Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Apr. 30, 2018 | May 31, 2018 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | CONNS INC | |
Entity Central Index Key | 1,223,389 | |
Current Fiscal Year End Date | --01-31 | |
Entity Filer Category | Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Apr. 30, 2018 | |
Document Fiscal Year Focus | 2,019 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 31,587,635 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Apr. 30, 2018 | Jan. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 6,190 | $ 9,286 |
Restricted cash (includes VIE balance of $75,174 and $85,322, respectively) | 76,724 | 86,872 |
Customer accounts receivable, net of allowances (includes VIE balance of $391,853 and $459,708, respectively) | 618,160 | 636,825 |
Other accounts receivable | 73,543 | 71,186 |
Inventories | 190,312 | 211,894 |
Income taxes receivable | 620 | 32,362 |
Prepaid expenses and other current assets | 15,664 | 31,592 |
Total current assets | 981,213 | 1,080,017 |
Long-term portion of customer accounts receivable, net of allowances (includes VIE balance of $329,039 and $455,002, respectively) | 635,508 | 650,608 |
Property and equipment, net | 141,314 | 143,152 |
Deferred income taxes | 22,052 | 21,565 |
Other assets | 4,662 | 5,457 |
Total assets | 1,784,749 | 1,900,799 |
Current liabilities: | ||
Current maturities of long-term debt and capital lease obligations (includes VIE balance of $22,085 and $0, respectively) | 23,180 | 907 |
Accounts payable | 82,362 | 71,617 |
Accrued compensation and related expenses | 11,215 | 21,366 |
Accrued expenses | 46,104 | 44,807 |
Income taxes payable | 9,752 | 2,939 |
Deferred revenues and other credits | 21,361 | 22,475 |
Total current liabilities | 193,974 | 164,111 |
Deferred rent | 85,729 | 87,003 |
Long-term debt and capital lease obligations (includes VIE balance of $556,972 and $787,979, respectively) | 929,535 | 1,090,105 |
Other long-term liabilities | 25,856 | 24,512 |
Total liabilities | 1,235,094 | 1,365,731 |
Commitments and Contingencies | ||
Stockholders' equity: | ||
Preferred stock ($0.01 par value, 1,000,000 shares authorized; none issued or outstanding) | 0 | 0 |
Common stock ($0.01 par value, 100,000,000 shares authorized; 31,586,827 and 31,435,775 shares issued, respectively) | 316 | 314 |
Additional paid-in capital | 101,983 | 101,087 |
Retained earnings | 447,356 | 433,667 |
Total stockholders' equity | 549,655 | 535,068 |
Total liabilities and stockholders' equity | $ 1,784,749 | $ 1,900,799 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Apr. 30, 2018 | Jan. 31, 2018 |
Restricted cash, VIE balance | $ 76,724 | $ 86,872 |
Customer accounts receivable, VIE balance | 618,160 | 636,825 |
Long-term portion of customer accounts receivable, VIE balance | 635,508 | 650,608 |
Current maturities of long-term debt and capital lease obligations, VIE balance | 23,180 | 907 |
Long-term debt and capital lease obligations, VIE balance | $ 929,535 | $ 1,090,105 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 31,586,827 | 31,435,775 |
Variable Interest Entity [Member] | ||
Restricted cash, VIE balance | $ 75,174 | $ 85,322 |
Customer accounts receivable, VIE balance | 391,853 | 459,708 |
Long-term portion of customer accounts receivable, VIE balance | 329,039 | 455,002 |
Current maturities of long-term debt and capital lease obligations, VIE balance | 22,085 | 0 |
Long-term debt and capital lease obligations, VIE balance | $ 556,972 | $ 787,979 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 30, 2018 | Apr. 30, 2017 | |
Revenues: | ||
Product sales | $ 249,314 | $ 251,362 |
Repair service agreement commissions | 22,863 | 24,696 |
Service revenues | 3,579 | 3,227 |
Total net sales | 275,756 | 279,285 |
Finance charges and other revenues | 82,631 | 76,541 |
Total revenues | 358,387 | 355,826 |
Costs and expenses: | ||
Cost of goods sold | 166,589 | 171,950 |
Selling, general and administrative expense | 114,878 | 106,537 |
Provision for bad debts | 44,156 | 55,930 |
Charges and credits | 0 | 1,227 |
Total costs and expenses | 325,623 | 335,644 |
Operating income | 32,764 | 20,182 |
Interest expense | 16,820 | 24,008 |
Loss on extinguishment of debt | 406 | 349 |
Income (loss) before income taxes | 15,538 | (4,175) |
Provision (benefit) for income taxes | 2,806 | (1,595) |
Net income (loss) | $ 12,732 | $ (2,580) |
Income (loss) per share: | ||
Basic (in dollars per share) | $ 0.40 | $ (0.08) |
Diluted (in dollars per share) | $ 0.39 | $ (0.08) |
Weighted average common shares outstanding: | ||
Basic (in shares) | 31,540,684 | 30,972,312 |
Diluted (in shares) | 32,452,864 | 30,972,312 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 30, 2018 | Apr. 30, 2017 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 12,732 | $ (2,580) |
Adjustments to reconcile net income (loss) to net cash from operating activities: | ||
Depreciation | 7,660 | 7,631 |
Amortization of debt issuance costs | 3,292 | 5,614 |
Provision for bad debts and uncollectible interest | 55,660 | 65,748 |
Stock-based compensation expense | 2,520 | 1,583 |
Charges, net of credits, for store and facility closures and relocations | 0 | 323 |
Deferred income tax (benefit) expense | (742) | 114 |
Gain on sale/disposal of property and equipment | (204) | (235) |
Tenant improvement allowances received from landlords | 2,130 | 1,893 |
Change in operating assets and liabilities: | ||
Customer accounts receivable | (21,635) | 6,943 |
Other accounts receivables | (883) | 6,296 |
Inventories | 21,582 | (6,143) |
Other assets | 15,928 | (2,105) |
Accounts payable | 11,055 | 3,428 |
Accrued expenses | (9,081) | 2,586 |
Income taxes | 38,556 | (1,180) |
Deferred rent, revenues and other credits | (3,231) | 848 |
Net cash provided by operating activities | 135,339 | 90,764 |
Cash flows from investing activities: | ||
Purchase of property and equipment | (6,169) | (4,286) |
Net cash used in investing activities | (6,169) | (4,286) |
Cash flows from financing activities: | ||
Proceeds from issuance of asset-backed notes | 0 | 469,814 |
Payments on asset-backed notes | (232,584) | (232,931) |
Borrowings from revolving credit facility | 393,158 | 265,935 |
Payments on revolving credit facility | (322,608) | (443,435) |
Borrowings from warehouse facility | 52,226 | 0 |
Payments on warehouse facility | (29,905) | 0 |
Payments of debt issuance costs and amendment fees | (533) | (7,605) |
Proceeds from stock issued under employee benefit plans | 267 | 256 |
Tax payments associated with equity-based compensation transactions | (1,888) | 0 |
Payments from extinguishment of debt | (294) | 0 |
Other | (253) | 84 |
Net cash (used in) provided by financing activities | (142,414) | 52,118 |
Net change in cash, cash equivalents and restricted cash | (13,244) | 138,596 |
Cash, cash equivalents and restricted cash, beginning of period | 96,158 | 134,264 |
Cash, cash equivalents and restricted cash, end of period | 82,914 | 272,860 |
Non-cash investing and financing activities: | ||
Capital lease asset additions and related obligations | 0 | 3,196 |
Property and equipment purchases not yet paid | 1,759 | 732 |
Supplemental cash flow data: | ||
Cash interest paid | 8,838 | 17,804 |
Cash income taxes refunded, net | $ 35,007 | $ 529 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Apr. 30, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Business . Conn's, Inc., a Delaware corporation, is a holding company with no independent assets or operations other than its investments in its subsidiaries. References to “we,” “our,” “us,” “the Company,” “Conn’s” or “CONN” refer to Conn’s, Inc. and, as apparent from the context, its consolidated bankruptcy-remote variable interest entities (“VIEs”) and its wholly owned subsidiaries. Conn's is a leading specialty retailer that offers a broad selection of quality, branded durable consumer goods and related services in addition to proprietary credit solutions for its core credit-constrained consumers. We operate an integrated and scalable business through our retail stores and website. Our complementary product offerings include furniture and mattresses, home appliances, consumer electronics and home office products from leading global brands across a wide range of price points. Our credit offering provides financing solutions to a large, under-served population of credit-constrained consumers who typically have limited credit alternatives. We operate two reportable segments: retail and credit. Our retail stores bear the "Conn's HomePlus" name with all of our stores providing the same products and services to a common customer group. Our stores follow the same procedures and methods in managing their operations. Our retail business and credit business are operated independently from each other. The credit segment is dedicated to providing short- and medium-term financing to our retail customers. The retail segment is not involved in credit approval decisions. Our management evaluates performance and allocates resources based on the operating results of the retail and credit segments. Basis of Presentation. The accompanying unaudited, condensed consolidated financial statements of Conn's, Inc. and its wholly-owned subsidiaries, including the VIEs, have been prepared by management in accordance with U.S. generally accepted accounting principles ("GAAP") and prevailing industry practice for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, we do not include all of the information and footnotes required by GAAP for complete financial statements. The accompanying financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. All such adjustments are of a normal recurring nature. The condensed consolidated financial position, results of operations and cash flows for these interim periods are not necessarily indicative of the results that may be expected in future periods. The balance sheet at January 31, 2018 has been derived from the audited financial statements at that date. The financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2018 (the “2018 Form 10-K”), filed with the United States Securities and Exchange Commission (the “SEC”) on April 5, 2018. Fiscal Year. Our fiscal year ends on January 31. References to a fiscal year refer to the calendar year in which the fiscal year ends. Principles of Consolidation . The consolidated financial statements include the accounts of Conn's, Inc. and its wholly-owned subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation. Variable Interest Entities. VIEs are consolidated if the Company is the primary beneficiary. The primary beneficiary of a VIE is the party that has (i) the power to direct the activities that most significantly impact the performance of the VIE and (ii) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. We securitize customer accounts receivables by transferring the receivables to various bankruptcy-remote VIEs. We retain the servicing of the securitized portfolio and have a variable interest in each corresponding VIE by holding the residual equity. We have determined that we are the primary beneficiary of each respective VIE because (i) our servicing responsibilities for the securitized portfolio give us the power to direct the activities that most significantly impact the performance of the VIE and (ii) our variable interest in the VIE gives us the obligation to absorb losses and the right to receive residual returns that potentially could be significant. As a result, we consolidate the respective VIEs within our consolidated financial statements. Refer to Note 5, Debt and Capital Lease Obligations , and Note 7, Variable Interest Entities , for additional information. Use of Estimates . The preparation of financial statements in accordance with GAAP requires management to make informed judgments and estimates that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Changes in facts and circumstances or additional information may result in revised estimates, and actual results may differ, even significantly, from these estimates. Management evaluates its estimates and related assumptions regularly, including those related to the allowance for doubtful accounts and allowances for no-interest option credit programs, which are particularly sensitive given the size of our customer portfolio balance. Cash and Cash Equivalents . Cash and cash equivalents include cash, credit card deposits in-transit, and highly liquid debt instruments purchased with a maturity of three months or less. Cash and cash equivalents include credit card deposits in-transit of $3.8 million and $2.0 million as of April 30, 2018 and January 31, 2018 , respectively. Restricted Cash. The restricted cash balance as of April 30, 2018 and January 31, 2018 includes $56.7 million and $58.1 million , respectively, of cash we collected as servicer on the securitized receivables that was subsequently remitted to the VIEs and $18.5 million and $27.2 million , respectively, of cash held by the VIEs as additional collateral for the asset-backed notes. Customer Accounts Receivable. Customer accounts receivable reported in the Condensed Consolidated Balance Sheet includes total receivables managed, including both those transferred to the VIEs and those not transferred to the VIEs. Customer accounts receivable are recognized at the time the customer takes possession of the product. Based on contractual terms, we record the amount of principal and accrued interest on customer receivables that is expected to be collected within the next twelve months in current assets with the remaining balance in long-term assets on the Condensed Consolidated Balance Sheet. Customer accounts receivable includes the net of unamortized deferred fees charged to customers and origination costs. Customer receivables are considered delinquent if a payment has not been received on the scheduled due date. Accounts that are delinquent more than 209 days as of the end of a month are charged-off against the allowance for doubtful accounts along with interest accrued subsequent to the last payment. In an effort to mitigate losses on our accounts receivable, we may make loan modifications to a borrower experiencing financial difficulty. In our role as servicer, we may also make modifications to loans held by the VIEs. The loan modifications are intended to maximize net cash flow after expenses and avoid the need to repossess collateral or exercise legal remedies available to us. We may extend or "re-age" a portion of our customer accounts, which involves modifying the payment terms to defer a portion of the cash payments due. Our re-aging of customer accounts does not change the interest rate or the total principal amount due from the customer and typically does not reduce the monthly contractual payments. To a much lesser extent, we may provide the customer the ability to re-age their obligation by refinancing the account, which does not change the interest rate or the total principal amount due from the customer but does reduce the monthly contractual payments and extend the term. We consider accounts that have been re-aged in excess of three months or refinanced as Troubled Debt Restructurings ("TDR" or "Restructured Accounts"). Interest Income on Customer Accounts Receivable . Interest income, which includes interest income and amortization of deferred fees and origination costs, is recorded using the interest method and is reflected in finance charges and other revenues. Typically, interest income is recorded until the customer account is paid off or charged-off, and we provide an allowance for estimated uncollectible interest. Any contractual interest income received from customers in excess of the interest income calculated using the interest method is recorded as deferred revenue on our balance sheets. At April 30, 2018 and January 31, 2018 , there was $12.5 million and $12.5 million , respectively, of deferred interest included in deferred revenues and other credits and other long-term liabilities. The deferred interest will ultimately be brought into income as the accounts pay off or charge-off. We offer a 12 month no -interest option program. If the customer is delinquent in making a scheduled monthly payment or does not repay the principal in full by the end of the no-interest option program period (grace periods are provided), the account does not qualify for the no-interest provision and none of the interest earned is waived. Interest income is recognized based on estimated accrued interest earned to date on all no -interest option finance programs with an offsetting reserve for those customers expected to satisfy the requirements of the program based on our historical experience. We recognize interest income on TDR accounts using the interest income method, which requires reporting interest income equal to the increase in the net carrying amount of the loan attributable to the passage of time. Cash proceeds and other adjustments are applied to the net carrying amount such that it equals the present value of expected future cash flows. We typically only place accounts in non-accrual status when legally required. Payments received on non-accrual loans will be applied to principal and reduce the amount of the loan. At April 30, 2018 , customer receivables carried in non-accrual status were $15.8 million , of which $12.1 million is in bankruptcy status and less than 60 days past due. At January 31, 2018 , customer receivables carried in non-accrual status were $16.9 million , of which $14.5 million is in bankruptcy status and less than 60 days past due. At April 30, 2018 and January 31, 2018 , customer receivables that were past due 90 days or more and still accruing interest totaled $111.1 million and $109.7 million , respectively. Allowance for Doubtful Accounts. The determination of the amount of the allowance for bad debts is, by nature, highly complex and subjective. Future events that are inherently uncertain could result in material changes to the level of the allowance for bad debts. General economic conditions, changes to state or federal regulations and a variety of other factors that affect the ability of borrowers to service their debts or our ability to collect will impact the future performance of the portfolio. We establish an allowance for doubtful accounts, including estimated uncollectible interest, to cover probable and estimable losses on our customer accounts receivable resulting from the failure of customers to make contractual payments. Our customer portfolio balance consists of a large number of relatively small, homogeneous accounts. None of our accounts are large enough to warrant individual evaluation for impairment. We record an allowance for doubtful accounts on our non-TDR customer accounts receivable that we expect to charge-off over the next 12 months based on historical gross charge-off rates over the last 24 months. We incorporate an adjustment to historical gross charge-off rates for a scaled factor of the year-over-year change in six month average first payment default rates and the year-over-year change in the balance of customer accounts receivable that are 60 days or more past due. In addition to adjusted historical gross charge-off rates, estimates of post-charge-off recoveries, including cash payments from customers, amounts realized from the repossession of the products financed, sales tax recoveries from taxing jurisdictions, and payments received under credit insurance policies are also considered. Qualitative adjustments are made to the allowance for bad debts when, based on management’s judgment, there are internal or external factors impacting probable incurred losses not taken into account by the quantitative calculations. These qualitative considerations are based on the following factors: changes in lending policies and procedures, changes in economic and business conditions, changes in the nature and volume of the portfolio, changes in lending management, changes in credit quality statistics, changes in concentrations of credit, and other internal or external factor changes. We utilize an economic qualitative adjustment based on changes in unemployment rates if current unemployment rates in our markets are worse than they were on average over the last 24 months. We also qualitatively