
|
95
|
|
|
81,269
|
|
|
81,364
|
|
|
337
|
|
|
68,403
|
|
|
68,740
|
|
||||||
Total revenues
|
291,903
|
|
|
81,269
|
|
|
373,172
|
|
|
308,370
|
|
|
68,403
|
|
|
376,773
|
|
||||||
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cost of goods sold
|
175,591
|
|
|
—
|
|
|
175,591
|
|
|
192,374
|
|
|
—
|
|
|
192,374
|
|
||||||
Selling, general and administrative expenses
(1)
|
80,676
|
|
|
33,679
|
|
|
114,355
|
|
|
79,777
|
|
|
34,680
|
|
|
114,457
|
|
||||||
Provision for bad debts
|
189
|
|
|
56,323
|
|
|
56,512
|
|
|
286
|
|
|
51,278
|
|
|
51,564
|
|
||||||
Charges and credits
|
5,861
|
|
|
—
|
|
|
5,861
|
|
|
1,987
|
|
|
—
|
|
|
1,987
|
|
||||||
Total costs and expense
|
262,317
|
|
|
90,002
|
|
|
352,319
|
|
|
274,424
|
|
|
85,958
|
|
|
360,382
|
|
||||||
Operating income (loss)
|
29,586
|
|
|
(8,733
|
)
|
|
20,853
|
|
|
33,946
|
|
|
(17,555
|
)
|
|
16,391
|
|
||||||
Interest expense
|
—
|
|
|
18,095
|
|
|
18,095
|
|
|
—
|
|
|
23,470
|
|
|
23,470
|
|
||||||
Loss on extinguishment of debt
|
—
|
|
|
461
|
|
|
461
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Income (loss) before income taxes
|
$
|
29,586
|
|
|
$
|
(27,289
|
)
|
|
$
|
2,297
|
|
|
$
|
33,946
|
|
|
$
|
(41,025
|
)
|
|
$
|
(7,079
|
)
|
|
Nine Months Ended October 31, 2017
|
|
Nine Months Ended October 31, 2016
|
||||||||||||||||||||
(in thousands)
|
Retail
|
|
Credit
|
|
Total
|
|
Retail
|
|
Credit
|
|
Total
|
||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Furniture and mattress
|
$
|
286,886
|
|
|
$
|
—
|
|
|
$
|
286,886
|
|
|
$
|
309,766
|
|
|
$
|
—
|
|
|
$
|
309,766
|
|
Home appliance
|
253,044
|
|
|
—
|
|
|
253,044
|
|
|
275,048
|
|
|
—
|
|
|
275,048
|
|
||||||
Consumer electronic
|
166,761
|
|
|
—
|
|
|
166,761
|
|
|
197,270
|
|
|
—
|
|
|
197,270
|
|
||||||
Home office
|
54,945
|
|
|
—
|
|
|
54,945
|
|
|
66,921
|
|
|
—
|
|
|
66,921
|
|
||||||
Other
|
13,105
|
|
|
—
|
|
|
13,105
|
|
|
15,264
|
|
|
—
|
|
|
15,264
|
|
||||||
Product sales
|
774,741
|
|
|
—
|
|
|
774,741
|
|
|
864,269
|
|
|
—
|
|
|
864,269
|
|
||||||
Repair service agreement commissions
|
72,703
|
|
|
—
|
|
|
72,703
|
|
|
82,849
|
|
|
—
|
|
|
82,849
|
|
||||||
Service revenues
|
10,062
|
|
|
—
|
|
|
10,062
|
|
|
11,456
|
|
|
—
|
|
|
11,456
|
|
||||||
Total net sales
|
857,506
|
|
|
—
|
|
|
857,506
|
|
|
958,574
|
|
|
—
|
|
|
958,574
|
|
||||||
Finance charges and other revenues
|
267
|
|
|
237,872
|
|
|
238,139
|
|
|
1,268
|
|
|
204,201
|
|
|
205,469
|
|
||||||
Total revenues
|
857,773
|
|
|
237,872
|
|
|
1,095,645
|
|
|
959,842
|
|
|
204,201
|
|
|
1,164,043
|
|
||||||
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cost of goods sold
|
519,847
|
|
|
—
|
|
|
519,847
|
|
|
605,709
|
|
|
—
|
|
|
605,709
|
|
||||||
Selling, general and administrative expenses
(1)
|
233,290
|
|
|
99,234
|
|
|
332,524
|
|
|
244,598
|
|
|
102,952
|
|
|
347,550
|
|
||||||
Provision for bad debts
|
584
|
|
|
161,307
|
|
|
161,891
|
|
|
811
|
|
|
169,167
|
|
|
169,978
|
|
||||||
Charges and credits
|
11,156
|
|
|
—
|
|
|
11,156
|
|
|
5,408
|
|
|
—
|
|
|
5,408
|
|
||||||
Total costs and expense
|
764,877
|
|
|
260,541
|
|
|
1,025,418
|
|
|
856,526
|
|
|
272,119
|
|
|
1,128,645
|
|
||||||
Operating income (loss)
|
92,896
|
|
|
(22,669
|
)
|
|
70,227
|
|
|
103,316
|
|
|
(67,918
|
)
|
|
35,398
|
|
||||||
Interest expense
|
—
|
|
|
62,142
|
|
|
62,142
|
|
|
—
|
|
|
73,504
|
|
|
73,504
|
|
||||||
Loss on extinguishment of debt
|
—
|
|
|
2,907
|
|
|
2,907
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Income (loss) before income taxes
|
$
|
92,896
|
|
|
$
|
(87,718
|
)
|
|
$
|
5,178
|
|
|
$
|
103,316
|
|
|
$
|
(141,422
|
)
|
|
$
|
(38,106
|
)
|
(1)
|
For the
three months ended October 31, 2017
and
2016
, the amount of corporate overhead allocated to each segment reflected in selling, general and administrative expense was
$7.3 million
and
$6.7 million
, respectively. For the
three months ended October 31, 2017
and
2016
, the amount of reimbursement made to the retail segment by the credit segment was
$9.3 million
and
$9.6 million
, respectively. For the
nine months ended October 31, 2017
and
2016
, the amount of corporate overhead allocated to each segment reflected in selling, general and administrative expense was
$21.5 million
and
$18.9 million
, respectively. For the
nine months ended October 31, 2017
and
2016
, the amount of reimbursement made to the retail segment by the credit segment was
$27.9 million
and
$29.0 million
, respectively.
|
10.
|
Guarantor Financial Information
|
(in thousands)
|
Conn's, Inc.
|
|
Guarantors
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
12,742
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12,742
|
|
Restricted cash
|
—
|
|
|
—
|
|
|
71,099
|
|
|
—
|
|
|
71,099
|
|
|||||
Customer accounts receivable, net of allowance
|
—
|
|
|
275,614
|
|
|
360,086
|
|
|
—
|
|
|
635,700
|
|
|||||
Other accounts receivable
|
—
|
|
|
63,203
|
|
|
—
|
|
|
—
|
|
|
63,203
|
|
|||||
Inventories
|
—
|
|
|
235,479
|
|
|
—
|
|
|
—
|
|
|
235,479
|
|
|||||
Other current assets
|
—
|
|
|
18,865
|
|
|
2,387
|
|
|
(5,337
|
)
|
|
15,915
|
|
|||||
Total current assets
|
—
|
|
|
605,903
|
|
|
433,572
|
|
|
(5,337
|
)
|
|
1,034,138
|
|
|||||
Investment in and advances to subsidiaries
|
682,391
|
|
|
193,682
|
|
|
—
|
|
|
(876,073
|
)
|
|
—
|
|
|||||
Long-term portion of customer accounts receivable, net of allowance
|
—
|
|
|
385,629
|
|
|
231,036
|
|
|
—
|
|
|
616,665
|
|
|||||
Property and equipment, net
|
—
|
|
|
144,747
|
|
|
—
|
|
|
—
|
|
|
144,747
|
|
|||||
Deferred income taxes
|
72,554
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
72,554
|
|
|||||
Other assets
|
—
|
|
|
6,285
|
|
|
—
|
|
|
—
|
|
|
6,285
|
|
|||||
Total assets
|
$
|
754,945
|
|
|
$
|
1,336,246
|
|
|
$
|
664,608
|
|
|
$
|
(881,410
|
)
|
|
$
|
1,874,389
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Current maturities of capital lease obligations
|
$
|
—
|
|
|
$
|
699
|
|
|
$
|
64,952
|
|
|
$
|
—
|
|
|
$
|
65,651
|
|
Accounts payable
|
—
|
|
|
109,738
|
|
|
—
|
|
|
—
|
|
|
109,738
|
|
|||||
Accrued expenses
|
4,800
|
|
|
59,463
|
|
|
3,602
|
|
|
(2,949
|
)
|
|
64,916
|
|
|||||
Other current liabilities
|
—
|
|
|
21,342
|
|
|
3,063
|
|
|
(2,387
|
)
|
|
22,018
|
|
|||||
Total current liabilities
|
4,800
|
|
|
191,242
|
|
|
71,617
|
|
|
(5,336
|
)
|
|
262,323
|
|
|||||
Deferred rent
|
—
|
|
|
87,152
|
|
|
—
|
|
|
—
|
|
|
87,152
|
|
|||||
Long-term debt and capital lease obligations
|
220,754
|
|
|
356,514
|
|
|
396,010
|
|
|
—
|
|
|
973,278
|
|
|||||
Other long-term liabilities
|
—
|
|
|
18,946
|
|
|
3,299
|
|
|
—
|
|
|
22,245
|
|
|||||
Total liabilities
|
225,554
|
|
|
653,854
|
|
|
470,926
|
|
|
(5,336
|
)
|
|
1,344,998
|
|
|||||
Total stockholders' equity
|
529,391
|
|
|
682,391
|
|
|
193,682
|
|
|
(876,073
|
)
|
|
529,391
|
|
|||||
Total liabilities and stockholders' equity
|
$
|
754,945
|
|
|
$
|
1,336,245
|
|
|
$
|
664,608
|
|
|
$
|
(881,409
|
)
|
|
$
|
1,874,389
|
|
(in thousands)
|
Conn's, Inc.
