Conn's, Inc. Provides Information on Impact of Stock-Based Compensation Expensing.BEAUMONT, Texas Beaumont is a city and county seat of Jefferson County, Texas and is within the Beaumont-Port Arthur metropolitan area. As of the 2000 U.S. Census, the city had a population of 113,866. -- Conn's, Inc. (NASDAQ/NM:CONN CONN Connecticut (old style) CONN Connection CONN Connector CONN Connotation ), a specialty retailer of home appliances, consumer electronics, computers, lawn and garden products, furniture and mattresses, adopted Statement of Financial Accounting Standards No. 123R, Stock-Based Compensation, which now requires the use of fair-value-based methods of accounting for stock-based compensation. In an effort to enhance comparability of current and prior year financial data, the Company elected to use the modified retrospective LAW, RETROSPECTIVE. A retrospective law is one that is to take effect, in point of time, before it was passed. 2. Whenever a law of this kind impairs the obligation of contracts, it is void. 3 Dall. 391. application transition, which results in the retrospective adjustment of all prior period financial statements. Attached with this press release are the statements of operations for the fiscal years ended January 31, 2005 and 2006, and for the four quarters in fiscal year 2006 retrospectively ret·ro·spec·tive adj. 1. Looking back on, contemplating, or directed to the past. 2. Looking or directed backward. 3. Applying to or influencing the past; retroactive. 4. adjusted for stock-based compensation expense. Additionally, the effect on fiscal year 2007 earnings per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share as a result of the adoption of FAS 123R is estimated to be approximately $0.06. About Conn's, Inc. The Company is a specialty retailer currently operating 58 retail locations in Texas and Louisiana. It sells major home appliances, including refrigerators, freezers, washers, dryers and ranges, and a variety of consumer electronics, including projection, plasma, LCD (Liquid Crystal Display) A display technology that uses rod-shaped molecules (liquid crystals) that flow like liquid and bend light. Unenergized, the crystals direct light through two polarizing filters, allowing a natural background color to show. and DLP (Digital Light Processing) A data projection technology from TI that produces clear, readable images on screens in lit rooms. DLP is used in all types of projection devices, from data projectors that weigh only a few pounds to large rear-projection TVs to electronic televisions, camcorders, DVD players A stand-alone device that plays DVDs. It contains a DVD drive and the electronics to decode the digital video. The device may play only manufactured DVDs, or it may be able to play DVD-R, DVD-RW and DVD+RW discs. DVD players are cabled to a TV or home theater system for display. and home theater An audio/video entertainment center that has a large-screen TV and hi-fi system with three speakers in the front (left, right and center) and left and right speakers in the rear. Starting in the early 1990s, video inputs were added to stereo receivers and preamplifiers. products. The Company also sells computers, lawn and garden products, mattresses and furniture, and continues to introduce additional product categories for the home to help increase same store sales Same Store Sales A statistic used in retail industry analysis. It compares sales of stores that have been open for a year or more. Notes: This statistic allows investors to determine what portion of new sales has come from sales growth and what portion from the opening of and to respond to our customers' product needs. Unlike many of its competitors, the Company provides in-house credit options for its customers. Historically, it has financed over 57% of retail sales. Customer receivables are financed substantially through an asset-backed securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. facility, from which the Company derives servicing fee income and interest income from these assets. The Company transfers receivables, consisting of retail installment contracts installment contract n. an agreement in which payments of money, delivery of goods or performance of services are to be made in a series of payments, deliveries or performances, usually on specific dates or upon certain happenings. and revolving accounts A revolving account is a type of debt account where the outstanding balance does not have to be paid in full every month by the borrower to the lender. The borrower maybe required to make a minimum payment, based on the balance amount. 