limit the impact of changes in first payment default rates and changes in delinquency when those changes result in a decrease to the allowance for bad debts based on a measure of the dispersion of historical charge-off rates. We determine allowances for those accounts that are TDR based on the discounted present value of cash flows expected to be collected over the life of those accounts based primarily on the performance of TDR loans over the last 24 months. The cash flows are discounted based on the weighted-average effective interest rate of the TDR accounts. The excess of the carrying amount over the discounted cash flow amount is recorded as an allowance for loss on those accounts. Debt Issuance Costs. Costs that are direct and incremental to debt issuance are deferred and amortized to interest expense using the effective interest method over the expected life of the debt. All other costs related to debt issuance are expensed as incurred. We present debt issuance costs associated with long-term debt as a reduction of the carrying amount of the debt. Unamortized costs related to the revolving credit facility are included in other assets on our Condensed Consolidated Balance Sheet and were $4.4 million and $5.2 million as of April 30, 2018 and January 31, 2018 , respectively. Income Taxes. For the three months ended April 30, 2018 and 2017, we utilized the estimated annual effective tax rate based on our estimated fiscal year 2019 and 2018 pre-tax income, respectively, in determining income tax expense. Provision for income taxes for interim periods is based on an estimated annual income tax rate, adjusted for discrete tax items. As a result, our interim effective tax rates may vary significantly from the statutory tax rate and the annual effective tax rate. On December 22, 2017 H.R. 1, originally known as the Tax Cuts and Jobs Act (the “Tax Act”), was signed into law. Among the significant changes to the U.S. Internal Revenue Code, the Tax Act lowered the U.S. federal corporate income tax rate (“Federal Tax Rate”) from 35% to 21% effective January 1, 2018. For the three months ended January 31, 2018, we calculated our best estimate of the impact of the Tax Act in our fiscal year 2018 provision for income taxes in accordance with our understanding of the Tax Act and available guidance as of that date. We continue to analyze additional information and guidance related to the Tax Act as supplemental legislation, regulatory guidance and evolving technical interpretations become available. We will continue to refine such amounts within the measurement period as provided by Staff Accounting Bulletin No. 118 and expect to complete our analysis no later than the fourth quarter of fiscal year 2019. For the three months ended April 30, 2018 and 2017, the effective tax rate was 18.1% and 38.2% , respectively. The primary factors affecting our effective tax rate for the three months ended April 30, 2018 were a decrease in the Federal Tax Rate as a result of the Tax Act, an increase in pre-tax earnings, and excess tax benefits related to the vesting of equity compensation. Stock-based Compensation. Stock-based compensation expense is recorded, net of estimated forfeitures, for share-based compensation awards over the requisite service period using the straight-line method. An adjustment is made to compensation cost for any difference between the estimated forfeitures and the actual forfeitures related to the awards. For equity-classified share-based compensation awards, expense is recognized based on the grant-date fair value. For stock option grants, we use the Black-Scholes model to determine fair value. For grants of restricted stock units, the fair value of the grant is the market value of our stock at the date of issuance. The following table sets forth the restricted stock unit awards ("RSUs"), performance stock awards ("PSUs") and stock options granted during the three months ended April 30, 2018 and 2017: Three Months Ended 2018 2017 RSUs (1) 80,411 324,487 PSUs (2) — 429,000 Stock Options (3) 620,166 — Total stock awards granted 700,577 753,487 Aggregate grant date fair value (in thousands) $ 15,511 $ 7,761 (1) The RSUs issued during the three months ended April 30, 2018 and 2017 are scheduled to vest ratably over periods of three to four years from the date of grant. (2) The PSUs issued during the three months ended April 30, 2017 will vest, if at all, upon the certification, after fiscal year 2020, by the compensation committee of the satisfaction of the annual and cumulative Earnings Before Interest, Taxes, Depreciation and Amortization performance conditions over the three fiscal years commencing with fiscal year 2018. (3) The weighted-average assumptions for the option awards granted during the three months ended April 30, 2018 included expected volatility of 68.0% , an expected term of 6.5 years and risk-free interest rate of 2.67% . No dividend yield was included in the weighted-average assumptions for the option awards granted during the three months ended April 30, 2018 . For the three months ended April 30, 2018 and 2017, stock-based compensation expense was $2.5 million and $1.6 million , respectively. Earnings per Share . Basic earnings per share is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding during the period. Diluted earnings per share includes the dilutive effects of any stock options and restricted stock units granted, which is calculated using the treasury-stock method. The following table sets forth the shares outstanding for the earnings per share calculations: Three Months Ended 2018 2017 Weighted-average common shares outstanding - Basic 31,540,684 30,972,312 Dilutive effect of stock options, RSUs and PSUs 912,180 — Weighted-average common shares outstanding - Diluted 32,452,864 30,972,312 For the three months ended April 30, 2018 and 2017 , the weighted-average number of stock options and restricted stock units not included in the calculation due to their anti-dilutive effect was 305,313 and 944,423 , respectively. Fair Value of Financial Instruments . Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities recorded at fair value are categorized using defined hierarchical levels related to subjectivity associated with the inputs to fair value measurements as follows: • 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). In determining fair value, we use observable market data when available, or models that incorporate observable market data. When we are required to measure fair value and there is not a market-observable price for the asset or liability or for a similar asset or liability, we use the cost or income approach depending on the quality of information available to support management’s assumptions. The cost approach is based on management’s best estimate of the current asset replacement cost. The income approach is based on management’s best assumptions regarding expectations of future net cash flows and discounts the expected cash flows using a commensurate risk-adjusted discount rate. Such evaluations involve significant judgment, and the results are based on expected future events or conditions such as sales prices, economic and regulatory climates, and other factors, most of which are often outside of management’s control. However, we believe assumptions used reflect a market participant’s view of long-term prices, costs, and other factors and are consistent with assumptions used in our business plans and investment decisions. In arriving at fair-value estimates, we use relevant observable inputs available for the valuation technique employed. If a fair-value measurement reflects inputs at multiple levels within the hierarchy, the fair-value measurement is characterized based on the lowest level of input that is significant to the fair-value measurement. The fair value of cash and cash equivalents, restricted cash and accounts payable approximate their carrying amounts because of the short maturity of these instruments. The fair value of customer accounts receivables, determined using a Level 3 discounted cash flow analysis, approximates their carrying amount, which includes the allowance for doubtful accounts. The fair value of our revolving credit facility approximates carrying value based on the current borrowing rate for similar types of borrowing arrangements. At April 30, 2018 , the fair value of the Senior Notes outstanding, which was determined using Level 1 inputs, was $224.8 million as compared to the carrying value of $227.0 million , excluding the impact of the related discount. At April 30, 2018 , the fair value of the asset-backed notes approximates their carrying value and was determined using Level 2 inputs based on inactive trading activity. Recent Accounting Pronouncements Adopted. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers , which provides a single comprehensive accounting standard for revenue recognition for contracts with customers and supersedes current guidance. Upon adoption of ASU 2014-09, entities are required to recognize revenue using the following comprehensive model: (1) identify contracts with customers, (2) identify the performance obligations in such contracts, (3) determine transaction price, (4) allocate the transaction price to the performance obligations, and (5) recognize revenue as each performance obligation is satisfied. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers: Deferral of Effective Date , which defers the effective date of ASU 2014-09 by one year and allows early adoption on a limited basis. The FASB has also issued ASU 2016-08, Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net); ASU 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing ; ASU 2016-11, Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting ; and ASU 2016-12, Revenue from Contracts with Customers: Narrow-Scope Improvements and Practical Expedients, all of which were issued to improve and clarify the guidance in ASU 2014-09. Effective February 1, 2018, the Company adopted these ASUs using the modified retrospective method applied to those contracts that were not completed as of February 1, 2018, with no restatement of comparative periods. Results for reporting periods beginning after February 1, 2018 are presented under ASC Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historic accounting policies under ASC Topic 605. We recognized a net after-tax cumulative effect adjustment to retained earnings of $1.0 million as of the date of adoption. The details of our current revenue recognition policy, as well as the change due to ASC Topic 606, are described below. Revenue Recognition . The Company has the following material revenue streams: the sale of products (e.g. appliances, electronics) including delivery; the sale of third party warranty and insurance programs, including retrospective income; service income; interest income generated from the financing of point of sale transactions; and volume rebate incentives received from a third party financer. Interest income related to our customer accounts receivable balance and loan origination costs (including sales commissions) meet the scope exception of ASC 606 and are therefore not impacted by the adoption of this standard. For our twelve month no-interest option program, as a practical expedient acceptable under ASC 606, we do not adjust for the time value of money. Sale of Products Including Delivery : The Company has a single performance obligation associated with these contracts: the delivery of the product to the customer, at which point control transfers. Revenue for the sale of products is recognized at the time of delivery, net of any adjustments for sales incentives such as discounts, coupons, rebates or other free products or services. Sales financed through third-party no-interest option programs typically require us to pay a fee to the third party on each completed sale, which is recorded as a reduction of net sales in the retail segment. Sale of Third Party Warranty and Insurance Programs, Including Retrospective Income: We sell repair service agreements ("RSA") and credit insurance contracts on behalf of unrelated third-parties. The Company has a single performance obligation associated with these contracts: the delivery of the product to the customer, at which point control transfers. Commissions related to these contracts are recognized in revenue upon delivery of the product. We defer 5% of the revenue received from the sale of RSAs as compensation to us for the cost to serve as administrator of the RSAs sold as 5% represents the estimated stand-alone sales price to serve as the administrator. The deferred RSA administration fee is recorded in income ratably over the life of the RSA contract sold. Retrospective income on RSA contracts is recognized upon delivery of the product based on an estimate of claims and is adjusted throughout the life of the contracts as actual claims materialize. Retrospective income on insurance contracts is recognized when earned as that is the point at which we no longer believe a significant reversal of income is probable as the consideration is highly susceptible to factors outside of our influence. Service Income: The Company has a single performance obligation associated with these contracts: the servicing of the RSA claims. Service revenues are recognized at the time service is provided to the customer. Volume Rebate Incentive: As part of our agreement with our third-party provider of no-interest option programs, we may receive a volume rebate incentive based on the total dollar value of sales made under our third-party provider. The Company has a single performance obligations associated with this contract: the delivery of the product to the customer, at which point control transfers. Revenue for the volume rebate incentive is recognized upon deliver of the product to the customer based on the projected total annual dollar value of sales to be made under our third-party provider. ASC 606 requires disaggregation of revenue recognized from contracts with customers to depict how the nature, amount, timing and uncertainty of revenue is affected by economic factors. The Company concluded that the disaggregated discrete financial information presented in Note 8, Segment Reporting , and Note 4, Finance Charges and Other Revenues , reviewed by our chief operating decision maker in evaluating the financial performance of our operating segments adequately addresses the disaggregation of revenue requirements of ASC 606. Deferred Revenue. Deferred revenue related to contracts with customers as defined by ASC 606 as of April 30, 2018 and January 31, 2018 consisted of deferred customer deposits of $1.5 million and $1.8 million , respectively, and deferred RSA administration fees of $8.4 million and $8.7 million , respectively. All of the deferred customer deposits as of January 31, 2018 were recognized as revenue during the three months ended April 30, 2018. We recognized $1.3 million of income during the three months ended April 30, 2018 related to RSA administrative fees deferred as of January 31, 2018. Changes in Revenue Recognition Due to ASC 606. The adoption of ASC 606 resulted in a change to our accounting policy related to retrospective income on RSAs. We participate in profit sharing agreements with the underwriters of our RSA products, payment from which is contingent upon the actual performance of the portfolio of the RSAs sold. Prior to the adoption of ASC 606, we recognized this revenue and related receivable as the amount due to us at each reporting date based on the performance of the portfolio through such date. The Company concluded that this retrospective income represents variable consideration under ASC 606 for which the Company’s performance obligation is satisfied when the RSA is sold to the customer. Under ASC 606, an estimate of variable consideration, subject to constraints, is to be included in the transaction price and recognized when or as the performance obligation is satisfied. As a result of the adoption of ASC 606, the Company changed its accounting policy related to retrospective income on RSAs to record an estimate of retrospective income when the RSA is sold, subject to constraints in the estimate. The Company's estimate of the amount of variable consideration is recorded as a contract asset, representing a conditional right to payment, and is included within other accounts receivable in the Condensed Consolidated Balance Sheet. The estimated contract asset will be reassessed at the end of each reporting period, with changes thereto recorded as adjustments to revenue. The cumulative effect of the changes made to the Company’s Condensed Consolidated Balance Sheet as a result of the adoption of ASC 606 were as follows (in thousands): Impact of Adoption of ASC 606 (in thousands) Balance at January 31, 2018 Adjustments due to ASC 606 Balance at February 1, 2018 Assets Other Accounts Receivable $ 71,186 $ 1,210 $ 72,396 Deferred Income Taxes 21,565 (254 ) 21,311 Stockholder's Equity $ 535,068 $ 956 $ 536,024 The adoption of ASC 606 did not have a material impact on the consolidated financial statements for the three months ended April 30, 2018 and no comparative financial statements are presented. Internal Controls. As a result of the adoption of ASC 606 we evaluated our internal control framework, and there have been no changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force) . ASU 2016-18 requires that the statement of cash flows provides the change in the total of cash, cash equival |
Customer Accounts Receivable
Customer Accounts Receivable | 3 Months Ended |
Apr. 30, 2018 | |
Receivables [Abstract] | |
Customer Accounts Receivable | Customer Accounts Receivable Customer accounts receivable consisted of the following: Total Outstanding Balance Customer Accounts Receivable 60 Days Past Due (1) Re-aged (1) (2) (in thousands) April 30, January 31, April 30, January 31, April 30, January 31, Customer accounts receivable $ 1,330,793 $ 1,374,269 $ 104,499 $ 114,120 $ 202,298 $ 217,952 Restructured accounts 163,700 153,593 37,095 37,687 163,700 153,593 Total customer portfolio balance $ 1,494,493 $ 1,527,862 $ 141,594 $ 151,807 $ 365,998 $ 371,545 Allowance for uncollectible accounts (204,100 ) (203,572 ) Allowances for no-interest option credit programs (20,827 ) (20,960 ) Deferred fees and origination costs, net (15,898 ) (15,897 ) Total customer accounts receivable, net 1,253,668 1,287,433 Short-term portion of customer accounts receivable, net (618,160 ) (636,825 ) Long-term portion of customer accounts receivable, net $ 635,508 $ 650,608 Securitized receivables held by the VIEs $ 869,872 $ 1,085,385 $ 108,105 $ 124,627 $ 299,327 $ 300,348 Receivables not held by the VIEs 624,621 442,477 33,489 27,180 66,671 71,197 Total customer portfolio balance $ 1,494,493 $ 1,527,862 $ 141,594 $ 151,807 $ 365,998 $ 371,545 (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 April 30, 2018 and January 31, 2018 , the amounts included within both 60 days past due and re-aged was $81.6 million and $80.8 million , respectively. As of April 30, 2018 and January 31, 2018 , the total customer portfolio balance past due one day or greater was $383.8 million and $401.0 million , respectively. These amounts include the 60 days past due balances shown. (2) The re-aged receivables balance as of April 30, 2018 and January 31, 2018 includes $54.2 million and $62.0 million in first time re-ages related to customers within FEMA-designated Hurricane Harvey disaster areas. The following presents the activity in the allowance for doubtful accounts and uncollectible interest for customer receivables: Three Months Ended April 30, 2018 Three Months Ended April 30, 2017 (in thousands) Customer Accounts Receivable Restructured Accounts Total Customer Accounts Receivable Restructured Accounts Total Allowance at beginning of period $ 148,856 $ 54,716 $ 203,572 $ 158,992 $ 51,183 $ 210,175 Provision (1) 38,740 16,660 55,400 48,516 17,232 65,748 Principal charge-offs (2) (39,775 ) (11,144 ) (50,919 ) (48,087 ) (13,397 ) (61,484 ) Interest charge-offs (7,360 ) (2,062 ) (9,422 ) (7,519 ) (2,095 ) (9,614 ) Recoveries (2) 4,272 1,197 5,469 1,749 487 2,236 Allowance at end of period $ 144,733 $ 59,367 $ 204,100 $ 153,651 $ 53,410 $ 207,061 Average total customer portfolio balance $ 1,347,373 $ 159,410 $ 1,506,783 $ 1,372,808 $ 139,026 $ 1,511,834 (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. |