|
|
Guarantors
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
23,566
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
23,566
|
|
Restricted cash
|
—
|
|
|
—
|
|
|
110,698
|
|
|
—
|
|
|
110,698
|
|
|||||
Customer accounts receivable, net of allowance
|
—
|
|
|
173,054
|
|
|
529,108
|
|
|
—
|
|
|
702,162
|
|
|||||
Other accounts receivable
|
—
|
|
|
69,286
|
|
|
—
|
|
|
—
|
|
|
69,286
|
|
|||||
Inventories
|
—
|
|
|
164,856
|
|
|
—
|
|
|
—
|
|
|
164,856
|
|
|||||
Other current assets
|
—
|
|
|
21,505
|
|
|
7,368
|
|
|
(11,768
|
)
|
|
17,105
|
|
|||||
Total current assets
|
—
|
|
|
452,267
|
|
|
647,174
|
|
|
(11,768
|
)
|
|
1,087,673
|
|
|||||
Investment in and advances to subsidiaries
|
678,149
|
|
|
220,107
|
|
|
—
|
|
|
(898,256
|
)
|
|
—
|
|
|||||
Long-term portion of customer accounts receivable, net of allowance
|
—
|
|
|
295,522
|
|
|
320,382
|
|
|
—
|
|
|
615,904
|
|
|||||
Property and equipment, net
|
—
|
|
|
159,202
|
|
|
—
|
|
|
—
|
|
|
159,202
|
|
|||||
Deferred income taxes
|
71,442
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
71,442
|
|
|||||
Other assets
|
—
|
|
|
6,913
|
|
|
—
|
|
|
—
|
|
|
6,913
|
|
|||||
Total assets
|
$
|
749,591
|
|
|
$
|
1,134,011
|
|
|
$
|
967,556
|
|
|
$
|
(910,024
|
)
|
|
$
|
1,941,134
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Current maturities of capital lease obligations
|
$
|
—
|
|
|
$
|
849
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
849
|
|
Accounts payable
|
—
|
|
|
101,612
|
|
|
—
|
|
|
—
|
|
|
101,612
|
|
|||||
Accrued expenses
|
686
|
|
|
40,287
|
|
|
6,525
|
|
|
(4,399
|
)
|
|
43,099
|
|
|||||
Other current liabilities
|
—
|
|
|
25,230
|
|
|
3,961
|
|
|
(7,370
|
)
|
|
21,821
|
|
|||||
Total current liabilities
|
686
|
|
|
167,978
|
|
|
10,486
|
|
|
(11,769
|
)
|
|
167,381
|
|
|||||
Deferred rent
|
—
|
|
|
87,957
|
|
|
—
|
|
|
—
|
|
|
87,957
|
|
|||||
Long-term debt and capital lease obligations
|
219,768
|
|
|
179,044
|
|
|
745,581
|
|
|
—
|
|
|
1,144,393
|
|
|||||
Other long-term liabilities
|
—
|
|
|
20,883
|
|
|
2,730
|
|
|
—
|
|
|
23,613
|
|
|||||
Total liabilities
|
220,454
|
|
|
455,862
|
|
|
758,797
|
|
|
(11,769
|
)
|
|
1,423,344
|
|
|||||
Total stockholders' equity
|
529,137
|
|
|
678,149
|
|
|
208,759
|
|
|
(898,255
|
)
|
|
517,790
|
|
|||||
Total liabilities and stockholders' equity
|
$
|
749,591
|
|
|
$
|
1,134,011
|
|
|
$
|
967,556
|
|
|
$
|
(910,024
|
)
|
|
$
|
1,941,134
|
|
(in thousands)
|
Conn's, Inc.
|
|
Guarantors
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total net sales
|
$
|
—
|
|
|
$
|
291,808
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
291,808
|
|
Finance charges and other revenues
|
—
|
|
|
45,228
|
|
|
36,136
|
|
|
—
|
|
|
81,364
|
|
|||||
Servicing fee revenue
|
—
|
|
|
18,178
|
|
|
—
|
|
|
(18,178
|
)
|
|
—
|
|
|||||
Total revenues
|
—
|
|
|
355,214
|
|
|
36,136
|
|
|
(18,178
|
)
|
|
373,172
|
|
|||||
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cost of goods sold
|
—
|
|
|
175,591
|
|
|
—
|
|
|
—
|
|
|
175,591
|
|
|||||
Selling, general and administrative expenses
|
—
|
|
|
125,355
|
|
|
7,178
|
|
|
(18,178
|
)
|
|
114,355
|
|
|||||
Provision for bad debts
|
—
|
|
|
44,454
|
|
|
12,058
|
|
|
—
|
|
|
56,512
|
|
|||||
Charges and credits
|
—
|
|
|
5,861
|
|
|
—
|
|
|
—
|
|
|
5,861
|
|
|||||
Total costs and expenses
|
—
|
|
|
351,261
|
|
|
19,236
|
|
|
(18,178
|
)
|
|
352,319
|
|
|||||
Operating income
|
—
|
|
|
3,953
|
|
|
16,900
|
|
|
—
|
|
|
20,853
|
|
|||||
Interest expense
|
4,443
|
|
|
4,979
|
|
|
8,673
|
|
|
—
|
|
|
18,095
|
|
|||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
461
|
|
|
—
|
|
|
461
|
|
|||||
Income (loss) before income taxes
|
(4,443
|
)
|
|
(1,026
|
)
|
|
7,766
|
|
|
—
|
|
|
2,297
|
|
|||||
Provision (benefit) for income taxes
|
(1,408
|
)
|
|
(324
|
)
|
|
2,460
|
|
|
—
|
|
|
728
|
|
|||||
Net income (loss) before consolidation
|
$
|
(3,035
|
)
|
|
$
|
(702
|
)
|
|
$
|
5,306
|
|
|
$
|
—
|
|
|
$
|
1,569
|
|
Income (loss) from consolidated subsidiaries (after tax)
|
$
|
4,742
|
|
|
$
|
1,988
|
|
|
$
|
—
|
|
|
$
|
(6,730
|
)
|
|
$
|
—
|
|
Consolidated net income (loss)
|
$
|
1,707
|
|
|
$
|
1,286
|
|
|
$
|
5,306
|
|
|
$
|
(6,730
|
)
|
|
$
|
1,569
|
|
(in thousands)
|
Conn's, Inc.