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 forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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 there·on adv. 1. On or upon this, that, or it. 2. Archaic Following that immediately; thereupon. Adv. 1. thereon - on that; "text and commentary thereon" on it, on that or similar terminology. Although the Company believes that the expectations reflected in such forward-looking statements will prove to be correct, the Company can give no assurance that such expectations will prove to have been correct. The actual future performance of the Company could differ materially from such statements. Factors that could cause or contribute to such differences include, but are not limited to: the Company's growth strategy and plans regarding opening new stores and entering new markets; the Company's intention to update or expand existing stores; the Company's estimated capital expenditures and costs related to the opening of new stores or the update or expansion of existing stores; the Company's ability to introduce additional product categories; the Company's cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses , growth trends and projected sales in the home appliance and consumer electronics industry and the Company's ability to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. such growth; relationships with the Company's key suppliers; the results of the Company's litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. ; weather conditions in the Company's markets; changes in the Company's stock price; and the actual number of shares of common stock outstanding. Further information on these risk factors is included in the Company's filings with the Securities and Exchange Commission, including the Company's Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. filed on March 31, 2006. 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 ob·li·gate tr.v. ob·li·gat·ed, ob·li·gat·ing, ob·li·gates 1. To bind, compel, or constrain by a social, legal, or moral tie. See Synonyms at force. 2. To cause to be grateful or indebted; oblige. to publicly release any revisions to these forward-looking statements to reflect the events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date of this press release or to reflect the occurrence of unanticipated events.
Conn's, Inc.
CONDENSED, CONSOLIDATED STATEMENTS OF OPERATIONS
as adjusted for FAS 123R
(unaudited)
(in thousands, except earnings per share)
Three Months Ended,
-------------------------------------------
April 30, July 31, Oct. 31, Jan. 31,
2005 2005 2005 2006
---------- ---------- ---------- ----------
Total Revenues $158,163 $164,375 $173,305 $206,579
Cost and expenses
Cost of goods sold,
including warehousing
and occupancy costs 100,917 103,579 110,024 133,544
Cost of parts sold,
including warehousing
and occupancy costs 1,225 1,236 1,334 1,515
Selling, general and
administrative expense 39,745 44,978 47,125 50,949
Provision for bad debts 1,152 443 929 1,245
---------- ---------- ---------- ----------
Total cost and
expenses 143,039 150,236 159,412 187,253
---------- ---------- ---------- ----------
Operating income 15,124 14,139 13,893 19,326
Interest expense (income),
net 355 59 74 (88)
---------- ---------- ---------- ----------
Income before minority
interest and income taxes 14,769 14,080 13,819 19,414
Minority interest in
limited partnership - - - -
---------- ---------- ---------- ----------
Income before income taxes 14,769 14,080 13,819 19,414
Total provision for income
taxes 5,187 4,983 4,887 6,806
---------- ---------- ---------- ----------
Net income $9,582 $9,097 $8,932 $12,608
========== ========== ========== ==========
Earnings per share
Basic $0.41 $0.39 $0.38 $0.54
Diluted $0.40 $0.38 $0.37 $0.51
Average common shares
outstanding
Basic 23,307 23,366 23,458 23,523
Diluted 23,775 24,013 24,265 24,532
Twelve Months Ended
January 31,
-----------------------
2006 2005
----------- -----------
Total Revenues $702,422 $567,092
Cost and expenses
Cost of goods sold, including warehousing
and occupancy costs 448,064 355,159
Cost of parts sold, including warehousing
and occupancy costs 5,310 4,551
Selling, general and administrative expense 182,797 153,652
Provision for bad debts 3,769 5,637
----------- -----------
Total cost and expenses 639,940 518,999
----------- -----------
Operating income 62,482 48,093
Interest expense (income), net 400 2,359
----------- -----------
Income before minority interest and income
taxes 62,082 45,734
Minority interest in limited partnership - 118
----------- -----------
Income before income taxes 62,082 45,616
Total provision for income taxes 21,863 16,100
----------- -----------
Net income $40,219 $29,516
=========== ===========
Earnings per share
Basic $1.72 $1.27
Diluted $1.67 $1.25
Average common shares outstanding
Basic 23,412 23,192
Diluted 24,088 23,646
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