Charges and Credits
Charges and Credits | 3 Months Ended |
Apr. 30, 2018 | |
Charges and Credits [Abstract] | |
Charges and Credits | Charges and Credits Charges and credits consisted of the following: Three Months Ended (in thousands) 2018 2017 Facility closure costs $ — $ 1,227 $ — $ 1,227 During the three months ended April 30, 2017 , we incurred exit costs associated with reducing the square footage of a distribution center. |
Finance Charges and Other Reven
Finance Charges and Other Revenue | 3 Months Ended |
Apr. 30, 2018 | |
Supplemental Disclosure of Finance Charges and Other Revenue [Abstract] | |
Finance Charges and Other Revenues | Finance Charges and Other Revenues Finance charges and other revenues consisted of the following: Three Months Ended (in thousands) 2018 2017 Interest income and fees $ 76,346 $ 67,131 Insurance income 6,271 9,330 Other revenues 14 80 $ 82,631 $ 76,541 Interest income and fees and insurance income are derived from the credit segment operations, whereas other revenues are derived from the retail segment operations. Insurance income is comprised of sales commissions from third-party insurance companies that are recognized when coverage is sold and retrospective income paid by the insurance carrier if insurance claims are less than earned premiums. During the three months ended April 30, 2018 and 2017, interest income and fees reflected provisions for uncollectible interest of $11.5 million and $10.0 million , respectively. The amount included in interest income and fees related to TDR accounts for the three months ended April 30, 2018 and 2017 are $5.8 million and $4.5 million , respectively. Insurance income decreased over the prior year period primarily due to a decrease in retrospective income as a result of higher claim volumes related to Hurricane Harvey. |
Debt and Capital Lease Obligati
Debt and Capital Lease Obligations | 3 Months Ended |
Apr. 30, 2018 | |
Debt Disclosure [Abstract] | |
Debt and Capital Lease Obligations | Debt and Capital Lease Obligations Debt and capital lease obligations consisted of the following: (in thousands) April 30, January 31, Revolving credit facility $ 147,550 $ 77,000 Senior Notes 227,000 227,000 2016-B VIE Asset-backed Class B Notes — 73,589 2017-A VIE Asset-backed Class A Notes 4,171 59,794 2017-A VIE Asset-backed Class B Notes 106,270 106,270 2017-A VIE Asset-backed Class C Notes 50,340 50,340 2017-B VIE Asset-backed Class A Notes 188,997 292,663 2017-B VIE Asset-backed Class B Notes 132,180 132,180 2017-B VIE Asset-backed Class C Notes 78,640 78,640 Warehouse Notes 22,321 — Capital lease obligations 4,696 4,949 Total debt and capital lease obligations 962,165 1,102,425 Less: Discount on debt (2,387 ) (2,527 ) Deferred debt issuance costs (7,063 ) (8,886 ) Current maturities of long-term debt and capital lease obligations (23,180 ) (907 ) Long-term debt and capital lease obligations $ 929,535 $ 1,090,105 Senior Notes. On July 1, 2014, we issued $250.0 million of the unsecured Senior Notes due July 2022 bearing interest at 7.25% (the "Senior Notes"), pursuant to an indenture dated July 1, 2014 (the "Indenture"), among Conn's, Inc., its subsidiary guarantors (the "Guarantors") and U.S. Bank National Association, as trustee. The effective interest rate of the Senior Notes after giving effect to the discount and issuance costs is 7.8% . The Indenture restricts the Company's and certain of its subsidiaries' ability to: (i) incur indebtedness; (ii) pay dividends or make other distributions in respect of, or repurchase or redeem, our capital stock ("restricted payments"); (iii) prepay, redeem or repurchase debt that is junior in right of payment to the notes; (iv) make loans and certain investments; (v) sell assets; (vi) incur liens; (vii) enter into transactions with affiliates; and (viii) consolidate, merge or sell all or substantially all of our assets. These covenants are subject to a number of important exceptions and qualifications. Specifically, limitations on restricted payments are only effective if one or more of the following occurred: (1) a default were to exist under the Indenture, (2) we could not satisfy a debt incurrence test, and (3) the aggregate amount of restricted payments were to exceed an amount tied to consolidated net income. These limitations, however, are subject to two exceptions: (1) an exception that permits the payment of up to $375.0 million in restricted payments, and (2) an exception that permits restricted payments regardless of dollar amount so long as, after giving pro forma effect to the dividends and other restricted payments, we would have had a leverage ratio, as defined under the Indenture, of less than or equal to 2.50 to 1.0 . As a result of these exceptions, as of April 30, 2018 , $183.5 million would have been free from the distribution restriction. However, as a result of the revolving credit facility distribution restrictions, which are further described below, we were restricted from making a distribution in respect of the Senior Notes in excess of $64.7 million as of April 30, 2018. During any time when the Senior Notes are rated investment grade by either of Moody's Investors Service, Inc. or Standard & Poor's Ratings Services and no default (as defined in the Indenture) has occurred and is continuing, many of such covenants will be suspended and we will cease to be subject to such covenants during such period. Events of default under the Indenture include customary events, such as a cross-acceleration provision in the event that we fail to make payment of other indebtedness prior to the expiration of any applicable grace period or upon acceleration of indebtedness prior to its stated maturity date in an amount exceeding $25.0 million , as well as in the event a judgment is entered against us in excess of $25.0 million that is not discharged, bonded or insured. Asset-backed Notes. During fiscal years 2018 and 2017 we securitized customer accounts receivables by transferring the receivables to various bankruptcy-remote VIEs. In turn, the VIEs issued asset-backed notes secured by the transferred customer accounts receivables and restricted cash held by the VIEs. Under the terms of the securitization transactions, all cash collections and other cash proceeds of the customer receivables go first to the servicer and the holders of issued notes, and then to us as the holder of non-issued notes and residual equity. We retain the servicing of the securitized portfolios and receive a monthly fee of 4.75% (annualized) based on the outstanding balance of the securitized receivables. In addition, we, rather than the VIEs, retain all credit insurance income together with certain recoveries related to credit insurance and repair service agreements on charge-offs of the securitized receivables, which are reflected as a reduction to net charge-offs on a consolidated basis. The asset-backed notes were offered and sold to qualified institutional buyers pursuant to the exemptions from registration provided by Rule 144A under the Securities Act of 1933, as amended. If an event of default were to occur under the indenture that governs the respective asset-backed notes, the payment of the outstanding amounts may be accelerated, in which event the cash proceeds of the receivables that otherwise might be released to the residual equity holder would instead be directed entirely toward repayment of the asset-backed notes, or if the receivables are liquidated, all liquidation proceeds could be directed solely to repayment of the asset-backed notes as governed by the respective terms of the asset-backed notes. The holders of the asset-backed notes have no recourse to assets outside of the VIEs. Events of default include, but are not limited to, failure to make required payments on the asset-backed notes or specified bankruptcy-related events. The asset-backed notes consist of the following: Asset-Backed Notes Original Principal Amount Original Net Proceeds (1) Current Principal Amount Issuance Date Maturity Date Fixed Interest Rate Effective Interest Rate (2) 2017-A Class A Notes $ 313,220 $ 304,451 $ 4,171 4/19/2017 7/15/2019 2.73% 5.33% 2017-A Class B Notes 106,270 103,300 106,270 4/19/2017 2/15/2020 5.11% 5.73% 2017-A Class C Notes 50,340 48,919 50,340 4/19/2017 10/15/2021 7.40% 7.77% 2017-B Class A Notes 361,400 358,945 188,997 12/20/2017 7/15/2020 2.73% 4.95% 2017-B Class B Notes 132,180 131,281 132,180 12/20/2017 4/15/2021 4.52% 5.14% 2017-B Class C Notes 78,640 77,843 78,640 12/20/2017 11/15/2022 5.95% 6.29% Warehouse Notes 52,226 50,774 22,321 2/15/2018 2/15/2019 Index + 2.75% (3) 7.72% Total $ 1,094,276 $ 1,075,513 $ 582,919 (1) After giving effect to debt issuance costs and restricted cash held by the VIEs. (2) For the three months ended April 30, 2018, and inclusive of retrospective adjustments to deferred debt issuance costs based on changes in timing of actual and expected cash flows. (3) The rate on the Warehouse Notes is defined as the applicable index plus a 2.75% fixed margin. On February 15, 2018, affiliates of the Company closed on a $52.2 million financing under a receivables warehouse financing transaction entered into on February 6, 2018 (the "Warehouse Notes"). The net proceeds of the Warehouse Notes were used to prepay in full the Series 2016-B Class B Notes (the "2016-B Redeemed Notes") that were still outstanding as of February 15, 2018. On February 15, 2018, the Company completed the redemption of the 2016-B Redeemed Notes at an aggregate redemption price of $73.6 million (which was equal to the entire outstanding principal of, plus accrued interest and the call premiums on, the 2016-B Redeemed Notes). The net funds used to call the notes was $50.3 million, which is equal to the redemption price less adjustments of $23.3 million for funds held in reserve and collection accounts in accordance with the terms of the applicable indenture governing the 2016-B Redeemed Notes. The difference between the net proceeds of the Warehouse Notes and the carrying value of the 2016-B Redeemed Notes at redemption was used to fund fees, expenses and a reserve account related to the Warehouse facility. In connection with the early redemption of the 2016-B Redeemed Notes, we wrote-off $0.4 million of debt issuance costs. Revolving Credit Facility. On March 31, 2017, Conn's, Inc. and certain of its subsidiaries (the "Borrowers") entered into a Third Amendment to the Third Amended and Restated Loan and Security Agreement, dated as of October 30, 2015, with certain lenders, which, as of April 30, 2018, provided for a $750.0 million asset-based revolving credit facility (the "revolving credit facility") under which credit availability is subject to a borrowing base. As of April 30, 2018, the revolving credit facility matured on October 30, 2019. As of April 30, 2018, loans under the revolving credit facility bore interest, at our option, at a rate equal to LIBOR plus the applicable margin based on facility availability which specified a margin ranging from 2.75% to 3.25% per annum (depending on quarterly average net availability under the borrowing base) or the alternate base rate plus a margin ranging from 1.75% to 2.25% per annum (depending on quarterly average net availability under the borrowing base). The alternate base rate is the greatest of the prime rate announced by Bank of America, N.A., the federal funds rate plus 0.5%, or LIBOR for a 30-day interest period plus 1.0%. As of April 30, 2018, we also paid an unused fee on the portion of the commitments that was available for future borrowings or letters of credit at a rate ranging from 0.25% to 0.75% per annum, depending on the average outstanding balance and letters of credit of the revolving credit facility in the immediately preceding quarter. The weighted-average interest rate on borrowings outstanding and including unused line fees under the revolving credit facility was 7.4% for the three months ended April 30, 2018 . The revolving credit facility provides funding based on a borrowing base calculation that includes customer accounts receivable and inventory, and provides for a $40.0 million sub-facility for letters of credit to support obligations incurred in the ordinary course of business. The obligations under the revolving credit facility are secured by substantially all assets of the Company, excluding the assets of the VIEs. As of April 30, 2018 , we had immediately available borrowing capacity of $233.5 million under our revolving credit facility, net of standby letters of credit issued of $2.8 million . We also had $366.2 million that may become available under our revolving credit facility if we grow the balance of eligible customer receivables and total eligible inventory balances. The revolving credit facility places restrictions on our ability to incur additional indebtedness, grant liens on assets, make distributions on equity interests, dispose of assets, make loans, pay other indebtedness, engage in mergers, and other matters. The revolving credit facility restricts our ability to make dividends and distributions unless no event of default exists and a liquidity test is satisfied. Subsidiaries of the Company may make dividends and distributions to the Company and other obligors under the revolving credit facility without restriction. As of April 30, 2018 , we were restricted from making distributions, including repayments of the Senior Notes or other distributions, in excess of $64.7 million as a result of the revolving credit facility distribution restrictions. The revolving credit facility contains customary default provisions, which, if triggered, could result in acceleration of all amounts outstanding under the revolving credit facility. Debt Covenants. We were in compliance with our debt covenants, as amended, at April 30, 2018 . A summary of the significant financial covenants that govern our revolving credit facility, as amended, compared to our actual compliance status at April 30, 2018 is presented below: Actual Required Minimum/ Maximum Interest Coverage Ratio must equal or exceed minimum 2.86:1.00 1.25:1.00 Leverage Ratio must not exceed maximum 2.14:1.00 4.00:1.00 ABS Excluded Leverage Ratio must not exceed maximum 1.20:1.00 2.00:1.00 Cash Recovery Percent must exceed stated amount 5.51% 4.45% Capital Expenditures, net, must not exceed maximum $11.5 million $75.0 million All capitalized terms in the above table are defined by the revolving credit facility, as amended, and may or may not agree directly to the financial statement captions in this document. The covenants are calculated quarterly, except for the Cash Recovery Percent, which is calculated monthly on a trailing three-month basis, and capital expenditures, which is calculated for a period of four consecutive fiscal quarters, as of the end of each fiscal quarter. |
Contingencies
Contingencies | 3 Months Ended |
Apr. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies Securities Class Action Litigation. We and two of our former executive officers are defendants in a consolidated securities class action lawsuit pending in the United States District Court for the Southern District of Texas (the “Court”), captioned In re Conn's Inc. Securities Litigation, Cause No. 14-CV-00548 (the “Consolidated Securities Action”). The Consolidated Securities Action started as three separate purported securities class action lawsuits filed between March 5, 2014 and May 5, 2014 in the Court that were consolidated into the Consolidated Securities Action on June 3, 2014. The plaintiffs in the Consolidated Securities Action allege that the defendants made false and misleading statements or failed to disclose material adverse facts about our business, operations, and prospects. They allege violations of sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder and seek to certify a class of all persons and entities that purchased or otherwise acquired Conn's common stock or call options, or sold or wrote Conn's put options between April 3, 2013 and December 9, 2014. The complaint does not specify the amount of damages sought. On June 30, 2015, the Court held a hearing on the defendants' motion to dismiss plaintiffs' complaint. At the hearing, the Court dismissed Brian Taylor, a former executive officer, and certain other aspects of the complaint. The Court ordered the plaintiffs to further amend their complaint in accordance with its ruling, and the plaintiffs filed their Fourth Consolidated Amended Complaint on July 21, 2015. The remaining defendants filed a motion to dismiss on August 28, 2015. The defendant's motion to dismiss was fully briefed and the Court held a hearing on defendants' motion on March 25, 2016 and on May 5, 2016, the Court issued a ruling that dismissed 78 of 91 alleged misstatements. The parties have submitted their respective briefs in support of, and in opposition to, class certification, and also engaged in discovery pursuant to the Court’s scheduling order. In late June 2017, the Court granted the plaintiffs’ motion for class certification, and shortly thereafter, Defendants filed a petition for permission to appeal to the United States Fifth Circuit Court of Appeals (the "Fifth Circuit"). The Fifth Circuit granted leave to appeal on August 21, 2017. Briefing on the appeal is complete. While the Fifth Circuit initially scheduled oral arguments on the appeal for May 2, 2018, the parties subsequently asked to postpone oral arguments. The Fifth Circuit has not set a new date for oral arguments. Trial is scheduled for October 2018. On April 2, 2018, MicroCapital Fund, LP, MicroCapital Fund Ltd, and MicroCapital LLC filed a lawsuit (the “MicroCapital Lawsuit”) against us and certain of our former executive officers in the United States District Court for the Southern District of Texas, Cause No. 4:18-CV-01020 (the "MicroCapital Action"). The plaintiffs in this action allege that the defendants made false and misleading statements or failed to disclose material facts about our credit and underwriting practices, accounting and internal controls. Plaintiffs allege violations of sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, Texas and Connecticut common law fraud, and Texas common law negligent misrepresentation against all defendants; as well as section 20A of the Securities Exchange Act of 1934; and Connecticut common law negligent misrepresentation against certain defendants arising from plaintiffs’ purchase of Conn’s, Inc. securities between April 3, 2013 and February 20, 2014. The complaint does not specify the amount of damages sought. On April 27, 2018, the plaintiffs in the MicroCapital Action filed a motion for a ruling that discovery can proceed and a request for a Rule 16 conference. We filed a response in opposition with as a cross-motion to stay this action in its entirety on May 18, 2018. The deadline to move to dismiss or otherwise respond to the complaint in the MicroCapital Action is set for July 20, 2018. We intend to vigorously defend our interests in the Consolidated Securities Action and to vigorously defend against the claims in the MicroCapital Action. It is not possible at this time to predict the timing or outcome of any of this litigation, and we cannot reasonably estimate the possible loss or range of possible loss from these claims. Derivative Litigation. On December 1, 2014, an alleged shareholder, purportedly on behalf of the Company, filed a derivative shareholder lawsuit against us and certain of our current and former directors and former executive officers in the Court, captioned as Robert Hack, derivatively on behalf of Conn's, Inc., v. Theodore M. Wright (former executive officer and former director), Bob L. Martin, Jon E.M. Jacoby (former director), Kelly M. Malson, Douglas H. Martin, David Schofman, Scott L. Thompson (former director), Brian Taylor (former executive officer) and Michael J. Poppe (former executive officer) and Conn's, Inc., Case No. 4:14-cv-03442 (the "Original Derivative Action"). The complaint asserts claims for breach of fiduciary duty, unjust enrichment, gross mismanagement, and insider trading based on substantially similar factual