|
|
Guarantors
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total net sales
|
$
|
—
|
|
|
$
|
308,033
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
308,033
|
|
Finance charges and other revenues
|
—
|
|
|
22,326
|
|
|
46,414
|
|
|
—
|
|
|
68,740
|
|
|||||
Servicing fee revenue
|
—
|
|
|
15,073
|
|
|
—
|
|
|
(15,073
|
)
|
|
—
|
|
|||||
Total revenues
|
—
|
|
|
345,432
|
|
|
46,414
|
|
|
(15,073
|
)
|
|
376,773
|
|
|||||
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cost of goods sold
|
—
|
|
|
192,374
|
|
|
—
|
|
|
—
|
|
|
192,374
|
|
|||||
Selling, general and administrative expenses
|
—
|
|
|
114,457
|
|
|
15,073
|
|
|
(15,073
|
)
|
|
114,457
|
|
|||||
Provision for bad debts
|
—
|
|
|
31,672
|
|
|
19,892
|
|
|
—
|
|
|
51,564
|
|
|||||
Charges and credits
|
—
|
|
|
1,987
|
|
|
—
|
|
|
—
|
|
|
1,987
|
|
|||||
Total costs and expenses
|
—
|
|
|
340,490
|
|
|
34,965
|
|
|
(15,073
|
)
|
|
360,382
|
|
|||||
Operating income
|
—
|
|
|
4,942
|
|
|
11,449
|
|
|
—
|
|
|
16,391
|
|
|||||
Interest expense
|
4,447
|
|
|
3,876
|
|
|
15,147
|
|
|
—
|
|
|
23,470
|
|
|||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Income (loss) before income taxes
|
(4,447
|
)
|
|
1,066
|
|
|
(3,698
|
)
|
|
—
|
|
|
(7,079
|
)
|
|||||
Provision (benefit) for income taxes
|
(2,051
|
)
|
|
492
|
|
|
(1,705
|
)
|
|
—
|
|
|
(3,264
|
)
|
|||||
Net income (loss) before consolidation
|
$
|
(2,396
|
)
|
|
$
|
574
|
|
|
$
|
(1,993
|
)
|
|
$
|
—
|
|
|
$
|
(3,815
|
)
|
Income (loss) from consolidated subsidiaries (after tax)
|
$
|
(1,419
|
)
|
|
$
|
(1,993
|
)
|
|
$
|
—
|
|
|
$
|
3,412
|
|
|
$
|
—
|
|
Consolidated net income (loss)
|
$
|
(3,815
|
)
|
|
$
|
(1,419
|
)
|
|
$
|
(1,993
|
)
|
|
$
|
3,412
|
|
|
$
|
(3,815
|
)
|
(in thousands)
|
Conn's, Inc.
|
|
Guarantors
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total net sales
|
$
|
—
|
|
|
$
|
857,506
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
857,506
|
|
Finance charges and other revenues
|
—
|
|
|
122,305
|
|
|
115,834
|
|
|
—
|
|
|
238,139
|
|
|||||
Servicing fee revenue
|
—
|
|
|
46,010
|
|
|
—
|
|
|
(46,010
|
)
|
|
—
|
|
|||||
Total revenues
|
—
|
|
|
1,025,821
|
|
|
115,834
|
|
|
(46,010
|
)
|
|
1,095,645
|
|
|||||
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cost of goods sold
|
—
|
|
|
519,847
|
|
|
—
|
|
|
—
|
|
|
519,847
|
|
|||||
Selling, general and administrative expenses
|
—
|
|
|
343,043
|
|
|
35,491
|
|
|
(46,010
|
)
|
|
332,524
|
|
|||||
Provision for bad debts
|
—
|
|
|
64,438
|
|
|
97,453
|
|
|
—
|
|
|
161,891
|
|
|||||
Charges and credits
|
—
|
|
|
11,156
|
|
|
—
|
|
|
—
|
|
|
11,156
|
|
|||||
Total costs and expenses
|
—
|
|
|
938,484
|
|
|
132,944
|
|
|
(46,010
|
)
|
|
1,025,418
|
|
|||||
Operating income
|
—
|
|
|
87,337
|
|
|
(17,110
|
)
|
|
—
|
|
|
70,227
|
|
|||||
Interest expense
|
13,329
|
|
|
7,501
|
|
|
41,312
|
|
|
—
|
|
|
62,142
|
|
|||||
Loss on extinguishment of debt
|
—
|
|
|
349
|
|
|
2,558
|
|
|
—
|
|
|
2,907
|
|
|||||
Income (loss) before income taxes
|
(13,329
|
)
|
|
79,487
|
|
|
(60,980
|
)
|
|
—
|
|
|
5,178
|
|
|||||
Provision (benefit) for income taxes
|
(4,934
|
)
|
|
29,420
|
|
|
(22,570
|
)
|
|
—
|
|
|
1,916
|
|
|||||
Net income (loss) before consolidation
|
$
|
(8,395
|
)
|
|
$
|
50,067
|
|
|
$
|
(38,410
|
)
|
|
$
|
—
|
|
|
$
|
3,262
|
|
Income (loss) from consolidated subsidiaries (after tax)
|
$
|
11,657
|
|
|
$
|
(38,410
|
)
|
|
$
|
—
|
|
|
$
|
26,753
|
|
|
$
|
—
|
|
Consolidated net income (loss)
|
$
|
3,262
|
|
|
$
|
11,657
|
|
|
$
|
(38,410
|
)
|
|
$
|
26,753
|
|
|
$
|
3,262
|
|
(in thousands)
|
Conn's, Inc.
|
|
Guarantors
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total net sales
|
$
|
—
|
|
|
$
|
958,574
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
958,574
|
|
Finance charges and other revenues
|
—
|
|
|
85,560
|
|
|
119,909
|
|
|
—
|
|
|
205,469
|
|
|||||
Servicing fee revenue
|
—
|
|
|
45,384
|
|
|
—
|
|
|
(45,384
|
)
|
|
—
|
|
|||||
Total revenues
|
—
|
|
|
1,089,518
|
|
|
119,909
|
|
|
(45,384
|
)
|
|
1,164,043
|
|
|||||
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cost of goods sold
|
—
|
|
|
605,709
|
|
|
—
|
|
|
—
|
|
|
605,709
|
|
|||||
Selling, general and administrative expenses
|
—
|
|
|
347,550
|
|
|
45,384
|
|
|
(45,384
|
)
|
|
347,550
|
|
|||||
Provision for bad debts
|
—
|
|
|
88,084
|
|
|
81,894
|
|
|
—
|
|
|
169,978
|
|
|||||
Charges and credits
|
—
|
|
|
5,408
|
|
|
—
|
|
|
—
|
|
|
5,408
|
|
|||||
Total costs and expenses
|
—
|
|
|
1,046,751
|
|
|
127,278
|
|
|
(45,384
|
)
|
|
1,128,645
|
|
|||||
Operating income
|
—
|
|
|
42,767
|
|
|
(7,369
|
)
|
|
—
|
|
|
35,398
|
|
|||||
Interest expense
|
13,290
|
|
|
10,496
|
|
|
49,718
|
|
|
—
|
|
|
73,504
|
|
|||||
Income (loss) before income taxes
|
(13,290
|
)
|
|
32,271
|
|
|
(57,087
|
)
|
|
—
|
|
|
(38,106
|
)
|
|||||
Provision (benefit) for income taxes
|
(4,400
|
)
|
|
10,685
|
|
|
(18,903
|
)
|
|
—
|
|
|
(12,618
|
)
|
|||||
Net income (loss) before consolidation
|
$
|
(8,890
|
)
|
|
$
|
21,586
|
|
|
$
|
(38,184
|
)
|
|
$
|
—
|
|
|
$
|
(25,488
|
)
|
Income (loss) from consolidated subsidiaries (after tax)
|
$
|
(16,598
|
)
|
|
$
|
(38,184
|
)
|
|
$
|
—
|
|
|
$
|
54,780
|
|
|
$
|
—
|
|
Consolidated net income (loss)
|
$
|
(25,488
|
)
|
|
$
|
(16,598
|
)
|
|
$
|
(38,184
|
)
|
|
$
|
54,780
|
|
|
$
|
(25,488
|
)
|
(in thousands)
|
Conn's, Inc.