allegations as those asserted in the Consolidated Securities Action. The plaintiff seeks unspecified damages against these persons and does not request any damages from us. Setting forth substantially similar claims against the same defendants, on February 25, 2015, an additional federal derivative action, captioned 95250 Canada LTEE, derivatively on Behalf of Conn's, Inc. v. Wright et al., Cause No. 4:15-cv-00521, was filed in the Court, which has been consolidated with the Original Derivative Action. The Court previously approved a stipulation among the parties to stay the action pending resolution of the motion for class certification in the Consolidated Securities Action. The parties have agreed to continue the stay pending a resolution of the Fifth Circuit appeal of class certification and, at this time, the Court has agreed to continue the stay. Another derivative action was filed on January 27, 2015, captioned as Richard A. Dohn v. Wright, et al., Cause No. 2015-04405, in the 281st Judicial District Court, Harris County, Texas. This action makes substantially similar allegations to the Original Derivative Action against the same defendants. On September 14, 2017, the court entered an order extending the stay until September 7, 2018. Prior to filing a lawsuit, an alleged shareholder, Robert J. Casey II ("Casey"), submitted a demand under Delaware law, which our Board of Directors refused. On May 19, 2016, Casey, purportedly on behalf of the Company, filed a lawsuit against us and certain of our current and former directors and former executive officers in the 55th Judicial District Court, Harris County, Texas, captioned as Casey, derivatively on behalf of Conn's, Inc., v. Theodore M. Wright (former executive officer and former director), Michael J. Poppe (former executive officer), Brian Taylor (former executive officer), Bob L. Martin, Jon E.M. Jacoby (former director), Kelly M. Malson, Douglas H. Martin, David Schofman, Scott L. Thompson (former director) and William E. Saunders Jr., and Conn's, Inc., Cause No. 2016-33135. The complaint asserts claims for breach of fiduciary duties and unjust enrichment based on substantially similar factual allegations as those asserted in the Original Derivative Action. The complaint does not specify the amount of damages sought. Pursuant to the parties’ agreement, this action is currently stayed. Other than Casey, none of the plaintiffs in the other derivative actions made a demand on our Board of Directors prior to filing their respective lawsuits. The defendants in the derivative actions intend to vigorously defend against these claims. It is not possible at this time to predict the timing or outcome of any of this litigation, and we cannot reasonably estimate the possible loss or range of possible loss from these claims. Regulatory Matters. We are continuing to cooperate with the SEC's investigation of our underwriting policies and bad debt provisions, which began in November 2014. The investigation is a non-public, fact-finding inquiry, and the SEC has stated that the investigation does not mean that any violations of law have occurred. In addition, we are involved in other routine litigation and claims incidental to our business from time to time which, individually or in the aggregate, are not expected to have a material adverse effect on us. As required, we accrue estimates of the probable costs for the resolution of these matters. These estimates have been developed in consultation with counsel and are based upon an analysis of potential results, assuming a combination of litigation and settlement strategies. However, the results of these proceedings cannot be predicted with certainty, and changes in facts and circumstances could impact our estimate of reserves for litigation. The Company believes that any probable and reasonably estimable loss associated with the foregoing has been adequately reflected in the accompanying financial statements. |
Variable Interest Entity
Variable Interest Entity | 3 Months Ended |
Apr. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Variable Interest Entity | Variable Interest Entities In fiscal years 2018 and 2017, we securitized customer accounts receivables by transferring the receivables to various bankruptcy-remote VIEs. Under the terms of the respective securitization transactions, all cash collections and other cash proceeds of the customer receivables go first to the servicer and the holders of the asset-backed notes, and then to the residual equity holder. We retain the servicing of the securitized portfolio and receive a monthly fee of 4.75% (annualized) based on the outstanding balance of the securitized receivables, and we currently hold all of the residual equity. In addition, we, rather than the VIEs, will retain certain credit insurance income together with certain recoveries related to credit insurance and repair service agreements on charge-offs of the securitized receivables, which will continue to be reflected as a reduction of net charge-offs on a consolidated basis for as long as we consolidate the VIEs. We consolidate VIEs when we determine that we are the primary beneficiary of these VIEs, we have the power to direct the activities that most significantly impact the performance of the VIEs and our obligation to absorb losses and the right to receive residual returns are significant. The following table presents the assets and liabilities held by the VIEs (for legal purposes, the assets and liabilities of the VIEs will remain distinct from Conn's, Inc.): (in thousands) April 30, January 31, Assets: Restricted cash $ 75,174 $ 85,322 Due from Conn's, Inc., net 7,051 15,212 Customer accounts receivable: Customer accounts receivable 750,425 987,418 Restructured accounts 119,448 97,967 Allowance for uncollectible accounts (127,485 ) (143,115 ) Allowances for no-interest option credit programs (14,645 ) (18,228 ) Deferred fees and origination costs (6,851 ) (9,332 ) Total customer accounts receivable, net 720,892 914,710 Total assets $ 803,117 $ 1,015,244 Liabilities: Accrued expenses $ 5,236 $ 6,723 Other liabilities 8,344 10,639 Current maturities of long-term debt: Warehouse Notes 22,321 — Deferred debt issuance costs (236 ) — 22,085 — Long-term debt: 2016-B Class B Notes — 73,589 2017-A Class A Notes 4,171 59,794 2017-A Class B Notes 106,270 106,270 2017-A Class C Notes 50,340 50,340 2017-B Class A Notes 188,997 292,663 2017-B Class B Notes 132,180 132,180 2017-B Class C Notes 78,640 78,640 560,598 793,476 Less: deferred debt issuance costs (3,626 ) (5,497 ) Total long-term debt 556,972 787,979 Total liabilities $ 592,637 $ 805,341 The assets of the VIEs serve as collateral for the obligations of the VIEs. The holders of the asset-backed notes have no recourse to assets outside of the respective VIEs. |
Segment Reporting
Segment Reporting | 3 Months Ended |
Apr. 30, 2018 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting Operating segments are defined as components of an enterprise that engage in business activities and for which discrete financial information is available that is evaluated on a regular basis by the chief operating decision maker to make decisions about how to allocate resources and assess performance. We are a leading specialty retailer and offer a broad selection of quality, branded durable consumer goods and related services in addition to a proprietary credit solution for our core credit-constrained consumers. We have two operating segments: (i) retail and (ii) credit. Our operating segments complement one another. The retail segment operates primarily through our stores and website in the retail furniture and mattresses, home appliances, consumer electronics and home office products business. Our retail segment product offerings include furniture and mattresses, home appliances, consumer electronics and home office products from leading global brands across a wide range of price points. Our credit segment offers affordable financing solutions to a large, under-served population of credit-constrained consumers who typically have limited credit alternatives. Our operating segments provide customers the opportunity to comparison shop across brands with confidence in our competitive prices as well as affordable monthly payment options, next day delivery and installation in the majority of our markets, and product repair service. The operating segments follow the same accounting policies used in our consolidated financial statements. We evaluate a segment’s performance based upon operating income before taxes. Selling, general and administrative expenses include the direct expenses of the retail and credit operations, allocated corporate overhead expenses, and a charge to the credit segment to reimburse the retail segment for expenses it incurs related to occupancy, personnel, advertising and other direct costs of the retail segment, which benefit the credit operations by sourcing credit customers and collecting payments. The reimbursement received by the retail segment from the credit segment is estimated using an annual rate of 2.5% times the average portfolio balance for each applicable period. As of April 30, 2018 , we operated retail stores in 14 states with no operations outside of the United States. No single customer accounts for more than 10% of our total revenues. Financial information by segment is presented in the following tables: Three Months Ended April 30, 2018 Three Months Ended April 30, 2017 (in thousands) Retail Credit Total Retail Credit Total Revenues: Furniture and mattress $ 97,020 $ — $ 97,020 $ 94,443 $ — $ 94,443 Home appliance 78,023 — 78,023 80,122 — 80,122 Consumer electronic 52,302 — 52,302 55,753 — 55,753 Home office 18,310 — 18,310 16,788 — 16,788 Other 3,659 — 3,659 4,256 — 4,256 Product sales 249,314 — 249,314 251,362 — 251,362 Repair service agreement commissions 22,863 — 22,863 24,696 — 24,696 Service revenues 3,579 — 3,579 3,227 — 3,227 Total net sales 275,756 — 275,756 279,285 — 279,285 Finance charges and other revenues 14 82,617 82,631 80 76,461 76,541 Total revenues 275,770 82,617 358,387 279,365 76,461 355,826 Costs and expenses: Cost of goods sold 166,589 — 166,589 171,950 — 171,950 Selling, general and administrative expenses (1) 77,752 37,126 114,878 73,947 32,590 106,537 Provision for bad debts 260 43,896 44,156 230 55,700 55,930 Charges and credits — — — 1,227 — 1,227 Total costs and expense 244,601 81,022 325,623 247,354 88,290 335,644 Operating income (loss) 31,169 1,595 32,764 32,011 (11,829 ) 20,182 Interest expense — 16,820 16,820 — 24,008 24,008 Loss on extinguishment of debt — 406 406 — 349 349 Income (loss) before income taxes $ 31,169 $ (15,631 ) $ 15,538 $ 32,011 $ (36,186 ) $ (4,175 ) (1) For the three months ended April 30, 2018 and 2017 , the amount of corporate overhead allocated to each segment reflected in selling, general and administrative expense was $8.4 million and $6.4 million , respectively. For the three months ended April 30, 2018 and 2017 , the amount of reimbursement made to the retail segment by the credit segment was $9.4 million and $9.4 million , respectively. |
Guarantor Financial Information
Guarantor Financial Information | 3 Months Ended |
Apr. 30, 2018 | |
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |
Guarantor Financial Information | Guarantor Financial Information Conn's, Inc. is a holding company with no independent assets or operations other than its investments in its subsidiaries. The Senior Notes, which were issued by Conn's, Inc., are fully and unconditionally guaranteed on a joint and several senior unsecured basis by the Guarantors. As of April 30, 2018 and January 31, 2018 the direct or indirect subsidiaries of Conn's, Inc. that were not Guarantors (the "Non-Guarantor Subsidiaries") were the VIEs and minor subsidiaries. There are no restrictions under the Indenture on the ability of any of the Guarantors to transfer funds to Conn's, Inc. in the form of dividends or distributions. The following financial information presents the Condensed Consolidated Balance Sheet, statement of operations, and statement of cash flows for Conn's, Inc. (the issuer of the Senior Notes), the Guarantors, and the Non-Guarantor Subsidiaries, together with certain eliminations. Investments in subsidiaries are accounted for by the parent company using the equity method for purposes of this presentation. Results of operations of subsidiaries are therefore reflected in the parent company's investment accounts and operations. The consolidated financial information includes financial data for: (i) Conn’s, Inc. (on a parent-only basis), (ii) Guarantors, (iii) Non-Guarantor Subsidiaries, and (iv) the parent company and the subsidiaries on a consolidated basis at April 30, 2018 and January 31, 2018 (after the elimination of intercompany balances and transactions). Condensed Consolidated Balance Sheet as of April 30, 2018 (in thousands) Conn's, Inc. Guarantors Non-guarantor Subsidiaries Eliminations Consolidated Assets Current assets: Cash and cash equivalents $ — $ 6,190 $ — $ — $ 6,190 Restricted cash — 1,550 75,174 — 76,724 Customer accounts receivable, net of allowances — 226,307 391,853 — 618,160 Other accounts receivable — 73,543 — — 73,543 Inventories — 190,312 — — 190,312 Other current assets — 20,108 7,051 (10,875 ) 16,284 Total current assets — 518,010 474,078 (10,875 ) 981,213 Investment in and advances to subsidiaries 753,815 210,480 — (964,295 ) — Long-term portion of customer accounts receivable, net of allowances — 306,469 329,039 — 635,508 Property and equipment, net — 141,314 — — 141,314 Deferred income taxes 22,052 — — — 22,052 Other assets — 4,662 — — 4,662 Total assets $ 775,867 $ 1,180,935 $ 803,117 $ (975,170 ) $ 1,784,749 Liabilities and Stockholders' Equity Current liabilities: Current maturities of debt and capital lease obligations $ — $ 1,095 $ 22,085 $ — $ 23,180 Accounts payable — 82,362 — — 82,362 Accrued expenses 4,800 60,859 5,236 (3,824 ) 67,071 Other current liabilities — 24,933 3,479 (7,051 ) 21,361 Total current liabilities 4,800 169,249 30,800 (10,875 ) 193,974 Deferred rent — 85,729 — — 85,729 Long-term debt and capital lease obligations 221,412 151,151 556,972 — 929,535 Other long-term liabilities — 20,991 4,865 — 25,856 Total liabilities 226,212 427,120 592,637 (10,875 ) 1,235,094 Total stockholders' equity 549,655 753,815 210,480 (964,295 ) 549,655 Total liabilities and stockholders' equity $ 775,867 $ 1,180,935 $ 803,117 $ (975,170 ) $ 1,784,749 Deferred income taxes related to tax attributes of the Guarantor Subsidiaries and Non-Guarantor Subsidiaries are reflected under Conn's, Inc. Condensed Consolidated Balance Sheet as of January 31, 2018 (in thousands) Conn's, Inc. Guarantors Non-guarantor Subsidiaries Eliminations Consolidated Assets Current assets: Cash and cash equivalents $ — $ 9,286 $ — $ — $ 9,286 Restricted cash — 1,550 85,322 — 86,872 Customer accounts receivable, net of allowances — 177,117 459,708 — 636,825 Other accounts receivable — 71,186 — — 71,186 Inventories — 211,894 — — 211,894 Other current assets — 68,621 15,212 (19,879 ) 63,954 Total current assets — 539,654 560,242 (19,879 ) 1,080,017 Investment in and advances to subsidiaries 735,272 209,903 — (945,175 ) — Long-term portion of customer accounts receivable, net of allowances — 195,606 455,002 — 650,608 Property and equipment, net — 143,152 — — 143,152 Deferred income taxes 21,565 — — — 21,565 Other assets — 5,457 — — 5,457 Total assets $ 756,837 $ 1,093,772 $ 1,015,244 $ (965,054 ) $ 1,900,799 Liabilities and Stockholders' Equity Current liabilities: Current maturities of capital lease obligations $ — $ 907 $ — $ — $ 907 Accounts payable — 71,617 — — 71,617 Accrued expenses 686 66,370 6,723 (4,667 ) 69,112 Other current liabilities — 32,685 5,002 (15,212 ) 22,475 Total current liabilities 686 171,579 11,725 (19,879 ) 164,111 Deferred rent — 87,003 — — 87,003 Long-term debt and capital lease obligations 221,083 81,043 787,979 — 1,090,105 Other long-term liabilities — 18,875 5,637 — 24,512 Total liabilities 221,769 358,500 805,341 (19,879 ) 1,365,731 Total stockholders' equity 535,068 735,272 209,903 (945,175 ) 535,068 Total liabilities and stockholders' equity $ 756,837 $ 1,093,772 $ 1,015,244 $ (965,054 ) $ 1,900,799 Deferred income taxes related to tax attributes of the Guarantor Subsidiaries and Non-Guarantor Subsidiaries are reflected under Conn's, Inc. Condensed Consolidated Statement of Operations for the three months ended April 30, 2018 (in thousands) Conn's, Inc. Guarantors Non-guarantor Subsidiaries Eliminations Consolidated Revenues: Total net sales $ — $ 275,756 $ — $ — $ 275,756 Finance charges and other revenues — 45,655 36,976 — 82,631 Servicing fee revenue — 16,746 — (16,746 ) — Total revenues — 338,157 36,976 (16,746 ) 358,387 Costs and expenses: Cost of goods sold — 166,589 — — 166,589 Selling, general and administrative expense — 119,793 11,831 (16,746 ) 114,878 Provision for bad debts — 7,008 37,148 — 44,156 Total costs and expenses — 293,390 48,979 (16,746 ) 325,623 Operating income (loss) — 44,767 (12,003 ) — 32,764 Interest expense 4,443 3,033 9,344 — 16,820 Loss on extinguishment of debt — — 406 — 406 Income (loss) before income taxes (4,443 ) 41,734 (21,753 ) — 15,538 Provision (benefit) for income taxes (802 ) 7,537 (3,929 ) — 2,806 Net income (loss) (3,641 ) 34,197 (17,824 ) — 12,732 Income (loss) from consolidated subsidiaries 16,373 (17,824 ) — 1,451 — Consolidated net income (loss) $ 12,732 $ 16,373 $ (17,824 ) $ 1,451 $ 12,732 Condensed Consolidated Statement of Operations for the three months ended April 30, 2017 (in thousands) Conn's, Inc. Guarantors Non-guarantor Subsidiaries Eliminations Consolidated Revenues: Total net sales $ — $ 279,285 $ — $ — $ 279,285 Finance charges and other revenues — 36,798 39,743 — 76,541 Servicing fee revenue — 15,184 — (15,184 ) — Total revenues — 331,267 39,743 (15,184 ) 355,826 Costs and expenses: Cost of goods sold — 171,950 — — 171,950 Selling, general and administrative expense — 106,233 15,488 (15,184 ) 106,537 Provision for bad debts — (5,433 ) 61,363 — 55,930 Charges and credits — 1,227 — — 1,227 Total costs and expenses — 273,977 76,851 (15,184 ) 335,644 Operating income (loss) — 57,290 (37,108 ) — 20,182 Interest expense 4,443 1,778 17,787 — 24,008 Loss on extinguishment of debt — 349 — — 349 Income (loss) before income taxes (4,443 ) 55,163 (54,895 ) — (4,175 ) Provision (benefit) for income taxes (1,698 ) 21,078 (20,975 ) — (1,595 ) Net income (loss) (2,745 ) 34,085 (33,920 ) — (2,580 ) Income (loss) from consolidated subsidiaries 165 (33,920 ) — 33,755 — Consolidated net income (loss) $ (2,580 ) $ 165 $ (33,920 ) $ 33,755 $ (2,580 ) Condensed Consolidated Statement of Cash Flows for the three months ended April 30, 2018 (in thousands) Conn's, Inc. Guarantors Non-guarantor Subsidiaries Eliminations Consolidated Net cash provided by (used in) operating activities $ (267 ) $ (14,194 ) $ 149,800 $ — $ 135,339 Cash flows from investing activities: Purchase of customer accounts receivables — — (50,774 ) 50,774 — Sale of customer accounts receivables — — 50,774 (50,774 ) — Purchase of property and equipment — (6,169 ) — — (6,169 ) Net cash used in investing activities — (6,169 ) — — (6,169 ) Cash flows from financing activities: Payments on asset-backed notes — (50,847 ) (181,737 ) — (232,584 ) Borrowings from revolving credit facility — 393,158 — — 393,158 Payments on revolving credit facility — (322,608 ) — — (322,608 ) Borrowings from warehouse facility — — 52,226 — 52,226 Payments of debt issuance costs and amendment fees — (1 ) (532 ) — (533 ) Payments on warehouse facility — — (29,905 ) — (29,905 ) Proceeds from stock issued under employee benefit plans 267 — — — 267 Tax payments associated with equity-based compensation transactions — (1,888 ) — — (1,888 ) Payments from extinguishment of debt — (294 ) — — (294 ) Other — (253 ) — — (253 ) Net cash provided by (used in) financing activities 267 17,267 (159,948 ) — (142,414 ) Net change in cash, cash equivalents and restricted cash — (3,096 ) (10,148 ) — (13,244 ) Cash, cash equivalents and restricted cash, beginning of period — 10,836 85,322 — 96,158 Cash, cash equivalents and restricted cash, end of period $ — $ 7,740 $ 75,174 $ — $ 82,914 Condensed Consolidated Statement of Cash Flows for the three months ended April 30, 2017 (in thousands) Conn's, Inc. Guarantors Non-guarantor Subsidiaries Eliminations Consolidated Net cash provided by (used in) operating activities $ (256 ) $ (192,236 ) $ 283,256 $ — $ 90,764 Cash flows from investing activities: Purchase of customer accounts receivables — — (466,056 ) 466,056 — Sale of customer accounts receivables — 466,056 — (466,056 ) — Purchase of property and equipment — (4,286 ) — — (4,286 ) Net cash provided by (used in) investing activities — 461,770 (466,056 ) — (4,286 ) Cash flows from financing activities: Proceeds from issuance of asset-backed notes — — 469,814 — 469,814 Payments on asset-backed notes — — (232,931 ) — (232,931 ) Borrowings from revolving credit facility — 265,935 — — 265,935 Payments on revolving credit facility — (443,435 ) — — (443,435 ) Payments of debt issuance costs and amendment fees — (2,865 ) (4,740 ) — (7,605 ) Proceeds from stock issued under employee benefit plans 256 — — — 256 Other 84 — — 84 Net cash provided by (used in) financing activities 256 (180,281 ) 232,143 — 52,118 Net change in cash, cash equivalents and restricted cash — 89,253 49,343 — 138,596 Cash, cash equivalents and restricted cash, beginning of period — 23,566 110,698 — 134,264 Cash, cash equivalents and restricted cash, end of period $ — $ 112,819 $ 160,041 $ — $ 272,860 |
Subsequent Events
Subsequent Events | 3 Months Ended |
Apr. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On May 23, 2018, the Company and certain of its subsidiaries amended the revolving credit facility by entering into a Fourth Amended and Restated Loan and Security Agreement with certain lenders. The amended revolving credit facility (a) provided for a reduction in the aggregate commitments from $750 million to $650 million ; (b) extended the maturity date to May 23, 2022, (c) modified the method by which the applicable margin is calculated to be based on the total leverage ratio, with the applicable margin ranging from 2.50% to 3.25% for LIBOR loans and from 1.50% to 2.25% for base rate loans, (d) eliminated a $10 million availability block in calculating the borrowing base, (e) increased the maximum accounts receivable advance rate from 75% to 80% , (f) decreased the maximum unused line fee from 75 basis points to 50 basis points, (g) eliminated the cash recovery covenant, (h) modified the maximum inventory component of the borrowing base from $175 million to 33.33% of revolving loan commitments in effect, (i) modified the interest coverage covenant such that the minimum interest coverage on a trailing two quarter basis is 1.5 x and the minimum interest coverage during any single quarter is 1.0 x, (j) increased the maximum capital expenditures from $75 million to $100 million during any period of four consecutive fiscal quarters and (k) modified the ability of the Company to effect future securitizations of its customer receivables portfolio, including adding the ability of the Company to enter into revolving ABS transactions. |
Summary of Significant Accoun16
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Apr. 30, 2018 | |
Accounting Policies [Abstract] | |
Business and Basis of Presentation | Business . Conn's, Inc., a Delaware corporation, is a holding company with no independent assets or operations other than its investments in its subsidiaries. References to “we,” “our,” “us,” “the Company,” “Conn’s” or “CONN” refer to Conn’s, Inc. and, as apparent from the context, its consolidated bankruptcy-remote variable interest entities (“VIEs”) and its wholly owned subsidiaries. Conn's is a leading specialty retailer that offers a broad selection of quality, branded durable consumer goods and related services in addition to proprietary credit solutions for its core credit-constrained consumers. We operate an integrated and scalable business through our retail stores and website. Our complementary product offerings include furniture and mattresses, home appliances, consumer electronics and home office products from leading global brands across a wide range of price points. Our credit offering provides financing solutions to a large, under-served population of credit-constrained consumers who typically have limited credit alternatives. We operate two reportable segments: retail and credit. Our retail stores bear the "Conn's HomePlus" name with all of our stores providing the same products and services to a common customer group. Our stores follow the same procedures and methods in managing their operations. Our retail business and credit business are operated independently from each other. The credit segment is dedicated to providing short- and medium-term financing to our retail customers. The retail segment is not involved in credit approval decisions. Our management evaluates performance and allocates resources based on the operating results of the retail and credit segments. Basis of Presentation. The accompanying unaudited, condensed consolidated financial statements of Conn's, Inc. and its wholly-owned subsidiaries, including the VIEs, have been prepared by management in accordance with U.S. generally accepted accounting principles ("GAAP") and prevailing industry practice for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, we do not include all of the information and footnotes required by GAAP for complete financial statements. The accompanying financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. All such adjustments are of a normal recurring nature. The condensed consolidated financial position, results of operations and cash flows for these interim periods are not necessarily indicative of the results that may be expected in future periods. The balance sheet at January 31, 2018 has been derived from the audited financial statements at that date. The financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2018 (the “2018 Form 10-K”), filed with the United States Securities and Exchange Commission (the “SEC”) on April 5, 2018. |
Fiscal Year | Fiscal Year. Our fiscal year ends on January 31. References to a fiscal year refer to the calendar year in which the fiscal year ends. |
Principles of Consolidation | Principles of Consolidation . The consolidated financial statements include the accounts of Conn's, Inc. and its wholly-owned subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation. |
Variable Interest Entity | Variable Interest Entities. VIEs are consolidated if the Company is the primary beneficiary. The primary beneficiary of a VIE is the party that has (i) the power to direct the activities that most significantly impact the performance of the VIE and (ii) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. We securitize customer accounts receivables by transferring the receivables to various bankruptcy-remote VIEs. We retain the servicing of the securitized portfolio and have a variable interest in each corresponding VIE by holding the residual equity. We have determined that we are the primary beneficiary of each respective VIE because (i) our servicing responsibilities for the securitized portfolio give us the power to direct the activities that most significantly impact the performance of the VIE and (ii) our variable interest in the VIE gives us the obligation to absorb losses and the right to receive residual returns that potentially could be significant. As a result, we consolidate the respective VIEs within our consolidated financial statements. Refer to Note 5, Debt and Capital Lease Obligations , and Note 7, Variable Interest Entities , for additional information. |
Use of Estimates | Use of Estimates . The preparation of financial statements in accordance with GAAP requires management to make informed judgments and estimates that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Changes in facts and circumstances or additional information may result in revised estimates, and actual results may differ, even significantly, from these estimates. Management evaluates its estimates and related assumptions regularly, including those related to the allowance for doubtful accounts and allowances for no-interest option credit programs, which are particularly sensitive given the size of our customer portfolio balance. |
Cash and Cash Equivalents and Restricted Cash | Cash and Cash Equivalents . Cash and cash equivalents include cash, credit card deposits in-transit, and highly liquid debt instruments purchased with a maturity of three months or less. Cash and cash equivalents include credit card deposits in-transit of $3.8 million and $2.0 million as of April 30, 2018 and January 31, 2018 , respectively. Restricted Cash. The restricted cash balance as of April 30, 2018 and January 31, 2018 includes $56.7 million and $58.1 million , respectively, of cash we collected as servicer on the securitized receivables that was subsequently remitted to the VIEs and $18.5 million and $27.2 million , respectively, of cash held by the VIEs as additional collateral for the asset-backed notes. |
Customer Accounts Receivable | Customer Accounts Receivable. Customer accounts receivable reported in the Condensed Consolidated Balance Sheet includes total receivables managed, including both those transferred to the VIEs and those not transferred to the VIEs. Customer accounts receivable are recognized at the time the customer takes possession of the product. Based on contractual terms, we record the amount of principal and accrued interest on customer receivables that is expected to be collected within the next twelve months in current assets with the remaining balance in long-term assets on the Condensed Consolidated Balance Sheet. Customer accounts receivable includes the net of unamortized deferred fees charged to customers and origination costs. Customer receivables are considered delinquent if a payment has not been received on the scheduled due date. Accounts that are delinquent more than 209 days as of the end of a month are charged-off against the allowance for doubtful accounts along with interest accrued subsequent to the last payment. In an effort to mitigate losses on our accounts receivable, we may make loan modifications to a borrower experiencing financial difficulty. In our role as servicer, we may also make modifications to loans held by the VIEs. The loan modifications are intended to maximize net cash flow after expenses and avoid the need to repossess collateral or exercise legal remedies available to us. We may extend or "re-age" a portion of our customer accounts, which involves modifying the payment terms to defer a portion of the cash payments due. Our re-aging of customer accounts does not change the interest rate or the total principal amount due from the customer and typically does not reduce the monthly contractual payments. To a much lesser extent, we may provide the customer the ability to re-age their obligation by refinancing the account, which does not change the interest rate or the total principal amount due from the customer but does reduce the monthly contractual payments and extend the term. We consider accounts that have been re-aged in excess of three months or refinanced as Troubled Debt Restructurings ("TDR" or "Restructured Accounts"). |
Interest Income on Customer Accounts Receivable | Interest Income on Customer Accounts Receivable . Interest income, which includes interest income and amortization of deferred fees and origination costs, is recorded using the interest method and is reflected in finance charges and other revenues. Typically, interest income is recorded until the customer account is paid off or charged-off, and we provide an allowance for estimated uncollectible interest. Any contractual interest income received from customers in excess of the interest income calculated using the interest method is recorded as deferred revenue on our balance sheets. At April 30, 2018 and January 31, 2018 , there was $12.5 million and $12.5 million , respectively, of deferred interest included in deferred revenues and other credits and other long-term liabilities. The deferred interest will ultimately be brought into income as the accounts pay off or charge-off. We offer a 12 month no -interest option program. If the customer is delinquent in making a scheduled monthly payment or does not repay the principal in full by the end of the no-interest option program period (grace periods are provided), the account does not qualify for the no-interest provision and none of the interest earned is waived. Interest income is recognized based on estimated accrued interest earned to date on all no -interest option finance programs with an offsetting reserve for those customers expected to satisfy the requirements of the program based on our historical experience. We recognize interest income on TDR accounts using the interest income method, which requires reporting interest income equal to the increase in the net carrying amount of the loan attributable to the passage of time. Cash proceeds and other adjustments are applied to the net carrying amount such that it equals the present value of expected future cash flows. We typically only place accounts in non-accrual status when legally required. Payments received on non-accrual loans will be applied to principal and reduce the amount of the loan. At April 30, 2018 , customer receivables carried in non-accrual status were $15.8 million , of which $12.1 million is in bankruptcy status and less than 60 days past due. At January 31, 2018 , customer receivables carried in non-accrual status were $16.9 million , of which $14.5 million is in bankruptcy status and less than 60 days past due. At April 30, 2018 and January 31, 2018 , customer receivables that were past due 90 days or more and still accruing interest totaled $111.1 million and $109.7 million , respectively. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts. The determination of the amount of the allowance for bad debts is, by nature, highly complex and subjective. Future events that are inherently uncertain could result in material changes to the level of the allowance for bad debts. General economic conditions, changes to state or federal regulations and a variety of other factors that affect the ability of borrowers to service their debts or our ability to collect will impact the future performance of the portfolio. We establish an allowance for doubtful accounts, including estimated uncollectible interest, to cover probable and estimable losses on our customer accounts receivable resulting from the failure of customers to make contractual payments. Our customer portfolio balance consists of a large number of relatively small, homogeneous accounts. None of our accounts are large enough to warrant individual evaluation for impairment. We record an allowance for doubtful accounts on our non-TDR customer accounts receivable that we expect to charge-off over the next 12 months based on historical gross charge-off rates over the last 24 months. We incorporate an adjustment to historical gross charge-off rates for a scaled factor of the year-over-year change in six month average first payment default rates and the year-over-year change in the balance of customer accounts receivable that are 60 days or more past due. In addition to adjusted historical gross charge-off rates, estimates of post-charge-off recoveries, including cash payments from customers, amounts realized from the repossession of the products financed, sales tax recoveries from taxing jurisdictions, and payments received under credit insurance policies are also considered. Qualitative adjustments are made to the allowance for bad debts when, based on management’s judgment, there are internal or external factors impacting probable incurred losses not taken into account by the quantitative calculations. These qualitative considerations are based on the following factors: changes in lending policies and procedures, changes in economic and business conditions, changes in the nature and volume of the portfolio, changes in lending management, changes in credit quality statistics, changes in concentrations of credit, and other internal or external factor changes. We utilize an economic qualitative adjustment based on changes in unemployment rates if current unemployment rates in our markets are worse than they were on average over the last 24 months. We also qualitatively limit the impact of changes in first payment default rates and changes in delinquency when those changes result in a decrease to the allowance for bad debts based on a measure of the dispersion of historical charge-off rates. We determine allowances for those accounts that are TDR based on the discounted present value of cash flows expected to be collected over the life of those accounts based primarily on the performance of TDR loans over the last 24 months. The cash flows are discounted based on the weighted-average effective interest rate of the TDR accounts. The excess of the carrying amount over the discounted cash flow amount is recorded as an allowance for loss on those accounts. |
Debt Issuance Costs | Debt Issuance Costs. Costs that are direct and incremental to debt issuance are deferred and amortized to interest expense using the effective interest method over the expected life of the debt. All other costs related to debt issuance are expensed as incurred. We present debt issuance costs associated with long-term debt as a reduction of the carrying amount of the debt. Unamortized costs related to the revolving credit facility are included in other assets on our Condensed Consolidated Balance Sheet and were $4.4 million and $5.2 million as of April 30, 2018 and January 31, 2018 , respectively. |
Income Taxes | Income Taxes. For the three months ended April 30, 2018 and 2017, we utilized the estimated annual effective tax rate based on our estimated fiscal year 2019 and 2018 pre-tax income, respectively, in determining income tax expense. Provision for income taxes for interim periods is based on an estimated annual income tax rate, adjusted for discrete tax items. As a result, our interim effective tax rates may vary significantly from the statutory tax rate and the annual effective tax rate. On December 22, 2017 H.R. 1, originally known as the Tax Cuts and Jobs Act (the “Tax Act”), was signed into law. Among the significant changes to the U.S. Internal Revenue Code, the Tax Act lowered the U.S. federal corporate income tax rate (“Federal Tax Rate”) from 35% to 21% effective January 1, 2018. For the three months ended January 31, 2018, we calculated our best estimate of the impact of the Tax Act in our fiscal year 2018 provision for income taxes in accordance with our understanding of the Tax Act and available guidance as of that date. We continue to analyze additional information and guidance related to the Tax Act as supplemental legislation, regulatory guidance and evolving technical interpretations become available. We will continue to refine such amounts within the measurement period as provided by Staff Accounting Bulletin No. 118 and expect to complete our analysis no later than the fourth quarter of fiscal year 2019. For the three months ended April 30, 2018 and 2017, the effective tax rate was 18.1% and 38.2% , respectively. The primary factors affecting our effective tax rate for the three months ended April 30, 2018 were a decrease in the Federal Tax Rate as a result of the Tax Act, an increase in pre-tax earnings, and excess tax benefits related to the vesting of equity compensation. |
Share-based Compensation | Stock-based Compensation. Stock-based compensation expense is recorded, net of estimated forfeitures, for share-based compensation awards over the requisite service period using the straight-line method. An adjustment is made to compensation cost for any difference between the estimated forfeitures and the actual forfeitures related to the awards. For equity-classified share-based compensation awards, expense is recognized based on the grant-date fair value. For stock option grants, we use the Black-Scholes model to determine fair value. For grants of restricted stock units, the fair value of the grant is the market value of our stock at the date of issuance. |