|
|
Guarantors
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net cash provided by (used in) operating activities
|
$
|
(3,011
|
)
|
|
$
|
(635,568
|
)
|
|
$
|
721,316
|
|
|
$
|
—
|
|
|
$
|
82,737
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Purchase of customer accounts receivables
|
—
|
|
|
—
|
|
|
(544,833
|
)
|
|
544,833
|
|
|
—
|
|
|||||
Sale of customer accounts receivables
|
—
|
|
|
544,833
|
|
|
—
|
|
|
(544,833
|
)
|
|
—
|
|
|||||
Purchase of property and equipment
|
—
|
|
|
(11,995
|
)
|
|
—
|
|
|
—
|
|
|
(11,995
|
)
|
|||||
Proceeds from sales of property
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net cash provided by (used in) investing activities
|
—
|
|
|
532,838
|
|
|
(544,833
|
)
|
|
—
|
|
|
(11,995
|
)
|
|||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Proceeds from issuance of asset-backed notes
|
—
|
|
|
—
|
|
|
469,814
|
|
|
—
|
|
|
469,814
|
|
|||||
Payments on asset-backed notes
|
—
|
|
|
(78,780
|
)
|
|
(737,463
|
)
|
|
—
|
|
|
(816,243
|
)
|
|||||
Changes in restricted cash balances
|
—
|
|
|
—
|
|
|
39,599
|
|
|
—
|
|
|
39,599
|
|
|||||
Borrowings from revolving credit facility
|
—
|
|
|
1,257,052
|
|
|
—
|
|
|
—
|
|
|
1,257,052
|
|
|||||
Payments on revolving credit facility
|
—
|
|
|
(1,082,552
|
)
|
|
—
|
|
|
—
|
|
|
(1,082,552
|
)
|
|||||
Borrowings from warehouse facility
|
—
|
|
|
—
|
|
|
79,940
|
|
|
—
|
|
|
79,940
|
|
|||||
Payment of debt issuance costs and amendment fees
|
—
|
|
|
(2,865
|
)
|
|
(5,307
|
)
|
|
—
|
|
|
(8,172
|
)
|
|||||
Payments on warehouse facility
|
—
|
|
|
—
|
|
|
(23,066
|
)
|
|
—
|
|
|
(23,066
|
)
|
|||||
Proceeds from stock issued under employee benefit plans
|
3,011
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,011
|
|
|||||
Other
|
—
|
|
|
(949
|
)
|
|
—
|
|
|
—
|
|
|
(949
|
)
|
|||||
Net cash provided by (used in) financing activities
|
3,011
|
|
|
91,906
|
|
|
(176,483
|
)
|
|
—
|
|
|
(81,566
|
)
|
|||||
Net change in cash and cash equivalents
|
—
|
|
|
(10,824
|
)
|
|
—
|
|
|
—
|
|
|
(10,824
|
)
|
|||||
Cash and cash equivalents, beginning of period
|
—
|
|
|
23,566
|
|
|
—
|
|
|
—
|
|
|
23,566
|
|
|||||
Cash and cash equivalents, end of period
|
$
|
—
|
|
|
$
|
12,742
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12,742
|
|
(in thousands)
|
Conn's, Inc.
|
|
Guarantors
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net cash provided by (used in) operating activities
|
$
|
(13,544
|
)
|
|
$
|
(606,570
|
)
|
|
$
|
803,125
|
|
|
$
|
—
|
|
|
$
|
183,011
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Purchase of customer accounts receivables
|
—
|
|
|
—
|
|
|
(1,038,226
|
)
|
|
1,038,226
|
|
|
—
|
|
|||||
Sale of customer accounts receivables
|
—
|
|
|
1,038,226
|
|
|
—
|
|
|
(1,038,226
|
)
|
|
—
|
|
|||||
Purchase of property and equipment
|
—
|
|
|
(41,804
|
)
|
|
—
|
|
|
—
|
|
|
(41,804
|
)
|
|||||
Proceeds from sales of property
|
—
|
|
|
686
|
|
|
—
|
|
|
—
|
|
|
686
|
|
|||||
Net change in intercompany
|
12,719
|
|
|
|
|
|
|
(12,719
|
)
|
|
—
|
|
|||||||
Net cash provided by (used in) investing activities
|
12,719
|
|
|
997,108
|
|
|
(1,038,226
|
)
|
|
(12,719
|
)
|
|
(41,118
|
)
|
|||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Proceeds from issuance of asset-backed notes
|
—
|
|
|
—
|
|
|
1,067,850
|
|
|
—
|
|
|
1,067,850
|
|
|||||
Payments on asset-backed notes
|
—
|
|
|
—
|
|
|
(736,266
|
)
|
|
—
|
|
|
(736,266
|
)
|
|||||
Changes in restricted cash balances
|
—
|
|
|
—
|
|
|
(87,900
|
)
|
|
—
|
|
|
(87,900
|
)
|
|||||
Borrowings from revolving credit facility
|
—
|
|
|
529,352
|
|
|
—
|
|
|
—
|
|
|
529,352
|
|
|||||
Payments on revolving credit facility
|
—
|
|
|
(858,559
|
)
|
|
—
|
|
|
—
|
|
|
(858,559
|
)
|
|||||
Payment of debt issuance costs and amendment fees
|
—
|
|
|
(1,192
|
)
|
|
(8,583
|
)
|
|
—
|
|
|
(9,775
|
)
|
|||||
Proceeds from stock issued under employee benefit plans
|
824
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
824
|
|
|||||
Net change in intercompany
|
—
|
|
|
(12,719
|
)
|
|
—
|
|
|
12,719
|
|
|
—
|
|
|||||
Other
|
1
|
|
|
(609
|
)
|
|
—
|
|
|
—
|
|
|
(608
|
)
|
|||||
Net cash provided by (used in) financing activities
|
825
|
|
|
(343,727
|
)
|
|
235,101
|
|
|
12,719
|
|
|
(95,082
|
)
|
|||||
Net change in cash and cash equivalents
|
—
|
|
|
46,811
|
|
|
—
|
|
|
—
|
|
|
46,811
|
|
|||||
Cash and cash equivalents, beginning of period
|
—
|
|
|
12,254
|
|
|
—
|
|
|
—
|
|
|
12,254
|
|
|||||
Cash and cash equivalents, end of period
|
$
|
—
|
|
|
$
|
59,065
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
59,065
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
i.
|
growth in the customer receivables portfolio in the three months ended
October 31, 2017
compared to a decline in the three months ended
October 31, 2016
,
|
ii.
|
higher net-charge offs in the three months ended
October 31, 2017
compared to the three months ended
October 31, 2016
, and
|
iii.
|
an increase in the qualitative reserve related to Hurricane Harvey of $1.1 million, partially offset by
|
iv.
|
a decrease in our estimated TDR loss rate as a result of improvements in TDR delinquency rates.
|
•
|
Achieved second consecutive quarter of profitability, despite the unprecedented impact of Hurricane Harvey;
|
•
|
Successfully launched our direct loan program in all of our Oklahoma and Tennessee locations which contributed to our sixth consecutive quarter of incremental yield improvement. Our weighted average origination loan yield increased to
27.9%
in the third quarter of fiscal year 2018 from
24.7%
in the third quarter of fiscal year 2017, an increase of over 300 basis points;
|
•
|
Reduced, year-over-year, the balance of accounts 60 days past due as a percentage of the customer receivables portfolio to
9.9%
at October 31, 2017 from
11.0%
at October 31, 2016;
|
•
|
Increased retail gross margin for the third quarter of fiscal year 2018 to
39.8%
, an increase of over
230
basis points compared to the third quarter of fiscal year 2017 rate of
37.5%
, driven primarily by improved product margins across all product categories, favorable product mix, and continued focus on increasing efficiencies;
|
•
|
Completed the early redemption of our 2016-A Redeemed Notes on August 15, 2017, which contributed to a $1.9 million reduction in interest expense in the third quarter of fiscal year 2018 compared to the second quarter of fiscal year 2018 and a $5.4 million reduction compared to the third quarter of fiscal year 2017; and
|
•
|
Increased sales financed with the lease-to-own product offered through Progressive Leasing, which we offer to our customers who do not qualify for our proprietary credit programs, to 5.7% in the third quarter of fiscal year 2018 from 3.8% in the second quarter of fiscal year 2018.
|
•
|
Implement our direct loan program offering to further enhance our yield;
|
•
|
Continue to refine and enhance our underwriting model and focus on our collection operations to reduce delinquency rates and future charge-offs to improve future credit segment performance;
|
•
|
Lower our cost of funds;
|
•
|
Optimize our mix of quality, branded products and reduce warehouse, delivery and transportation costs to increase our retail gross margin;
|
•
|
Maintain focus on cost control of our SG&A expenses; and
|
•
|
Open three new stores, all of which were successfully opened during the first half of fiscal year 2018.
|
Consolidated:
|
Three Months Ended
October 31, |
|
Nine Months Ended
October 31, |
||||||||||||||||||||
(in thousands)
|
2017
|
|
2016
|
|
Change
|
|
2017
|
|
2016
|
|
Change
|
||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total net sales
|
$
|
291,808
|
|
|
$
|
308,033
|
|
|
$
|
(16,225
|
)
|
|
$
|
857,506
|
|
|
$
|
958,574
|
|
|
$
|
(101,068
|
)
|
Finance charges and other revenues
|
81,364
|
|
|
68,740
|
|
|
12,624
|
|
|
238,139
|
|
|
205,469
|
|
|
32,670
|
|
||||||
Total revenues
|
373,172
|
|
|
376,773
|
|
|
(3,601
|
)
|
|
1,095,645
|
|
|
1,164,043
|
|
|
(68,398
|
)
|
||||||
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cost of goods sold
|
175,591
|
|
|
192,374
|
|
|
(16,783
|
)
|
|
519,847
|
|
|
605,709
|
|
|
(85,862
|
)
|
||||||
Selling, general and administrative expenses
|
114,355
|
|
|
114,457
|
|
|
(102
|
)
|
|
332,524
|
|
|
347,550
|
|
|
(15,026
|
)
|
||||||
Provision for bad debts
|
56,512
|
|
|
51,564
|
|
|
4,948
|
|
|
161,891
|
|
|
169,978
|
|
|
(8,087
|
)
|
||||||
Charges and credits
|
5,861
|
|
|
1,987
|
|
|
3,874
|
|
|
11,156
|
|
|
5,408
|
|
|
5,748
|
|
||||||
Total costs and expenses
|
352,319
|
|
|
360,382
|
|
|
(8,063
|
)
|
|
1,025,418
|
|
|
1,128,645
|
|
|
(103,227
|
)
|
||||||
Operating income
|
20,853
|
|
|
16,391
|
|
|
4,462
|
|
|
70,227
|
|
|
35,398
|
|
|
34,829
|
|
||||||
Interest expense
|
18,095
|
|
|
23,470
|
|
|
(5,375
|
)
|
|
62,142
|
|
|
73,504
|
|
|
(11,362
|
)
|
||||||
Loss on extinguishment of debt
|
461
|
|
|
—
|
|
|
461
|
|
|
2,907
|
|
|
—
|
|
|
2,907
|
|
||||||
Income (loss) before income taxes
|
2,297
|
|
|
(7,079
|
)
|
|
9,376
|
|
|
5,178
|
|
|
(38,106
|
)
|
|
43,284
|
|
||||||
Provision (benefit) for income taxes
|
728
|
|
|
(3,264
|
)
|
|
3,992
|
|
|
1,916
|
|
|
(12,618
|
)
|
|
14,534
|
|
||||||
Net income (loss)
|
$
|
1,569
|
|
|
$
|
(3,815
|
)
|
|
$
|
5,384
|
|
|
$
|
3,262
|
|
|
$
|
(25,488
|
)
|
|
$
|
28,750
|
|
Retail Segment:
|
Three Months Ended
October 31, |
|
Nine Months Ended
October 31, |
||||||||||||||||||||
(in thousands)
|
2017
|
|
2016
|
|
Change
|
|
2017
|
|
2016
|
|
Change
|
||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Product sales
|
$
|
263,786
|
|
|
$
|
278,056
|
|
|
$
|
(14,270
|
)
|
|
$
|
774,741
|
|
|
$
|
864,269
|
|
|
$
|
(89,528
|
)
|
Repair service agreement commissions
|
24,488
|
|
|
26,354
|
|
|
(1,866
|
)
|
|
72,703
|
|
|
82,849
|
|
|
(10,146
|
)
|
||||||
Service revenues
|
3,534
|
|
|
3,623
|
|
|
(89
|
)
|
|
10,062
|
|
|
11,456
|
|
|
(1,394
|
)
|
||||||
Total net sales
|
291,808
|
|
|
308,033
|
|
|
(16,225
|
)
|
|
857,506
|
|
|
958,574
|
|
|
(101,068
|
)
|
||||||
Other revenues
|
95
|
|
|
337
|
|
|
(242
|
)
|
|
267
|
|
|
1,268
|
|
|
(1,001
|
)
|
||||||
Total revenues
|
291,903
|
|
|
308,370
|
|
|
(16,467
|
)
|
|
857,773
|
|
|
959,842
|
|
|
(102,069
|
)
|
||||||
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cost of goods sold
|
175,591
|
|
|
192,374
|
|
|
(16,783
|
)
|
|
519,847
|
|
|
605,709
|
|
|
(85,862
|
)
|
||||||
Selling, general and administrative expenses
(1)
|
80,676
|
|
|
79,777
|
|
|
899
|
|
|
233,290
|
|
|
244,598
|
|
|
(11,308
|
)
|
||||||
Provision for bad debts
|
189
|
|
|
286
|
|
|
(97
|
)
|
|
584
|
|
|
811
|
|
|
(227
|
)
|
||||||
Charges and credits
|
5,861
|
|
|
1,987
|
|
|
3,874
|
|
|
11,156
|
|
|
5,408
|
|
|
5,748
|
|
||||||
Total costs and expenses
|
262,317
|
|
|
274,424
|
|
|
(12,107
|
)
|
|
764,877
|
|
|
856,526
|
|
|
(91,649
|
)
|
||||||
Operating income
|
$
|
29,586
|
|
|
$
|
33,946
|
|
|
$
|
(4,360
|
)
|
|
$
|
92,896
|
|
|
$
|
103,316
|
|
|
$
|
(10,420
|
)
|
Number of stores:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Beginning of period
|
116
|
|
|
112
|
|
|
|
|
113
|
|
|
103
|
|
|
|
||||||||
Open
|
—
|
|
|
1
|
|
|
|
|
3
|
|
|
10
|
|
|
|
||||||||
Closed
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
||||||||
End of period
|
116
|
|
|
113
|
|
|
|
|
116
|
|
|
113
|
|
|
|
Credit Segment:
|
Three Months Ended
October 31, |
|
Nine Months Ended
October 31, |
||||||||||||||||||||
(in thousands)
|
2017
|
|
2016
|
|
Change
|
|
2017
|
|
2016
|
|
Change
|
||||||||||||
Revenues -
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Finance charges and other revenues
|
$
|
81,269
|
|
|
$
|
68,403
|
|
|
$
|
12,866
|
|
|
$
|
237,872
|
|
|
$
|
204,201
|
|
|
$
|
33,671
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Selling, general and administrative expenses
(1)
|
33,679
|
|
|
34,680
|
|
|
(1,001
|
)
|
|
99,234
|
|
|
102,952
|
|
|
(3,718
|
)
|
||||||
Provision for bad debts
|
56,323
|
|
|
51,278
|
|
|
5,045
|
|
|
161,307
|
|
|
169,167
|
|
|
(7,860
|
)
|
||||||
Total cost and expenses
|
90,002
|
|
|
85,958
|
|
|
4,044
|
|
|
260,541
|
|
|
272,119
|
|
|
(11,578
|
)
|
||||||
Operating loss
|
(8,733
|
)
|
|
(17,555
|
)
|
|
8,822
|
|
|
(22,669
|
)
|
|
(67,918
|
)
|
|
45,249
|
|
||||||
Interest expense
|
18,095
|
|
|
23,470
|
|
|
(5,375
|
)
|
|
62,142
|
|
|
73,504
|
|
|
(11,362
|
)
|
||||||
Loss on extinguishment of debt
|
461
|
|
|
—
|
|
|
461
|
|
|
2,907
|
|
|
—
|
|
|
2,907
|
|
||||||
Loss before income taxes
|
$
|
(27,289
|
)
|
|
$
|
(41,025
|
)
|
|
$
|
13,736
|
|
|
$
|
(87,718
|
)
|
|
$
|
(141,422
|
)
|
|
$
|
53,704
|
|
(1)
|
For the
three months ended October 31, 2017
and
2016
, the amount of corporate overhead allocated to each segment reflected in selling, general and administrative expense was
$7.3 million
and
$6.7 million
, respectively. For the
three months ended October 31, 2017
and
2016
, the amount of reimbursement made to the retail segment by the credit segment was
$9.3 million
and
$9.6 million
, respectively. For the
nine months ended October 31, 2017
and
2016
, the amount of corporate overhead allocated to each segment reflected in selling, general and administrative expense was
$21.5 million
and
$18.9 million
, respectively. For the
nine months ended October 31, 2017
and
2016
, the amount of reimbursement made to the retail segment by the credit segment was
$27.9 million
and
$29.0 million
, respectively.