Earnings per Share | Earnings per Share . Basic earnings per share is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding during the period. Diluted earnings per share includes the dilutive effects of any stock options and restricted stock units granted, which is calculated using the treasury-stock method. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments . Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities recorded at fair value are categorized using defined hierarchical levels related to subjectivity associated with the inputs to fair value measurements as follows: • 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). In determining fair value, we use observable market data when available, or models that incorporate observable market data. When we are required to measure fair value and there is not a market-observable price for the asset or liability or for a similar asset or liability, we use the cost or income approach depending on the quality of information available to support management’s assumptions. The cost approach is based on management’s best estimate of the current asset replacement cost. The income approach is based on management’s best assumptions regarding expectations of future net cash flows and discounts the expected cash flows using a commensurate risk-adjusted discount rate. Such evaluations involve significant judgment, and the results are based on expected future events or conditions such as sales prices, economic and regulatory climates, and other factors, most of which are often outside of management’s control. However, we believe assumptions used reflect a market participant’s view of long-term prices, costs, and other factors and are consistent with assumptions used in our business plans and investment decisions. In arriving at fair-value estimates, we use relevant observable inputs available for the valuation technique employed. If a fair-value measurement reflects inputs at multiple levels within the hierarchy, the fair-value measurement is characterized based on the lowest level of input that is significant to the fair-value measurement. The fair value of cash and cash equivalents, restricted cash and accounts payable approximate their carrying amounts because of the short maturity of these instruments. The fair value of customer accounts receivables, determined using a Level 3 discounted cash flow analysis, approximates their carrying amount, which includes the allowance for doubtful accounts. The fair value of our revolving credit facility approximates carrying value based on the current borrowing rate for similar types of borrowing arrangements. At April 30, 2018 , the fair value of the Senior Notes outstanding, which was determined using Level 1 inputs, was $224.8 million as compared to the carrying value of $227.0 million , excluding the impact of the related discount. At April 30, 2018 , the fair value of the asset-backed notes approximates their carrying value and was determined using Level 2 inputs based on inactive trading activity. |
Recent Accounting Pronouncements Adopted and Recent Accounting Pronouncements Yet To Be Adopted | We recognized a net after-tax cumulative effect adjustment to retained earnings of $1.0 million as of the date of adoption. The details of our current revenue recognition policy, as well as the change due to ASC Topic 606, are described below. Revenue Recognition . The Company has the following material revenue streams: the sale of products (e.g. appliances, electronics) including delivery; the sale of third party warranty and insurance programs, including retrospective income; service income; interest income generated from the financing of point of sale transactions; and volume rebate incentives received from a third party financer. Interest income related to our customer accounts receivable balance and loan origination costs (including sales commissions) meet the scope exception of ASC 606 and are therefore not impacted by the adoption of this standard. For our twelve month no-interest option program, as a practical expedient acceptable under ASC 606, we do not adjust for the time value of money. Sale of Products Including Delivery : The Company has a single performance obligation associated with these contracts: the delivery of the product to the customer, at which point control transfers. Revenue for the sale of products is recognized at the time of delivery, net of any adjustments for sales incentives such as discounts, coupons, rebates or other free products or services. Sales financed through third-party no-interest option programs typically require us to pay a fee to the third party on each completed sale, which is recorded as a reduction of net sales in the retail segment. Sale of Third Party Warranty and Insurance Programs, Including Retrospective Income: We sell repair service agreements ("RSA") and credit insurance contracts on behalf of unrelated third-parties. The Company has a single performance obligation associated with these contracts: the delivery of the product to the customer, at which point control transfers. Commissions related to these contracts are recognized in revenue upon delivery of the product. We defer 5% of the revenue received from the sale of RSAs as compensation to us for the cost to serve as administrator of the RSAs sold as 5% represents the estimated stand-alone sales price to serve as the administrator. The deferred RSA administration fee is recorded in income ratably over the life of the RSA contract sold. Retrospective income on RSA contracts is recognized upon delivery of the product based on an estimate of claims and is adjusted throughout the life of the contracts as actual claims materialize. Retrospective income on insurance contracts is recognized when earned as that is the point at which we no longer believe a significant reversal of income is probable as the consideration is highly susceptible to factors outside of our influence. Service Income: The Company has a single performance obligation associated with these contracts: the servicing of the RSA claims. Service revenues are recognized at the time service is provided to the customer. Volume Rebate Incentive: As part of our agreement with our third-party provider of no-interest option programs, we may receive a volume rebate incentive based on the total dollar value of sales made under our third-party provider. The Company has a single performance obligations associated with this contract: the delivery of the product to the customer, at which point control transfers. Revenue for the volume rebate incentive is recognized upon deliver of the product to the customer based on the projected total annual dollar value of sales to be made under our third-party provider. ASC 606 requires disaggregation of revenue recognized from contracts with customers to depict how the nature, amount, timing and uncertainty of revenue is affected by economic factors. The Company concluded that the disaggregated discrete financial information presented in Note 8, Segment Reporting , and Note 4, Finance Charges and Other Revenues , reviewed by our chief operating decision maker in evaluating the financial performance of our operating segments adequately addresses the disaggregation of revenue requirements of ASC 606. Deferred Revenue. Deferred revenue related to contracts with customers as defined by ASC 606 as of April 30, 2018 and January 31, 2018 consisted of deferred customer deposits of $1.5 million and $1.8 million , respectively, and deferred RSA administration fees of $8.4 million and $8.7 million , respectively. All of the deferred customer deposits as of January 31, 2018 were recognized as revenue during the three months ended April 30, 2018. We recognized $1.3 million of income during the three months ended April 30, 2018 related to RSA administrative fees deferred as of January 31, 2018. Changes in Revenue Recognition Due to ASC 606. The adoption of ASC 606 resulted in a change to our accounting policy related to retrospective income on RSAs. We participate in profit sharing agreements with the underwriters of our RSA products, payment from which is contingent upon the actual performance of the portfolio of the RSAs sold. Prior to the adoption of ASC 606, we recognized this revenue and related receivable as the amount due to us at each reporting date based on the performance of the portfolio through such date. The Company concluded that this retrospective income represents variable consideration under ASC 606 for which the Company’s performance obligation is satisfied when the RSA is sold to the customer. Under ASC 606, an estimate of variable consideration, subject to constraints, is to be included in the transaction price and recognized when or as the performance obligation is satisfied. As a result of the adoption of ASC 606, the Company changed its accounting policy related to retrospective income on RSAs to record an estimate of retrospective income when the RSA is sold, subject to constraints in the estimate. The Company's estimate of the amount of variable consideration is recorded as a contract asset, representing a conditional right to payment, and is included within other accounts receivable in the Condensed Consolidated Balance Sheet. The estimated contract asset will be reassessed at the end of each reporting period, with changes thereto recorded as adjustments to revenue. The cumulative effect of the changes made to the Company’s Condensed Consolidated Balance Sheet as a result of the adoption of ASC 606 were as follows (in thousands): Impact of Adoption of ASC 606 (in thousands) Balance at January 31, 2018 Adjustments due to ASC 606 Balance at February 1, 2018 Assets Other Accounts Receivable $ 71,186 $ 1,210 $ 72,396 Deferred Income Taxes 21,565 (254 ) 21,311 Stockholder's Equity $ 535,068 $ 956 $ 536,024 The adoption of ASC 606 did not have a material impact on the consolidated financial statements for the three months ended April 30, 2018 and no comparative financial statements are presented. Internal Controls. As a result of the adoption of ASC 606 we evaluated our internal control framework, and there have been no changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force) . ASU 2016-18 requires that the statement of cash flows provides the change in the total of cash, cash equivalents, and restricted cash or restricted cash equivalents. We hold restricted cash related to our asset backed security transactions and lending license requirements. Effective February 1, 2018, the Company adopted the ASU which resulted in us no longer presenting the changes in restricted cash balances as a component of cash flows from financing activities but instead include the balances of both current and long-term restricted cash with cash and cash equivalents in total cash, cash equivalents and restricted cash for the beginning and end of the periods presented. The total cash flow impact for the three months ended April 30, 2017 was an increase in the cash provided by financing activities of $49.3 million . The balances of cash and cash equivalents and restricted cash are separately presented within the Condensed Consolidated Balance Sheet as of April 30, 2018 and January 31, 2018. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force) . ASU 2016-15 clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows to reduce diversity in practice. Among other things, debt prepayment or debt extinguishment costs will be presented as cash outflows for financing activities on the statement of cash flow. Effective February 1, 2018, the Company adopted the ASU, which resulted in us no longer presenting the change in debt extinguishment costs as a component of cash flows from operating activities but instead include the change as a component of cash flows from financing activities. The adoption of this ASU resulted in the classification of $0.3 million in payments on extinguishment of debt as a cash outflow from financing activities for the months ended April 30, 2018. There was no impact for the three months ended April 30, 2017. Recent Accounting Pronouncements Yet To Be Adopted. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which will change how lessees account for leases. For most leases, a liability will be recorded on the balance sheet based on the present value of future lease obligations with a corresponding right-of-use asset. Primarily for those leases currently classified by us as operating leases, we will recognize a single lease cost on a straight line basis based on the combined amortization of the lease obligation and the right-of-use asset. Other leases will be required to be accounted for as financing arrangements similar to how we currently account for capital leases. On transition, we will recognize a cumulative-effect adjustment to the retained earnings on the opening balance sheet in the period of adoption using a modified retrospective approach. The final standard will become effective for us beginning in the first quarter of fiscal year 2020. Based on our preliminary assessment, we believe the adoption of this ASU will have a material impact on our financial statements as we will be required to report additional leases on our Condensed Consolidated Balance Sheet. We are the lessee under various lease agreements for our retail stores and equipment that are currently accounted for as operating leases as discussed in Note 8, Leases, of our audited Consolidated Financial Statements included in our 2018 Form 10-K. In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . ASU 2016-13 requires that financial assets measured at amortized cost be presented at the net amount expected to be collected through an allowance for credit losses that is deducted from the amortized cost basis. The allowance for credit losses should reflect management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset. The standard will become effective for us in the first quarter of fiscal year 2021 and early adoption is permitted beginning in the first quarter of fiscal year 2020. We have formed a cross-functional working group comprised of individuals from various functional areas including credit, finance, accounting, and information technology. While we are currently evaluating the likely impact the adoption of this ASU will have on our consolidated financial statements, the adoption of ASU 2016-13 is likely to result in a material increase in the allowance for loan losses as a result of changing from an "incurred loss" model, which encompasses allowances for current known and inherent losses within the portfolio, to an "expected loss" model, which encompasses allowances for losses expected to be incurred over the life of the portfolio. |
Summary of Significant Accoun17
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Apr. 30, 2018 | |
Accounting Policies [Abstract] | |
RSUs, PSUs and stock options granted during the period | The following table sets forth the restricted stock unit awards ("RSUs"), performance stock awards ("PSUs") and stock options granted during the three months ended April 30, 2018 and 2017: Three Months Ended 2018 2017 RSUs (1) 80,411 324,487 PSUs (2) — 429,000 Stock Options (3) 620,166 — Total stock awards granted 700,577 753,487 Aggregate grant date fair value (in thousands) $ 15,511 $ 7,761 (1) The RSUs issued during the three months ended April 30, 2018 and 2017 are scheduled to vest ratably over periods of three to four years from the date of grant. (2) The PSUs issued during the three months ended April 30, 2017 will vest, if at all, upon the certification, after fiscal year 2020, by the compensation committee of the satisfaction of the annual and cumulative Earnings Before Interest, Taxes, Depreciation and Amortization performance conditions over the three fiscal years commencing with fiscal year 2018. (3) The weighted-average assumptions for the option awards granted during the three months ended April 30, 2018 included expected volatility of 68.0% , an expected term of 6.5 years and risk-free interest rate of 2.67% . No dividend yield was included in the weighted-average assumptions for the option awards granted during the three months ended April 30, 2018 . |
Shares outstanding for the earnings per share calculations | Earnings per Share . Basic earnings per share is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding during the period. Diluted earnings per share includes the dilutive effects of any stock options and restricted stock units granted, which is calculated using the treasury-stock method. The following table sets forth the shares outstanding for the earnings per share calculations: Three Months Ended 2018 2017 Weighted-average common shares outstanding - Basic 31,540,684 30,972,312 Dilutive effect of stock options, RSUs and PSUs 912,180 — Weighted-average common shares outstanding - Diluted 32,452,864 30,972,312 |
Cumulative effect of the changes for adoption of Topic 606 | The cumulative effect of the changes made to the Company’s Condensed Consolidated Balance Sheet as a result of the adoption of ASC 606 were as follows (in thousands): Impact of Adoption of ASC 606 (in thousands) Balance at January 31, 2018 Adjustments due to ASC 606 Balance at February 1, 2018 Assets Other Accounts Receivable $ 71,186 $ 1,210 $ 72,396 Deferred Income Taxes 21,565 (254 ) 21,311 Stockholder's Equity $ 535,068 $ 956 $ 536,024 |
Customer Accounts Receivable (T
Customer Accounts Receivable (Tables) | 3 Months Ended |
Apr. 30, 2018 | |
Receivables [Abstract] | |
Allowance for doubtful accounts and uncollectible interest for customer receivables | Customer accounts receivable consisted of the following: Total Outstanding Balance Customer Accounts Receivable 60 Days Past Due (1) Re-aged (1) (2) (in thousands) April 30, January 31, April 30, January 31, April 30, January 31, Customer accounts receivable $ 1,330,793 $ 1,374,269 $ 104,499 $ 114,120 $ 202,298 $ 217,952 Restructured accounts 163,700 153,593 37,095 37,687 163,700 153,593 Total customer portfolio balance $ 1,494,493 $ 1,527,862 $ 141,594 $ 151,807 $ 365,998 $ 371,545 Allowance for uncollectible accounts (204,100 ) (203,572 ) Allowances for no-interest option credit programs (20,827 ) (20,960 ) Deferred fees and origination costs, net (15,898 ) (15,897 ) Total customer accounts receivable, net 1,253,668 1,287,433 Short-term portion of customer accounts receivable, net (618,160 ) (636,825 ) Long-term portion of customer accounts receivable, net $ 635,508 $ 650,608 Securitized receivables held by the VIEs $ 869,872 $ 1,085,385 $ 108,105 $ 124,627 $ 299,327 $ 300,348 Receivables not held by the VIEs 624,621 442,477 33,489 27,180 66,671 71,197 Total customer portfolio balance $ 1,494,493 $ 1,527,862 $ 141,594 $ 151,807 $ 365,998 $ 371,545 (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 April 30, 2018 and January 31, 2018 , the amounts included within both 60 days past due and re-aged was $81.6 million and $80.8 million , respectively. As of April 30, 2018 and January 31, 2018 , the total customer portfolio balance past due one day or greater was $383.8 million and $401.0 million , respectively. These amounts include the 60 days past due balances shown. (2) The re-aged receivables balance as of April 30, 2018 and January 31, 2018 includes $54.2 million and $62.0 million in first time re-ages related to customers within FEMA-designated Hurricane Harvey disaster areas. |
Activity in the allowance for doubtful accounts and uncollectible interest for customer receivables | The following presents the activity in the allowance for doubtful accounts and uncollectible interest for customer receivables: Three Months Ended April 30, 2018 Three Months Ended April 30, 2017 (in thousands) Customer Accounts Receivable Restructured Accounts Total Customer Accounts Receivable Restructured Accounts Total Allowance at beginning of period $ 148,856 $ 54,716 $ 203,572 $ 158,992 $ 51,183 $ 210,175 Provision (1) 38,740 16,660 55,400 48,516 17,232 65,748 Principal charge-offs (2) (39,775 ) (11,144 ) (50,919 ) (48,087 ) (13,397 ) (61,484 ) Interest charge-offs (7,360 ) (2,062 ) (9,422 ) (7,519 ) (2,095 ) (9,614 ) Recoveries (2) 4,272 1,197 5,469 1,749 487 2,236 Allowance at end of period $ 144,733 $ 59,367 $ 204,100 $ 153,651 $ 53,410 $ 207,061 Average total customer portfolio balance $ 1,347,373 $ 159,410 $ 1,506,783 $ 1,372,808 $ 139,026 $ 1,511,834 (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. |