|
|
Three Months Ended October 31,
|
|
|
|
%
|
|
Same store
|
||||||||||||||||
(dollars in thousands)
|
2017
|
|
% of Total
|
|
2016
|
|
% of Total
|
|
Change
|
|
Change
|
|
% change
|
|
|||||||||
Furniture and mattress
|
$
|
97,146
|
|
|
33.3
|
%
|
|
$
|
98,898
|
|
|
32.1
|
%
|
|
$
|
(1,752
|
)
|
|
(1.8
|
)%
|
|
(6.1
|
)%
|
Home appliance
|
83,837
|
|
|
28.7
|
|
|
85,785
|
|
|
27.8
|
|
|
(1,948
|
)
|
|
(2.3
|
)
|
|
(3.3
|
)
|
|||
Consumer electronic
|
58,062
|
|
|
19.9
|
|
|
65,670
|
|
|
21.3
|
|
|
(7,608
|
)
|
|
(11.6
|
)
|
|
(10.7
|
)
|
|||
Home office
|
20,295
|
|
|
7.0
|
|
|
22,747
|
|
|
7.5
|
|
|
(2,452
|
)
|
|
(10.8
|
)
|
|
(8.1
|
)
|
|||
Other
|
4,446
|
|
|
1.5
|
|
|
4,956
|
|
|
1.6
|
|
|
(510
|
)
|
|
(10.3
|
)
|
|
(11.1
|
)
|
|||
Product sales
|
263,786
|
|
|
90.4
|
|
|
278,056
|
|
|
90.3
|
|
|
(14,270
|
)
|
|
(5.1
|
)
|
|
(6.6
|
)
|
|||
Repair service agreement commissions
|
24,488
|
|
|
8.4
|
|
|
26,354
|
|
|
8.5
|
|
|
(1,866
|
)
|
|
(7.1
|
)
|
|
(10.1
|
)
|
|||
Service revenues
|
3,534
|
|
|
1.2
|
|
|
3,623
|
|
|
1.2
|
|
|
(89
|
)
|
|
(2.5
|
)
|
|
|
|
|||
Total net sales
|
$
|
291,808
|
|
|
100.0
|
%
|
|
$
|
308,033
|
|
|
100.0
|
%
|
|
$
|
(16,225
|
)
|
|
(5.3
|
)%
|
|
(7.0
|
)%
|
•
|
Mattress unit volume decreased 15.1%, partially offset by a 4.5% increase in average selling price;
|
•
|
Home appliance unit volume decreased 5.0%, partially offset by a 1.8% increase in average selling price;
|
•
|
Consumer electronic unit volume decreased 11.9%, partially offset by a 1.5% increase in average sales price; and
|
•
|
Home office unit volume decreased 20.4%, partially offset by a 15.5% increase in average selling price.
|
|
Three Months Ended
October 31, |
|
|
||||||||
(in thousands)
|
2017
|
|
2016
|
|
Change
|
||||||
Interest income and fees
|
$
|
74,144
|
|
|
$
|
58,404
|
|
|
$
|
15,740
|
|
Insurance income
|
7,125
|
|
|
9,999
|
|
|
(2,874
|
)
|
|||
Other revenues
|
95
|
|
|
337
|
|
|
(242
|
)
|
|||
Finance charges and other revenues
|
$
|
81,364
|
|
|
$
|
68,740
|
|
|
$
|
12,624
|
|
|
Three Months Ended
October 31, |
|
|
||||||||
(dollars in thousands)
|
2017
|
|
2016
|
|
Change
|
||||||
Interest income and fees
|
$
|
74,144
|
|
|
$
|
58,404
|
|
|
$
|
15,740
|
|
Net charge-offs
|
(56,519
|
)
|
|
(50,216
|
)
|
|
(6,303
|
)
|
|||
Interest expense
|
(18,095
|
)
|
|
(23,470
|
)
|
|
5,375
|
|
|||
Net portfolio income
|
$
|
(470
|
)
|
|
$
|
(15,282
|
)
|
|
$
|
14,812
|
|
Average portfolio balance
|
$
|
1,485,683
|
|
|
$
|
1,542,767
|
|
|
$
|
(57,084
|
)
|
Interest income and fee yield (annualized)
|
19.8
|
%
|
|
15.0
|
%
|
|
|
||||
Net charge-off % (annualized)
|
15.2
|
%
|
|
13.0
|
%
|
|
|
|
Three Months Ended
October 31, |
|
|
||||||||
(dollars in thousands)
|
2017
|
|
2016
|
|
Change
|
||||||
Total net sales
|
$
|
291,808
|
|
|
$
|
308,033
|
|
|
$
|
(16,225
|
)
|
Cost of goods sold
|
$
|
175,591
|
|
|
$
|
192,374
|
|
|
$
|
(16,783
|
)
|
Retail gross margin
|
39.8
|
%
|
|
37.5
|
%
|
|
|
|
|
Three Months Ended
October 31, |
|
|
||||||||
(dollars in thousands)
|
2017
|
|
2016
|
|
Change
|
||||||
Selling, general and administrative expenses:
|
|
|
|
|
|
||||||
Retail segment
|
$
|
80,676
|
|
|
$
|
79,777
|
|
|
$
|
899
|
|
Credit segment
|
33,679
|
|
|
34,680
|
|
|
(1,001
|
)
|
|||
Selling, general and administrative expenses - Consolidated
|
$
|
114,355
|
|
|
$
|
114,457
|
|
|
$
|
(102
|
)
|
Selling, general and administrative expenses as a percent of total revenues
|
30.6
|
%
|
|
30.4
|
%
|
|
|
|
|
Three Months Ended
October 31, |
|
|
||||||||
(dollars in thousands)
|
2017
|
|
2016
|
|
Change
|
||||||
Provision for bad debts:
|
|
|
|
|
|
||||||
Retail segment
|
$
|
189
|
|
|
$
|
286
|
|
|
$
|
(97
|
)
|
Credit segment
|
56,323
|
|
|
51,278
|
|
|
5,045
|
|
|||
Provision for bad debts - Consolidated
|
$
|
56,512
|
|
|
$
|
51,564
|
|
|
$
|
4,948
|
|
Provision for bad debts - Credit segment, as a percent of average portfolio balance (annualized)
|
15.2
|
%
|
|
13.3
|
%
|
|
|
|
i.
|
growth in the customer receivables portfolio in the three months ended
October 31, 2017
compared to a decline in the three months ended
October 31, 2016
;
|
ii.
|
higher net-charge offs in the three months ended
October 31, 2017
compared to the three months ended
October 31, 2016
; and
|
iii.
|
an increase in the qualitative reserve related to Hurricane Harvey of $1.1 million; partially offset by
|
iv.
|
a decrease in our estimated TDR loss rate as a result of improvements in TDR delinquency rates.
|
|
Three Months Ended
October 31, |
|
|
||||||||
(in thousands)
|
2017
|
|
2016
|
|
Change
|
||||||
Store and Facility closure costs
|
$
|
—
|
|
|
$
|
954
|
|
|
$
|
(954
|
)
|
Impairments from disposals
|
—
|
|
|
595
|
|
|
(595
|
)
|
|||
Legal and professional fees related to securities-related litigation
|
—
|
|
|
158
|
|
|
(158
|
)
|
|||
Employee severance
|
—
|
|
|
280
|
|
|
(280
|
)
|
|||
Write-off of capitalized software costs
|
5,861
|
|
|
—
|
|
|
5,861
|
|
|||
|
$
|
5,861
|
|
|
$
|
1,987
|
|
|
$
|
3,874
|
|
|
Three Months Ended
October 31, |
|
|
||||||||
(dollars in thousands)
|
2017
|
|
2016
|
|
Change
|
||||||
Provision (benefit) for income taxes
|
$
|
728
|
|
|
$
|
(3,264
|
)
|
|
$
|
3,992
|
|
Effective tax rate
|
31.7
|
%
|
|
46.1
|
%
|
|
|
|
|
Nine Months Ended October 31,
|
|
|
|
%
|
|
Same store
|
||||||||||||||||
(dollars in thousands)
|
2017
|
|
% of Total
|
|
2016
|
|
% of Total
|
|
Change
|
|
Change
|
|
% change
|
|
|||||||||
Furniture and mattress
|
$
|
286,886
|
|
|
33.5
|
%
|
|
$
|
309,766
|
|
|
32.3
|
%
|
|
$
|
(22,880
|
)
|
|
(7.4
|
)%
|
|
(11.0
|
)%
|
Home appliance
|
253,044
|
|
|
29.5
|
|
|
275,048
|
|
|
28.7
|
|
|
(22,004
|
)
|
|
(8.0
|
)
|
|
(9.7
|
)
|
|||
Consumer electronic
|
166,761
|
|
|
19.4
|
|
|
197,270
|
|
|
20.6
|
|
|
(30,509
|
)
|
|
(15.5
|
)
|
|
(16.0
|
)
|
|||
Home office
|
54,945
|
|
|
6.4
|
|
|
66,921
|
|
|
7.0
|
|
|
(11,976
|
)
|
|
(17.9
|
)
|
|
(17.6
|
)
|
|||
Other
|
13,105
|
|
|
1.6
|
|
|
15,264
|
|
|
1.6
|
|
|
(2,159
|
)
|
|
(14.1
|
)
|
|
(16.2
|
)
|
|||
Product sales
|
774,741
|
|
|
90.4
|
|
|
864,269
|
|
|
90.2
|
|
|
(89,528
|
)
|
|
(10.4
|
)
|
|
(12.4
|
)
|
|||
Repair service agreement commissions
|
72,703
|
|
|
8.5
|
|
|
82,849
|
|
|
8.6
|
|
|
(10,146
|
)
|
|
(12.2
|
)
|
|
(13.9
|
)
|
|||
Service revenues
|
10,062
|
|
|
1.1
|
|
|
11,456
|
|
|
1.2
|
|
|
(1,394
|
)
|
|
(12.2
|
)
|
|
|
||||
Total net sales
|
$
|
857,506
|
|
|
100.0
|
%
|
|
$
|
958,574
|
|
|
100.0
|
%
|
|
$
|
(101,068
|
)
|
|
(10.5
|
)%
|
|
(12.5
|
)%
|
•
|
Furniture unit volume decreased 20.7%, partially offset by a 11.4% increase in average selling price;
|
•
|
Mattress unit volume decreased 17.4%, partially offset by a 10.2% increase in average selling price;
|
•
|
Home appliance unit volume decreased 9.0% and average selling price decreased 0.8%;
|
•
|
Consumer electronic unit volume decreased 16.5%, partially offset by a 0.6% increase in average selling price; and
|
•
|
Home office unit volume decreased 21.0%, partially offset by a 4.3% increase in average selling price.