Charges and Credits (Tables)
Charges and Credits (Tables) | 3 Months Ended |
Apr. 30, 2018 | |
Charges and Credits [Abstract] | |
Schedule of Charges and Credits | Charges and credits consisted of the following: Three Months Ended (in thousands) 2018 2017 Facility closure costs $ — $ 1,227 $ — $ 1,227 |
Finance Charges and Other Rev20
Finance Charges and Other Revenue (Tables) | 3 Months Ended |
Apr. 30, 2018 | |
Supplemental Disclosure of Finance Charges and Other Revenue [Abstract] | |
Schedule of finance charges and other revenues | Finance charges and other revenues consisted of the following: Three Months Ended (in thousands) 2018 2017 Interest income and fees $ 76,346 $ 67,131 Insurance income 6,271 9,330 Other revenues 14 80 $ 82,631 $ 76,541 |
Debt and Capital Lease Obliga21
Debt and Capital Lease Obligations (Tables) | 3 Months Ended |
Apr. 30, 2018 | |
Debt Disclosure [Abstract] | |
Long-term Debt | Debt and capital lease obligations consisted of the following: (in thousands) April 30, January 31, Revolving credit facility $ 147,550 $ 77,000 Senior Notes 227,000 227,000 2016-B VIE Asset-backed Class B Notes — 73,589 2017-A VIE Asset-backed Class A Notes 4,171 59,794 2017-A VIE Asset-backed Class B Notes 106,270 106,270 2017-A VIE Asset-backed Class C Notes 50,340 50,340 2017-B VIE Asset-backed Class A Notes 188,997 292,663 2017-B VIE Asset-backed Class B Notes 132,180 132,180 2017-B VIE Asset-backed Class C Notes 78,640 78,640 Warehouse Notes 22,321 — Capital lease obligations 4,696 4,949 Total debt and capital lease obligations 962,165 1,102,425 Less: Discount on debt (2,387 ) (2,527 ) Deferred debt issuance costs (7,063 ) (8,886 ) Current maturities of long-term debt and capital lease obligations (23,180 ) (907 ) Long-term debt and capital lease obligations $ 929,535 $ 1,090,105 |
Schedule of Asset-backed Notes | The asset-backed notes consist of the following: Asset-Backed Notes Original Principal Amount Original Net Proceeds (1) Current Principal Amount Issuance Date Maturity Date Fixed Interest Rate Effective Interest Rate (2) 2017-A Class A Notes $ 313,220 $ 304,451 $ 4,171 4/19/2017 7/15/2019 2.73% 5.33% 2017-A Class B Notes 106,270 103,300 106,270 4/19/2017 2/15/2020 5.11% 5.73% 2017-A Class C Notes 50,340 48,919 50,340 4/19/2017 10/15/2021 7.40% 7.77% 2017-B Class A Notes 361,400 358,945 188,997 12/20/2017 7/15/2020 2.73% 4.95% 2017-B Class B Notes 132,180 131,281 132,180 12/20/2017 4/15/2021 4.52% 5.14% 2017-B Class C Notes 78,640 77,843 78,640 12/20/2017 11/15/2022 5.95% 6.29% Warehouse Notes 52,226 50,774 22,321 2/15/2018 2/15/2019 Index + 2.75% (3) 7.72% Total $ 1,094,276 $ 1,075,513 $ 582,919 (1) After giving effect to debt issuance costs and restricted cash held by the VIEs. (2) For the three months ended April 30, 2018, and inclusive of retrospective adjustments to deferred debt issuance costs based on changes in timing of actual and expected cash flows. (3) The rate on the Warehouse Notes is defined as the applicable index plus a 2.75% fixed margin. |
Covenant Compliance | A summary of the significant financial covenants that govern our revolving credit facility, as amended, compared to our actual compliance status at April 30, 2018 is presented below: Actual Required Minimum/ Maximum Interest Coverage Ratio must equal or exceed minimum 2.86:1.00 1.25:1.00 Leverage Ratio must not exceed maximum 2.14:1.00 4.00:1.00 ABS Excluded Leverage Ratio must not exceed maximum 1.20:1.00 2.00:1.00 Cash Recovery Percent must exceed stated amount 5.51% 4.45% Capital Expenditures, net, must not exceed maximum $11.5 million $75.0 million |
Variable Interest Entity (Table
Variable Interest Entity (Tables) | 3 Months Ended |
Apr. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of assets and liabilities held by the VIE | The following table presents the assets and liabilities held by the VIEs (for legal purposes, the assets and liabilities of the VIEs will remain distinct from Conn's, Inc.): (in thousands) April 30, January 31, Assets: Restricted cash $ 75,174 $ 85,322 Due from Conn's, Inc., net 7,051 15,212 Customer accounts receivable: Customer accounts receivable 750,425 987,418 Restructured accounts 119,448 97,967 Allowance for uncollectible accounts (127,485 ) (143,115 ) Allowances for no-interest option credit programs (14,645 ) (18,228 ) Deferred fees and origination costs (6,851 ) (9,332 ) Total customer accounts receivable, net 720,892 914,710 Total assets $ 803,117 $ 1,015,244 Liabilities: Accrued expenses $ 5,236 $ 6,723 Other liabilities 8,344 10,639 Current maturities of long-term debt: Warehouse Notes 22,321 — Deferred debt issuance costs (236 ) — 22,085 — Long-term debt: 2016-B Class B Notes — 73,589 2017-A Class A Notes 4,171 59,794 2017-A Class B Notes 106,270 106,270 2017-A Class C Notes 50,340 50,340 2017-B Class A Notes 188,997 292,663 2017-B Class B Notes 132,180 132,180 2017-B Class C Notes 78,640 78,640 560,598 793,476 Less: deferred debt issuance costs (3,626 ) (5,497 ) Total long-term debt 556,972 787,979 Total liabilities $ 592,637 $ 805,341 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 3 Months Ended |
Apr. 30, 2018 | |
Segment Reporting [Abstract] | |
Financial information by segment | Financial information by segment is presented in the following tables: Three Months Ended April 30, 2018 Three Months Ended April 30, 2017 (in thousands) Retail Credit Total Retail Credit Total Revenues: Furniture and mattress $ 97,020 $ — $ 97,020 $ 94,443 $ — $ 94,443 Home appliance 78,023 — 78,023 80,122 — 80,122 Consumer electronic 52,302 — 52,302 55,753 — 55,753 Home office 18,310 — 18,310 16,788 — 16,788 Other 3,659 — 3,659 4,256 — 4,256 Product sales 249,314 — 249,314 251,362 — 251,362 Repair service agreement commissions 22,863 — 22,863 24,696 — 24,696 Service revenues 3,579 — 3,579 3,227 — 3,227 Total net sales 275,756 — 275,756 279,285 — 279,285 Finance charges and other revenues 14 82,617 82,631 80 76,461 76,541 Total revenues 275,770 82,617 358,387 279,365 76,461 355,826 Costs and expenses: Cost of goods sold 166,589 — 166,589 171,950 — 171,950 Selling, general and administrative expenses (1) 77,752 37,126 114,878 73,947 32,590 106,537 Provision for bad debts 260 43,896 44,156 230 55,700 55,930 Charges and credits — — — 1,227 — 1,227 Total costs and expense 244,601 81,022 325,623 247,354 88,290 335,644 Operating income (loss) 31,169 1,595 32,764 32,011 (11,829 ) 20,182 Interest expense — 16,820 16,820 — 24,008 24,008 Loss on extinguishment of debt — 406 406 — 349 349 Income (loss) before income taxes $ 31,169 $ (15,631 ) $ 15,538 $ 32,011 $ (36,186 ) $ (4,175 ) (1) For the three months ended April 30, 2018 and 2017 , the amount of corporate overhead allocated to each segment reflected in selling, general and administrative expense was $8.4 million and $6.4 million , respectively. For the three months ended April 30, 2018 and 2017 , the amount of reimbursement made to the retail segment by the credit segment was $9.4 million and $9.4 million , respectively. |
Guarantor Financial Informati24
Guarantor Financial Information (Tables) | 3 Months Ended |
Apr. 30, 2018 | |
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |
Condensed Consolidated Balance Sheet | Condensed Consolidated Balance Sheet as of January 31, 2018 (in thousands) Conn's, Inc. Guarantors Non-guarantor Subsidiaries Eliminations Consolidated Assets Current assets: Cash and cash equivalents $ — $ 9,286 $ — $ — $ 9,286 Restricted cash — 1,550 85,322 — 86,872 Customer accounts receivable, net of allowances — 177,117 459,708 — 636,825 Other accounts receivable — 71,186 — — 71,186 Inventories — 211,894 — — 211,894 Other current assets — 68,621 15,212 (19,879 ) 63,954 Total current assets — 539,654 560,242 (19,879 ) 1,080,017 Investment in and advances to subsidiaries 735,272 209,903 — (945,175 ) — Long-term portion of customer accounts receivable, net of allowances — 195,606 455,002 — 650,608 Property and equipment, net — 143,152 — — 143,152 Deferred income taxes 21,565 — — — 21,565 Other assets — 5,457 — — 5,457 Total assets $ 756,837 $ 1,093,772 $ 1,015,244 $ (965,054 ) $ 1,900,799 Liabilities and Stockholders' Equity Current liabilities: Current maturities of capital lease obligations $ — $ 907 $ — $ — $ 907 Accounts payable — 71,617 — — 71,617 Accrued expenses 686 66,370 6,723 (4,667 ) 69,112 Other current liabilities — 32,685 5,002 (15,212 ) 22,475 Total current liabilities 686 171,579 11,725 (19,879 ) 164,111 Deferred rent — 87,003 — — 87,003 Long-term debt and capital lease obligations 221,083 81,043 787,979 — 1,090,105 Other long-term liabilities — 18,875 5,637 — 24,512 Total liabilities 221,769 358,500 805,341 (19,879 ) 1,365,731 Total stockholders' equity 535,068 735,272 209,903 (945,175 ) 535,068 Total liabilities and stockholders' equity $ 756,837 $ 1,093,772 $ 1,015,244 $ (965,054 ) $ 1,900,799 Condensed Consolidated Balance Sheet as of April 30, 2018 (in thousands) Conn's, Inc. Guarantors Non-guarantor Subsidiaries Eliminations Consolidated Assets Current assets: Cash and cash equivalents $ — $ 6,190 $ — $ — $ 6,190 Restricted cash — 1,550 75,174 — 76,724 Customer accounts receivable, net of allowances — 226,307 391,853 — 618,160 Other accounts receivable — 73,543 — — 73,543 Inventories — 190,312 — — 190,312 Other current assets — 20,108 7,051 (10,875 ) 16,284 Total current assets — 518,010 474,078 (10,875 ) 981,213 Investment in and advances to subsidiaries 753,815 210,480 — (964,295 ) — Long-term portion of customer accounts receivable, net of allowances — 306,469 329,039 — 635,508 Property and equipment, net — 141,314 — — 141,314 Deferred income taxes 22,052 — — — 22,052 Other assets — 4,662 — — 4,662 Total assets $ 775,867 $ 1,180,935 $ 803,117 $ (975,170 ) $ 1,784,749 Liabilities and Stockholders' Equity Current liabilities: Current maturities of debt and capital lease obligations $ — $ 1,095 $ 22,085 $ — $ 23,180 Accounts payable — 82,362 — — 82,362 Accrued expenses 4,800 60,859 5,236 (3,824 ) 67,071 Other current liabilities — 24,933 3,479 (7,051 ) 21,361 Total current liabilities 4,800 169,249 30,800 (10,875 ) 193,974 Deferred rent — 85,729 — — 85,729 Long-term debt and capital lease obligations 221,412 151,151 556,972 — 929,535 Other long-term liabilities — 20,991 4,865 — 25,856 Total liabilities 226,212 427,120 592,637 (10,875 ) 1,235,094 Total stockholders' equity 549,655 753,815 210,480 (964,295 ) 549,655 Total liabilities and stockholders' equity $ 775,867 $ 1,180,935 $ 803,117 $ (975,170 ) $ 1,784,749 |
Condensed Consolidated Statement of Operations | Condensed Consolidated Statement of Operations for the three months ended April 30, 2018 (in thousands) Conn's, Inc. Guarantors Non-guarantor Subsidiaries Eliminations Consolidated Revenues: Total net sales $ — $ 275,756 $ — $ — $ 275,756 Finance charges and other revenues — 45,655 36,976 — 82,631 Servicing fee revenue — 16,746 — (16,746 ) — Total revenues — 338,157 36,976 (16,746 ) 358,387 Costs and expenses: Cost of goods sold — 166,589 — — 166,589 Selling, general and administrative expense — 119,793 11,831 (16,746 ) 114,878 Provision for bad debts — 7,008 37,148 — 44,156 Total costs and expenses — 293,390 48,979 (16,746 ) 325,623 Operating income (loss) — 44,767 (12,003 ) — 32,764 Interest expense 4,443 3,033 9,344 — 16,820 Loss on extinguishment of debt — — 406 — 406 Income (loss) before income taxes (4,443 ) 41,734 (21,753 ) — 15,538 Provision (benefit) for income taxes (802 ) 7,537 (3,929 ) — 2,806 Net income (loss) (3,641 ) 34,197 (17,824 ) — 12,732 Income (loss) from consolidated subsidiaries 16,373 (17,824 ) — 1,451 — Consolidated net income (loss) $ 12,732 $ 16,373 $ (17,824 ) $ 1,451 $ 12,732 Condensed Consolidated Statement of Operations for the three months ended April 30, 2017 (in thousands) Conn's, Inc. Guarantors Non-guarantor Subsidiaries Eliminations Consolidated Revenues: Total net sales $ — $ 279,285 $ — $ — $ 279,285 Finance charges and other revenues — 36,798 39,743 — 76,541 Servicing fee revenue — 15,184 — (15,184 ) — Total revenues — 331,267 39,743 (15,184 ) 355,826 Costs and expenses: Cost of goods sold — 171,950 — — 171,950 Selling, general and administrative expense — 106,233 15,488 (15,184 ) 106,537 Provision for bad debts — (5,433 ) 61,363 — 55,930 Charges and credits — 1,227 — — 1,227 Total costs and expenses — 273,977 76,851 (15,184 ) 335,644 Operating income (loss) — 57,290 (37,108 ) — 20,182 Interest expense 4,443 1,778 17,787 — 24,008 Loss on extinguishment of debt — 349 — — 349 Income (loss) before income taxes (4,443 ) 55,163 (54,895 ) — (4,175 ) Provision (benefit) for income taxes (1,698 ) 21,078 (20,975 ) — (1,595 ) Net income (loss) (2,745 ) 34,085 (33,920 ) — (2,580 ) Income (loss) from consolidated subsidiaries 165 (33,920 ) — 33,755 — Consolidated net income (loss) $ (2,580 ) $ 165 $ (33,920 ) $ 33,755 $ (2,580 ) |
Condensed Consolidated Statement of Cash Flows | Condensed Consolidated Statement of Cash Flows for the three months ended April 30, 2018 (in thousands) Conn's, Inc. Guarantors Non-guarantor Subsidiaries Eliminations Consolidated Net cash provided by (used in) operating activities $ (267 ) $ (14,194 ) $ 149,800 $ — $ 135,339 Cash flows from investing activities: Purchase of customer accounts receivables — — (50,774 ) 50,774 — Sale of customer accounts receivables — — 50,774 (50,774 ) — Purchase of property and equipment — (6,169 ) — — (6,169 ) Net cash used in investing activities — (6,169 ) — — (6,169 ) Cash flows from financing activities: Payments on asset-backed notes — (50,847 ) (181,737 ) — (232,584 ) Borrowings from revolving credit facility — 393,158 — — 393,158 Payments on revolving credit facility — (322,608 ) — — (322,608 ) Borrowings from warehouse facility — — 52,226 — 52,226 Payments of debt issuance costs and amendment fees — (1 ) (532 ) — (533 ) Payments on warehouse facility — — (29,905 ) — (29,905 ) Proceeds from stock issued under employee benefit plans 267 — — — 267 Tax payments associated with equity-based compensation transactions — (1,888 ) — — (1,888 ) Payments from extinguishment of debt — (294 ) — — (294 ) Other — (253 ) — — (253 ) Net cash provided by (used in) financing activities 267 17,267 (159,948 ) — (142,414 ) Net change in cash, cash equivalents and restricted cash — (3,096 ) (10,148 ) — (13,244 ) Cash, cash equivalents and restricted cash, beginning of period — 10,836 85,322 — 96,158 Cash, cash equivalents and restricted cash, end of period $ — $ 7,740 $ 75,174 $ — $ 82,914 Condensed Consolidated Statement of Cash Flows for the three months ended April 30, 2017 (in thousands) Conn's, Inc. Guarantors Non-guarantor Subsidiaries Eliminations Consolidated Net cash provided by (used in) operating activities $ (256 ) $ (192,236 ) $ 283,256 $ — $ 90,764 Cash flows from investing activities: Purchase of customer accounts receivables — — (466,056 ) 466,056 — Sale of customer accounts receivables — 466,056 — (466,056 ) — Purchase of property and equipment — (4,286 ) — — (4,286 ) Net cash provided by (used in) investing activities — 461,770 (466,056 ) — (4,286 ) Cash flows from financing activities: Proceeds from issuance of asset-backed notes — — 469,814 — 469,814 Payments on asset-backed notes — — (232,931 ) — (232,931 ) Borrowings from revolving credit facility — 265,935 — — 265,935 Payments on revolving credit facility — (443,435 ) — — (443,435 ) Payments of debt issuance costs and amendment fees — (2,865 ) (4,740 ) — (7,605 ) Proceeds from stock issued under employee benefit plans 256 — — — 256 Other 84 — — 84 Net cash provided by (used in) financing activities 256 (180,281 ) 232,143 — 52,118 Net change in cash, cash equivalents and restricted cash — 89,253 49,343 — 138,596 Cash, cash equivalents and restricted cash, beginning of period — 23,566 110,698 — 134,264 Cash, cash equivalents and restricted cash, end of period $ — $ 112,819 $ 160,041 $ — $ 272,860 |
Summary of Significant Accoun25
Summary of Significant Accounting Policies - Narrative (Details) $ in Thousands | 3 Months Ended | ||
Apr. 30, 2018USD ($)segment | Apr. 30, 2017 | Jan. 31, 2018USD ($) | |
Debt Instrument [Line Items] | |||
Number of operating segments | segment | 2 | ||
Cash and Cash Equivalents and Restricted Cash | |||
Cash and cash equivalents include credit card deposits in-transit | $ 3,800 | $ 2,000 | |
Restricted cash | 76,724 | 86,872 | |
Interest Income on Customer Accounts Receivable | |||
Deferred revenue | 12,500 | 12,500 | |
Nonaccrual status | 15,800 | 16,900 | |
Amount in bankruptcy and less than 60 days past due | 12,100 | 14,500 | |
90 days past due and still accruing | 111,100 | 109,700 | |
Debt Issuance Costs | |||
Deferred debt issuance costs | $ 7,063 | 8,886 | |
Income Taxes | |||
Effective tax rate | 18.10% | 38.20% | |
Fair Value of Financial Instruments | |||
Long-term debt | $ 582,919 | ||
Senior Notes [Member] | |||
Fair Value of Financial Instruments | |||
Debt fair value | 224,800 | ||
Secured Debt [Member] | |||
Fair Value of Financial Instruments | |||
Long-term debt | 227,000 | ||
Revolving Credit Facility [Member] | |||
Debt Issuance Costs | |||
Deferred debt issuance costs | 4,400 | 5,200 | |
Securitized Receivables Servicer [Member] | |||
Cash and Cash Equivalents and Restricted Cash | |||
Restricted cash | 18,500 | 27,200 | |
Collateral Held by VIE [Member] | |||
Cash and Cash Equivalents and Restricted Cash | |||
Restricted cash | $ 56,700 | $ 58,100 |
Summary of Significant Accoun26
Summary of Significant Accounting Policies - Stock-based Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 30, 2018 | Apr. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock awards granted (in shares) | 700,577 | 753,487 |
Aggregate grant date fair value | $ 15,511 | $ 7,761 |
Dividend yield | 0.00% | |
Stock-based compensation expense | $ 2,520 | $ 1,583 |
Minimum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 3 years | |
Maximum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 4 years | |
(RSUs) [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
RSUs and PSUs (in shares) | 80,411 | 324,487 |
(PSUs) [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
RSUs and PSUs (in shares) | 0 | 429,000 |
Stock Option [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock Options (in shares) | 620,166 | 0 |
Expected volatility rate | 68.00% | |
Expected term | 6 years 6 months | |
Risk free interest rate | 2.67% |
Summary of Significant Accoun27
Summary of Significant Accounting Policies - Earnings per Share (Details) - shares | 3 Months Ended | |
Apr. 30, 2018 | Apr. 30, 2017 | |
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||
Weighted average common shares outstanding - Basic (in shares) | 31,540,684 | 30,972,312 |
Weighted average common shares outstanding - Diluted (in shares) | 32,452,864 | 30,972,312 |
Weighted average number of stock options and restricted stock units not included in the calculation of the dilutive effect of stock options and restricted stock units (in shares) | 305,313 | 944,423 |
Stock Option [Member] | ||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||
Dilutive effect of stock options, RSUs and PSUs (in shares) | 912,180 | 0 |
Summary of Significant Accoun28
Summary of Significant Accounting Policies - Recent Accounting Pronouncements (Details) - USD ($) | 3 Months Ended | |||
Apr. 30, 2018 | Apr. 30, 2017 | Feb. 01, 2018 | Jan. 31, 2018 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Deferred revenue | $ 12,500,000 | $ 12,500,000 | ||
Other accounts receivable | 73,543,000 | 71,186,000 | ||
Deferred income taxes | 22,052,000 | 21,565,000 | ||
Stockholder's Equity | 549,655,000 | 535,068,000 | ||
Net cash provided by (used in) financing activities | (142,414,000) | $ 52,118,000 | ||
Payment for debt extinguishment | 294,000 | 0 | ||
Customer Deposits [Member] | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Deferred revenue | 1,500,000 | $ 1,800,000 | ||
RSA Administration Fees [Member] | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Percent of revenue deferred | 5.00% | |||
Deferred revenue, revenue recognized | 1,300,000 | |||
Deferred revenue | 8,400,000 | $ 8,700,000 | ||
Topic 606 [Member] | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Cumulative impact on adoption of ASU | $ 1,000,000 | |||
Other accounts receivable | 72,396,000 | |||