|
|
Nine Months Ended
October 31, |
|
|
||||||||
(in thousands)
|
2017
|
|
2016
|
|
Change
|
||||||
Interest income and fees
|
$
|
210,765
|
|
|
$
|
173,527
|
|
|
$
|
37,238
|
|
Insurance income
|
27,107
|
|
|
30,674
|
|
|
(3,567
|
)
|
|||
Other revenues
|
267
|
|
|
1,268
|
|
|
(1,001
|
)
|
|||
Finance charges and other revenues
|
$
|
238,139
|
|
|
$
|
205,469
|
|
|
$
|
32,670
|
|
|
Nine Months Ended
October 31, |
|
|
||||||||
(dollars in thousands)
|
2017
|
|
2016
|
|
Change
|
||||||
Interest income and fees
|
$
|
210,765
|
|
|
$
|
173,527
|
|
|
$
|
37,238
|
|
Net charge-offs
|
(170,393
|
)
|
|
(159,204
|
)
|
|
(11,189
|
)
|
|||
Interest expense
|
(62,142
|
)
|
|
(73,504
|
)
|
|
11,362
|
|
|||
Net portfolio income
|
$
|
(21,770
|
)
|
|
$
|
(59,181
|
)
|
|
$
|
37,411
|
|
Average portfolio balance
|
$
|
1,493,292
|
|
|
$
|
1,548,966
|
|
|
$
|
(55,674
|
)
|
Interest income and fee yield (annualized)
|
18.9
|
%
|
|
14.9
|
%
|
|
|
||||
Net charge-off % (annualized)
|
15.2
|
%
|
|
13.7
|
%
|
|
|
|
Nine Months Ended
October 31, |
|
|
||||||||
(dollars in thousands)
|
2017
|
|
2016
|
|
Change
|
||||||
Total net sales
|
$
|
857,506
|
|
|
$
|
958,574
|
|
|
$
|
(101,068
|
)
|
Cost of goods sold
|
$
|
519,847
|
|
|
$
|
605,709
|
|
|
$
|
(85,862
|
)
|
Retail gross margin
|
39.4
|
%
|
|
36.8
|
%
|
|
|
|
|
Nine Months Ended
October 31, |
|
|
||||||||
(dollars in thousands)
|
2017
|
|
2016
|
|
Change
|
||||||
Selling, general and administrative expenses:
|
|
|
|
|
|
||||||
Retail segment
|
$
|
233,290
|
|
|
$
|
244,598
|
|
|
$
|
(11,308
|
)
|
Credit segment
|
99,234
|
|
|
102,952
|
|
|
(3,718
|
)
|
|||
Selling, general and administrative expenses - Consolidated
|
$
|
332,524
|
|
|
$
|
347,550
|
|
|
$
|
(15,026
|
)
|
Selling, general and administrative expenses as a percent of total revenues
|
30.3
|
%
|
|
29.9
|
%
|
|
|
|
|
Nine Months Ended
October 31, |
|
|
||||||||
(dollars in thousands)
|
2017
|
|
2016
|
|
Change
|
||||||
Provision for bad debts:
|
|
|
|
|
|
||||||
Retail segment
|
$
|
584
|
|
|
$
|
811
|
|
|
$
|
(227
|
)
|
Credit segment
|
161,307
|
|
|
169,167
|
|
|
(7,860
|
)
|
|||
Provision for bad debts - Consolidated
|
$
|
161,891
|
|
|
$
|
169,978
|
|
|
$
|
(8,087
|
)
|
Provision for bad debts - Credit segment, as a percent of average portfolio balance (annualized)
|
14.4
|
%
|
|
14.6
|
%
|
|
|
|
i.
|
a decrease in our estimated non-TDR loss rate as a result of the inclusion of first payment default rates as a factor in our allowance for bad debts estimate;
|
ii.
|
changes in estimates of $5.0 million reflected as an increase to provision for bad debts for the
nine
months ended
October 31, 2016
related to sales tax recovery on previously charged-off accounts;
|
iii.
|
a decrease in our estimated TDR loss rate as a result of improvements in TDR delinquency rates; and
|
iv.
|
a larger decrease in the customer receivables portfolio in the
nine
months ended
October 31, 2017
compared to the
nine
months ended
October 31, 2016
; partially offset by
|
v.
|
higher net-charge offs in the
nine
months ended
October 31, 2017
compared to the
nine
months ended
October 31, 2016
; and
|
vi.
|
an increase in the qualitative reserve related to Hurricane Harvey of $1.1 million.
|
|
Nine Months Ended
October 31, |
|
|
||||||||
(in thousands)
|
2017
|
|
2016
|
|
Change
|
||||||
Store and facility closure costs
|
$
|
1,349
|
|
|
$
|
954
|
|
|
$
|
395
|
|
Impairments from disposals
|
—
|
|
|
1,980
|
|
|
(1,980
|
)
|
|||
Legal and professional fees related to the exploration of strategic alternatives and securities-related litigation
|
34
|
|
|
747
|
|
|
(713
|
)
|
|||
Employee severance
|
1,317
|
|
|
1,493
|
|
|
(176
|
)
|
|||
Write-off of software capitalized costs
|
5,861
|
|
|
—
|
|
|
5,861
|
|
|||
Indirect tax audit reserve
|
2,595
|
|
|
—
|
|
|
2,595
|
|
|||
Executive management transition costs
|
—
|
|
|
234
|
|
|
(234
|
)
|
|||
|
$
|
11,156
|
|
|
$
|
5,408
|
|
|
$
|
5,748
|
|
|
Nine Months Ended
October 31, |
|
|
||||||||
(dollars in thousands)
|
2017
|
|
2016
|
|
Change
|
||||||
Provision (benefit) for income taxes
|
$
|
1,916
|
|
|
$
|
(12,618
|
)
|
|
$
|
14,534
|
|
Effective tax rate
|
37.0
|
%
|
|
33.1
|
%
|
|
|
|
|
As of October 31,
|
||||||
|
2017
|
|
2016
|
||||
Weighted average credit score of outstanding balances
(1)
|
589
|
|
|
591
|
|
||
Average outstanding customer balance
|
$
|
2,405
|
|
|
$
|
2,354
|
|
Balances 60+ days past due as a percentage of total customer portfolio balance
(2)(3)
|
9.9
|
%
|
|
11.0
|
%
|
||
Re-aged balance as a percentage of total customer portfolio balance
(2)(4)
|
23.8
|
%
|
|
16.0
|
%
|
||
Account balances re-aged more than six months (in thousands)
|
$
|
80,516
|
|
|
$
|
73,385
|
|
Allowance for bad debts as a percentage of total customer portfolio balance
|
13.6
|
%
|
|
13.3
|
%
|
||
Percent of total customer portfolio balance represented by no-interest option receivables
|
22.3
|
%
|
|
28.3
|
%
|
|
Three Months Ended
October 31, |
|
Nine Months Ended
October 31, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Total applications processed
|
321,373
|
|
|
326,131
|
|
|
909,287
|
|
|
975,363
|
|
||||
Weighted average origination credit score of sales financed
(1)
|
611
|
|
|
610
|
|
|
609
|
|
|
610
|
|
||||
Percent of total applications approved and utilized
|
29.1
|
%
|
|
32.7
|
%
|
|
31.1
|
%
|
|
35.1
|
%
|
||||
Average down payment
|
2.9
|
%
|
|
3.1
|
%
|
|
3.2
|
%
|
|
3.4
|
%
|
||||
Average income of credit customer at origination
|
$
|
43,500
|
|
|
$
|
42,200
|
|
|
$
|
42,700
|
|
|
$
|
41,400
|
|
Percent of retail sales paid for by:
|
|
|
|
|
|
|
|
|
|
|
|
||||
In-house financing, including down payments received
|
72.0
|
%
|
|
72.3
|
%
|
|
71.7
|
%
|
|
69.8
|
%
|
||||
Third-party financing
|
15.1
|
%
|
|
16.4
|
%
|
|
15.8
|
%
|
|
15.4
|
%
|
||||
Third-party lease-to-own option
|
5.7
|
%
|
|
5.2
|
%
|
|
5.7
|
%
|
|
5.1
|
%
|
||||
|
92.8
|
%
|
|
93.9
|
%
|
|
93.2
|
%
|
|
90.3
|
%
|
(1)
|
Credit scores exclude non-scored accounts.
|
(2)
|
Accounts that become delinquent after being re-aged are included in both the delinquency and re-aged amounts.
|
(3)
|
The balance of 60+ days past due as a percentage of total customer portfolio balance as of October 31, 2017 reflects the impact of first time re-ages related to customers within FEMA-designated Hurricane Harvey disaster areas.
|
(4)
|
The re-aged balance as a percentage of total customer portfolio as of October 31, 2017 includes
$71.8 million
in first time re-ages related to customers within FEMA-designated Hurricane Harvey disaster areas.
|
Asset-Backed Notes
|
|
Original Principal Amount
|
|
Net Proceeds
(1)
|
|
Issuance Date
|
|
Maturity Date
|
|
Contractual Interest Rate
|
|
Effective Interest Rate
(2)
|
||||
2016-B Class A Notes
|
|
391,840
|
|
|
380,033
|
|
|
10/6/2016
|
|
10/15/2018
|
|
3.73%
|
|
5.47%
|
||
2016-B Class B Notes
|
|
111,960
|
|
|
108,586
|
|
|
10/6/2016
|
|
3/15/2019
|
|
7.34%
|
|
8.03%
|
||
2017-A Class A Notes
|
|
313,220
|
|
|
304,451
|
|
|
4/19/2017
|
|
7/15/2019
|
|
2.73%
|
|
4.96%
|
||
2017-A Class B Notes
|
|
106,270
|
|
|
103,300
|
|
|
4/19/2017
|
|
2/15/2020
|
|
5.11%
|
|
5.83%
|
||
2017-A Class C Notes
|
|
50,340
|
|
|
48,919
|
|
|
4/19/2017
|
|
10/15/2021
|
|
7.40%
|
|
7.91%
|
||
2017 Warehouse Class A Notes
|
|
79,940
|
|
|
78,777
|
|
|
8/15/2017
|
|
8/15/2018
|
|
1M CP + 4%
(3)
|
|
7.02%
|
||
Total
|
|
$
|
1,053,570
|
|
|
$
|
1,024,066
|
|
|
|
|
|
|
|
|
|
(1)
|
After giving effect to debt issuance costs and restricted cash held by the VIEs.
|
(2)
|
For the
nine
months ended
October 31, 2017
, and inclusive of changes in timing of actual and expected cash flows.
|
(3)
|
The rate on the 2017 Warehouse Class A Notes is defined as the one-month commercial paper rate, representing the purchaser's commercial paper cost, plus a 4% fixed margin.
|
|
Actual
|
|
Required
Minimum/ Maximum |
Interest Coverage Ratio must equal or exceed minimum
|
1.75:1.00
|
|
1.10:1.00
|
Leverage Ratio must not exceed maximum
|
2.49:1.00
|
|
4.00:1.00
|
ABS Excluded Leverage Ratio must not exceed maximum
|
1.71:1.00
|
|
2.00:1.00
|
Cash Recovery Percent must exceed stated amount
|
4.80%
|
|
4.45%
|
Capital Expenditures, net, must not exceed maximum
|
$1.0 million
|
|
$75.0 million
|
|
|
|
Payments due by period
|
||||||||||||||||
(in thousands)
|
Total
|
|
Less Than 1
Year
|
|
1-3
Years
|
|
3-5
Years
|
|
More Than
5
Years
|
||||||||||
Debt, including estimated interest payments
(1)
:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revolving credit facility
(1)
|
$
|
385,394
|
|
|
$
|
16,720
|
|
|
$
|
368,674
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Senior Notes
(2)
|
304,464
|
|
|
16,458
|
|
|
32,915
|
|
|
255,091
|
|
|
|
|
|||||
2016B Class A Notes
(2)
|
8,868
|
|
|
8,868
|
|
|
|
|
|
|
|
|
|
|
|||||
2016B Class B Notes
(2)
|
123,217
|
|
|
8,218
|
|
|
114,999
|
|
|
|
|
|
|
|
|||||
2017A Class A Notes
(2)
|
135,611
|
|
|
3,538
|
|
|
132,073
|
|
|
|
|
|
|
|
|||||
2017A Class B Notes
(2)
|
118,722
|
|
|
5,430
|
|
|
113,292
|
|
|
|
|
|
|
|
|||||
2017A Class C Notes
(2)
|
65,088
|
|
|
3,725
|
|
|
7,450
|
|
|
53,913
|
|
|
|
|
|||||
2017 Warehouse Class A Notes
(1)
|
59,353
|
|
|
59,353
|
|
|
|
|
|
|
|
||||||||
Capital lease obligations
|
7,668
|
|
|
1,281
|
|
|
1,540
|
|
|
826
|
|
|
4,021
|
|
|||||
Operating leases:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Real estate
|
434,072
|
|
|
58,571
|
|
|
116,284
|
|
|
109,474
|
|
|
149,743
|
|
|||||
Equipment
|
1,521
|
|
|
1,003
|
|
|
505
|
|
|
13
|
|
|
—
|
|
|||||
Contractual commitments
(3)
|
111,704
|
|
|
107,030
|
|
|
4,575
|
|
|
99
|
|
|
—
|
|
|||||
Total
|
$
|
1,755,682
|
|
|
$
|
290,195
|
|
|
$
|
892,307
|
|
|
$
|
419,416
|
|
|
$
|
153,764
|
|
(1)
|
Estimated interest payments are based on the outstanding balance as of
October 31, 2017
and the interest rate in effect at that time.
|
(2)
|
The payments due by period for the Senior Notes, and asset-backed notes were based on their respective maturity dates at their respective fixed annual interest rate. Actual principal and interest payments will be provided based on the proceeds from the securitized customer accounts receivables.
|
(3)
|
Contractual commitments primarily includes commitments to purchase inventory of
$100.7 million
, with the remaining commitments for advertising and other services. The timing of the payments is subject to change based upon actual receipt and the terms of payment with the vendor.
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
PART II.
|
OTHER INFORMATION
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
ITEM 3.
|
DEFAULTS UPON SENIOR SECURITIES
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
OTHER INFORMATION
|
ITEM 6.
|
EXHIBITS
|
Exhibit
Number
|
|
Description of Document
|
|
|
|
3.1
|
|
|
3.1.1
|
|
|
3.1.2
|
|
|
3.1.3
|
|
|
3.1.4
|
|
|
3.2
|
|
|
3.3
|
|
|
3.4
|
|
|
4.1
|
|
|
10.1
|
|
|
10.2
|
|
|
10.3
|
|
|
11.1
|
|
|
31.1
|
|
|
31.2
|
|
|
32.1
|
|
|
101
|
|
The following financial information from our Quarterly Report on Form 10-Q for the third quarter of fiscal year 2018, filed with the SEC on December 7, 2017, formatted in Extensible Business Reporting Language (XBRL): (i) the consolidated balance sheets at October 31, 2017 and January 31, 2017, (ii) the consolidated statements of operations for the three and nine months ended October 31, 2017 and 2016, (iii) the consolidated statements of cash flows for the nine months ended October 31, 2017 and 2016 and (iv) the notes to consolidated financial statements
|
|
CONN'S, INC.
|
|
|
|
|
|
|
|
Date:
|
December 7, 2017
|
|
|
|
|
|
|
By:
|
/s/ Lee A. Wright
|
|
|
|
Lee A. Wright
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
(Principal Financial Officer and duly authorized to sign this report on behalf of the registrant)
|
|
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