Deferred income taxes | 21,311,000 | |||
Stockholder's Equity | 536,024,000 | |||
Topic 606 [Member] | Balance at January 31, 2018 [Member] | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Other accounts receivable | 71,186,000 | |||
Deferred income taxes | 21,565,000 | |||
Stockholder's Equity | $ 535,068,000 | |||
Topic 606 [Member] | Adjustments due to Topic 606 [Member] | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Other accounts receivable | 1,210,000 | |||
Deferred income taxes | (254,000) | |||
Stockholder's Equity | $ 956,000 | |||
ASU 2016-18 [Member] | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Net cash provided by (used in) financing activities | 49,300,000 | |||
ASU 2016-15 [Member] | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Cumulative impact on adoption of ASU | $ 0 | |||
Payment for debt extinguishment | $ 300,000 |
Customer Accounts Receivable (D
Customer Accounts Receivable (Details) - USD ($) $ in Thousands | 3 Months Ended | ||||
Apr. 30, 2018 | Apr. 30, 2017 | Apr. 30, 2018 | Jan. 31, 2018 | Apr. 30, 2017 | |
Total Outstanding Balance | |||||
Customer accounts receivable | $ 1,494,493 | $ 1,527,862 | |||
60 Days Past Due | 141,594 | 151,807 | |||
Reaged | 365,998 | 371,545 | |||
Allowance for uncollectible accounts | $ (203,572) | $ (210,175) | (204,100) | (203,572) | $ (207,061) |
Allowances for no-interest option credit programs | (20,827) | (20,960) | |||
Deferred fees and origination costs, net | (15,898) | (15,897) | |||
Total customer accounts receivable, net | 1,253,668 | 1,287,433 | |||
Short-term portion of customer accounts receivable, net | (618,160) | (636,825) | |||
Long-term portion of customer accounts receivable, net | 635,508 | 650,608 | |||
Amounts included within past due and reaged accounts | 81,600 | 80,800 | |||
Past due | 383,800 | 401,000 | |||
Reaged | 54,200 | 62,000 | |||
Allowance for doubtful accounts and uncollectible interest for customer receivables [Abstract] | |||||
Allowance at beginning of period | 203,572 | 210,175 | |||
Provision | 55,400 | 65,748 | |||
Principal charge-offs | (50,919) | (61,484) | |||
Interest charge-offs | (9,422) | (9,614) | |||
Recoveries | 5,469 | 2,236 | |||
Allowance at end of period | 204,100 | 207,061 | |||
Average total customer portfolio balance | 1,506,783 | 1,511,834 | |||
Excluding VIE [Member] | |||||
Total Outstanding Balance | |||||
Customer accounts receivable | 624,621 | 442,477 | |||
60 Days Past Due | 33,489 | 27,180 | |||
Reaged | 66,671 | 71,197 | |||
Variable Interest Entity [Member] | |||||
Total Outstanding Balance | |||||
Customer accounts receivable | 869,872 | 1,085,385 | |||
60 Days Past Due | 108,105 | 124,627 | |||
Reaged | 299,327 | 300,348 | |||
Allowance for uncollectible accounts | (143,115) | (127,485) | (143,115) | ||
Allowances for no-interest option credit programs | (14,645) | (18,228) | |||
Deferred fees and origination costs, net | (6,851) | (9,332) | |||
Total customer accounts receivable, net | 720,892 | 914,710 | |||
Short-term portion of customer accounts receivable, net | (391,853) | (459,708) | |||
Long-term portion of customer accounts receivable, net | 329,039 | 455,002 | |||
Allowance for doubtful accounts and uncollectible interest for customer receivables [Abstract] | |||||
Allowance at beginning of period | 143,115 | ||||
Allowance at end of period | 127,485 | ||||
Customer Accounts Receivable [Member] | |||||
Total Outstanding Balance | |||||
Customer accounts receivable | 1,330,793 | 1,374,269 | |||
60 Days Past Due | 104,499 | 114,120 | |||
Reaged | 202,298 | 217,952 | |||
Allowance for uncollectible accounts | (148,856) | (158,992) | (144,733) | (148,856) | (153,651) |
Allowance for doubtful accounts and uncollectible interest for customer receivables [Abstract] | |||||
Allowance at beginning of period | 148,856 | 158,992 | |||
Provision | 38,740 | 48,516 | |||
Principal charge-offs | (39,775) | (48,087) | |||
Interest charge-offs | (7,360) | (7,519) | |||
Recoveries | 4,272 | 1,749 | |||
Allowance at end of period | 144,733 | 153,651 | |||
Average total customer portfolio balance | 1,347,373 | 1,372,808 | |||
Restructured Accounts [Member] | |||||
Total Outstanding Balance | |||||
Customer accounts receivable | 163,700 | 153,593 | |||
60 Days Past Due | 37,095 | 37,687 | |||
Reaged | 163,700 | 153,593 | |||
Allowance for uncollectible accounts | (54,716) | (51,183) | (59,367) | $ (54,716) | (53,410) |
Allowance for doubtful accounts and uncollectible interest for customer receivables [Abstract] | |||||
Allowance at beginning of period | 54,716 | 51,183 | |||
Provision | 16,660 | 17,232 | |||
Principal charge-offs | (11,144) | (13,397) | |||
Interest charge-offs | (2,062) | (2,095) | |||
Recoveries | 1,197 | 487 | |||
Allowance at end of period | $ 59,367 | $ 53,410 | |||
Average total customer portfolio balance | $ 159,410 | $ 139,026 |
Charges and Credits (Details)
Charges and Credits (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 30, 2018 | Apr. 30, 2017 | |
Charges and Credits [Abstract] | ||
Facility closure costs | $ 0 | $ 1,227 |
Charges and credits | $ 0 | $ 1,227 |
Finance Charges and Other Rev31
Finance Charges and Other Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 30, 2018 | Apr. 30, 2017 | |
Troubled Debt Restructuring, Debtor, Subsequent Periods [Line Items] | ||
Interest income and fees | $ 76,346 | $ 67,131 |
Insurance income | 6,271 | 9,330 |
Other revenues | 14 | 80 |
Finance charges and other | 82,631 | 76,541 |
Provisions for uncollectible interest | 11,500 | 10,000 |
Financing Receivable [Member] | ||
Troubled Debt Restructuring, Debtor, Subsequent Periods [Line Items] | ||
Interest income and fees | $ 5,800 | $ 4,500 |
Debt and Capital Lease Obliga32
Debt and Capital Lease Obligations - Schedule of Debt and Capital Lease Obligations (Details) - USD ($) $ in Thousands | Apr. 30, 2018 | Jan. 31, 2018 |
Long-term debt [Abstract] | ||
Long-term debt | $ 582,919 | |
Capital lease obligations | 4,696 | $ 4,949 |
Total debt and capital lease obligations | 962,165 | 1,102,425 |
Less: | ||
Discount on debt | (2,387) | (2,527) |
Deferred debt issuance costs | (7,063) | (8,886) |
Current maturities of long-term debt and capital lease obligations | (23,180) | (907) |
Long-term debt and capital lease obligations | 929,535 | 1,090,105 |
Senior Notes [Member] | ||
Long-term debt [Abstract] | ||
Long-term debt | 227,000 | 227,000 |
2016-B Class B Notes [Member] | Secured Debt [Member] | ||
Long-term debt [Abstract] | ||
Long-term debt | 0 | 73,589 |
2017-A Class A Notes [Member] | ||
Long-term debt [Abstract] | ||
Long-term debt | 4,171 | |
2017-A Class A Notes [Member] | Secured Debt [Member] | ||
Long-term debt [Abstract] | ||
Long-term debt | 4,171 | 59,794 |
2017-A Class B Notes [Member] | ||
Long-term debt [Abstract] | ||
Long-term debt | 106,270 | |
2017-A Class B Notes [Member] | Secured Debt [Member] | ||
Long-term debt [Abstract] | ||
Long-term debt | 106,270 | 106,270 |
2017-A Class C Notes [Member] | ||
Long-term debt [Abstract] | ||
Long-term debt | 50,340 | |
2017-A Class C Notes [Member] | Secured Debt [Member] | ||
Long-term debt [Abstract] | ||
Long-term debt | 50,340 | 50,340 |
2017-B Class A Notes [Member] | ||
Long-term debt [Abstract] | ||
Long-term debt | 188,997 | |
2017-B Class A Notes [Member] | Secured Debt [Member] | ||
Long-term debt [Abstract] | ||
Long-term debt | 188,997 | 292,663 |
2017-B Class B Notes [Member] | ||
Long-term debt [Abstract] | ||
Long-term debt | 132,180 | |
2017-B Class B Notes [Member] | Secured Debt [Member] | ||
Long-term debt [Abstract] | ||
Long-term debt | 132,180 | 132,180 |
2017-B Class C Notes [Member] | ||
Long-term debt [Abstract] | ||
Long-term debt | 78,640 | |
2017-B Class C Notes [Member] | Secured Debt [Member] | ||
Long-term debt [Abstract] | ||
Long-term debt | 78,640 | 78,640 |
Warehouse Notes [Member] | ||
Long-term debt [Abstract] | ||
Long-term debt | 22,321 | 0 |
Less: | ||
Current maturities of long-term debt and capital lease obligations | 0 | |
Revolving Credit Facility [Member] | ||
Less: | ||
Deferred debt issuance costs | (4,400) | (5,200) |
Revolving Credit Facility [Member] | Line of Credit [Member] | ||
Long-term debt [Abstract] | ||
Long-term debt | $ 147,550 | $ 77,000 |
Debt and Capital Lease Obliga33
Debt and Capital Lease Obligations - Senior Notes (Details) | Apr. 30, 2018USD ($)exception | Jul. 01, 2014USD ($) |
Debt Instrument [Line Items] | ||
Original Principal Amount | $ 1,094,276,000 | |
Senior Notes [Member] | Senior Unsecured Notes Due July 2022 [Member] | ||
Debt Instrument [Line Items] | ||
Original Principal Amount | $ 250,000,000 | |
Interest rate on notes (in hundredths) | 7.25% | |
Effective interest rate | 7.80% | |
Number of exceptions for limitations | exception | 2 | |
Restricted payment basket amount | $ 375,000,000 | |
Leverage ratio | 2.50 | |
Restrictions on payment of dividends, amount free from restriction | $ 183,500,000 | |
Trigger amount under indenture | $ 25,000,000 | |
Line of Credit [Member] | Revolving Credit Facility [Member] | ||
Debt Instrument [Line Items] | ||
Restrictions on payment of dividends, amount free from restriction | $ 64,700,000 |
Debt and Capital Lease Obliga34
Debt and Capital Lease Obligations - Asset Backed Notes (Details) - USD ($) | Feb. 15, 2018 | Dec. 20, 2017 | Apr. 19, 2017 | Apr. 30, 2018 | Jan. 31, 2018 |
Debt Instrument [Line Items] | |||||
Monthly fee percentage on outstanding balance | 4.75% | ||||
Original Principal Amount | $ 1,094,276,000 | ||||
Original Net Proceeds | 1,075,513,000 | ||||
Current Principal Amount | 582,919,000 | ||||
2017-A Class A Notes [Member] | |||||
Debt Instrument [Line Items] | |||||
Original Principal Amount | 313,220,000 | ||||
Original Net Proceeds | $ 304,451,000 | ||||
Current Principal Amount | $ 4,171,000 | ||||
Fixed Interest Rate | 2.73% | ||||
Effective interest rate | 5.33% | ||||
2017-A Class A Notes [Member] | Secured Debt [Member] | |||||
Debt Instrument [Line Items] | |||||
Current Principal Amount | $ 4,171,000 | $ 59,794,000 | |||
2017-A Class B Notes [Member] | |||||
Debt Instrument [Line Items] | |||||
Original Principal Amount | 106,270,000 | ||||
Original Net Proceeds | 103,300,000 | ||||
Current Principal Amount | $ 106,270,000 | ||||
Fixed Interest Rate | 5.11% | ||||
Effective interest rate | 5.73% | ||||
2017-A Class B Notes [Member] | Secured Debt [Member] | |||||
Debt Instrument [Line Items] | |||||
Current Principal Amount | $ 106,270,000 | 106,270,000 | |||
2017-A Class C Notes [Member] | |||||
Debt Instrument [Line Items] | |||||
Original Principal Amount | 50,340,000 | ||||
Original Net Proceeds | $ 48,919,000 | ||||
Current Principal Amount | $ 50,340,000 | ||||
Fixed Interest Rate | 7.40% | ||||
Effective interest rate | 7.77% | ||||
2017-A Class C Notes [Member] | Secured Debt [Member] | |||||
Debt Instrument [Line Items] | |||||
Current Principal Amount | $ 50,340,000 | 50,340,000 | |||
2017-B Class A Notes [Member] | |||||
Debt Instrument [Line Items] | |||||
Original Principal Amount | 361,400,000 | ||||
Original Net Proceeds | $ 358,945,000 | ||||
Current Principal Amount | $ 188,997,000 | ||||
Fixed Interest Rate | 2.73% | ||||
Effective interest rate | 4.95% | ||||
2017-B Class A Notes [Member] | Secured Debt [Member] | |||||
Debt Instrument [Line Items] | |||||
Current Principal Amount | $ 188,997,000 | 292,663,000 | |||
2017-B Class B Notes [Member] | |||||
Debt Instrument [Line Items] | |||||
Original Principal Amount | 132,180,000 | ||||
Original Net Proceeds | 131,281,000 | ||||
Current Principal Amount | $ 132,180,000 | ||||
Fixed Interest Rate | 4.52% | ||||
Effective interest rate | 5.14% | ||||
2017-B Class B Notes [Member] | Secured Debt [Member] | |||||
Debt Instrument [Line Items] | |||||
Current Principal Amount | $ 132,180,000 | 132,180,000 | |||
2017-B Class C Notes [Member] | |||||
Debt Instrument [Line Items] | |||||
Original Principal Amount | 78,640,000 | ||||
Original Net Proceeds | $ 77,843,000 | ||||
Current Principal Amount | $ 78,640,000 | ||||
Fixed Interest Rate | 5.95% | ||||
Effective interest rate | 6.29% | ||||
2017-B Class C Notes [Member] | Secured Debt [Member] | |||||
Debt Instrument [Line Items] | |||||
Current Principal Amount | $ 78,640,000 | 78,640,000 | |||
Warehouse Notes [Member] | |||||
Debt Instrument [Line Items] | |||||
Original Principal Amount | $ 52,200,000 | 52,226,000 | |||
Original Net Proceeds | 50,774,000 | ||||
Current Principal Amount | $ 22,321,000 | 0 | |||
Fixed Interest Rate | 2.75% | ||||
Effective interest rate | 7.72% | ||||
2016-B Class B Notes [Member] | Secured Debt [Member] | |||||
Debt Instrument [Line Items] | |||||
Current Principal Amount | $ 0 | $ 73,589,000 | |||
Redemption amount | 73,600,000 | ||||
Payments to redeem debt | 50,300,000 | ||||
Adjustments | $ 23,300,000 | ||||
Write off debt issuance costs | $ 400,000 | ||||
Asset-backed Securities [Member] | |||||
Debt Instrument [Line Items] | |||||
Monthly fee percentage on outstanding balance | 4.75% | 4.75% |
Debt and Capital Lease Obliga35
Debt and Capital Lease Obligations - Revolving Credit Facility (Details) - USD ($) | Mar. 31, 2017 | Apr. 30, 2018 | Jan. 31, 2018 |
Line of Credit Facility [Line Items] | |||
Minimum cash recovery percentage | 4.45% | ||
Original Principal Amount | $ 1,094,276,000 | ||
Deferred debt issuance costs | 7,063,000 | $ 8,886,000 | |
Revolving Credit Facility [Member] | |||
Line of Credit Facility [Line Items] | |||
Deferred debt issuance costs | $ 4,400,000 | $ 5,200,000 | |
Line of Credit [Member] | Revolving Credit Facility [Member] | |||
Line of Credit Facility [Line Items] | |||
Maximum capacity extended under credit facility | $ 750,000,000 | ||
Unused capacity fee percentage | 0.75% | ||
Weighted-average interest rate | 7.40% | ||
Restrictions on payment of dividends, amount free from restriction | $ 64,700,000 | ||
Line of Credit [Member] | Revolving Credit Facility [Member] | Minimum [Member] | |||
Line of Credit Facility [Line Items] | |||
Unused capacity fee percentage | 0.25% | ||
Line of Credit [Member] | Revolving Credit Facility [Member] | Maximum [Member] | |||
Line of Credit Facility [Line Items] | |||
Unused capacity fee percentage | 0.75% | ||
Line of Credit [Member] | Revolving Credit Facility [Member] | LIBOR [Member] | |||
Line of Credit Facility [Line Items] | |||
Variable basis spread | 1.00% | ||
Line of Credit [Member] | Revolving Credit Facility [Member] | Alternate Base Rate [Member] | Minimum [Member] | |||
Line of Credit Facility [Line Items] | |||
Variable basis spread | 1.75% | ||
Line of Credit [Member] | Revolving Credit Facility [Member] | Alternate Base Rate [Member] | Maximum [Member] | |||
Line of Credit Facility [Line Items] | |||
Variable basis spread | 2.25% | ||
Line of Credit [Member] | Revolving Credit Facility [Member] | Federal Funds Rate [Member] | |||
Line of Credit Facility [Line Items] | |||
Variable basis spread | 0.50% | ||
Line of Credit [Member] | Letter of Credit [Member] | |||
Line of Credit Facility [Line Items] | |||
Original Principal Amount | $ 40,000,000 | ||
Revolving Credit Facility [Member] | |||
Line of Credit Facility [Line Items] | |||
Sub-facility for letters of credit | 2,800,000 | ||
Available borrowing capacity | 233,500,000 | ||
Additional remaining borrowing capacity | $ 366,200,000 | ||
Revolving Credit Facility [Member] | LIBOR [Member] | Minimum [Member] | |||
Line of Credit Facility [Line Items] | |||
Variable basis spread | 2.75% | ||
Revolving Credit Facility [Member] | LIBOR [Member] | Maximum [Member] | |||
Line of Credit Facility [Line Items] | |||
Variable basis spread | 3.25% |
Debt and Capital Lease Obliga36
Debt and Capital Lease Obligations - Debt Covenants (Details) $ in Millions | 3 Months Ended |
Apr. 30, 2018USD ($) | |
Actual | |
Interest Coverage Ratio must equal or exceed minimum | 2.86 |
Leverage Ratio must not exceed maximum | 2.14 |
ABS Excluded Leverage Ratio must not exceed maximum | 1.20 |
Cash Recovery Percent must exceed stated amount | 5.51% |
Capital Expenditures, net, must not exceed maximum | $ 11.5 |
Required Minimum/ Maximum | |
Interest Coverage Ratio must equal or exceed minimum | 1.25 |
Leverage Ratio must not exceed maximum | 4 |
ABS Excluded Leverage Ratio must not exceed maximum | 2 |
ABS Excluded Leverage Ratio must not exceed maximum | 4.45% |
Capital Expenditures, net, must not exceed maximum | $ 75 |
Determination period | 12 months |
Contingencies (Details)
Contingencies (Details) - False and Misleading Statements and Failure to Disclosure Adverse Information [Member] | Jun. 30, 2015allegation | Apr. 30, 2018defendant | May 05, 2014claim |
Loss Contingencies [Line Items] | |||
Number of pending actions | claim | 3 | ||
Number of allegations dismissed in claim | 78 | ||
Number of allegations in claim | 91 | ||
Executive Officer [Member] | |||
Loss Contingencies [Line Items] | |||
Number of defendants | defendant | 2 |
Variable Interest Entity - Add
Variable Interest Entity - Additional Information (Details) | 12 Months Ended |
Jan. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Monthly fee percentage on outstanding balance | 4.75% |
Variable Interest Entity (Detai
Variable Interest Entity (Details) - USD ($) $ in Thousands | Apr. 30, 2018 | Jan. 31, 2018 | Apr. 30, 2017 | Jan. 31, 2017 |
Assets: | ||||
Restricted cash | $ 76,724 | $ 86,872 | ||
Customer accounts receivable: | ||||
Allowance for uncollectible accounts | (204,100) | (203,572) | $ (207,061) | $ (210,175) |
Allowances for no-interest option credit programs | 20,827 | 20,960 | ||
Deferred fees and origination costs, net | (15,898) | (15,897) | ||
Total customer accounts receivable, net | 1,253,668 | 1,287,433 | ||
Total assets | 1,784,749 | 1,900,799 | ||
Current maturities of long-term debt: | ||||
Current maturities of long-term debt and capital lease obligations | 23,180 | 907 | ||
Total long-term debt | 582,919 | |||
Less: deferred debt issuance costs | (7,063) | (8,886) | ||
Long-term debt | 929,535 | 1,090,105 | ||
Total liabilities | 1,235,094 | 1,365,731 | ||
Warehouse Notes [Member] | ||||
Current maturities of long-term debt: | ||||
Current maturities of long-term debt and capital lease obligations | 0 | |||
Total long-term debt | 22,321 | 0 | ||
2017-A Class A Notes [Member] | ||||
Current maturities of long-term debt: | ||||
Total long-term debt | 4,171 | |||
2017-A Class B Notes [Member] | ||||
Current maturities of long-term debt: | ||||
Total long-term debt | 106,270 | |||
2017-A Class C Notes [Member] | ||||
Current maturities of long-term debt: | ||||
Total long-term debt | 50,340 | |||
2017-B Class A Notes [Member] | ||||
Current maturities of long-term debt: | ||||
Total long-term debt | 188,997 | |||
2017-B Class B Notes [Member] | ||||
Current maturities of long-term debt: | ||||
Total long-term debt | 132,180 | |||
2017-B Class C Notes [Member] | ||||
Current maturities of long-term debt: | ||||
Total long-term debt | 78,640 | |||
Secured Debt [Member] | 2016-B Class B Notes [Member] | ||||
Current maturities of long-term debt: | ||||
Total long-term debt | 0 | 73,589 | ||
Secured Debt [Member] | 2017-A Class A Notes [Member] | ||||
Current maturities of long-term debt: | ||||
Total long-term debt | 4,171 | 59,794 | ||
Secured Debt [Member] | 2017-A Class B Notes [Member] | ||||
Current maturities of long-term debt: | ||||
Total long-term debt | 106,270 | 106,270 | ||
Secured Debt [Member] | 2017-A Class C Notes [Member] | ||||
Current maturities of long-term debt: | ||||
Total long-term debt | 50,340 | 50,340 | ||
Secured Debt [Member] | 2017-B Class A Notes [Member] | ||||
Current maturities of long-term debt: | ||||
Total long-term debt | 188,997 | 292,663 | ||
Secured Debt [Member] | 2017-B Class B Notes [Member] | ||||
Current maturities of long-term debt: | ||||
Total long-term debt | 132,180 | 132,180 | ||
Secured Debt [Member] | 2017-B Class C Notes [Member] | ||||
Current maturities of long-term debt: | ||||
Total long-term debt | 78,640 | 78,640 | ||
Variable Interest Entity [Member] | ||||
Assets: | ||||
Restricted cash | 75,174 | 85,322 | ||
Due from Conn's, Inc., net | 7,051 | 15,212 | ||
Customer accounts receivable: | ||||
Customer accounts receivable | 750,425 | 987,418 | ||
Restructured accounts | 119,448 | 97,967 | ||
Allowance for uncollectible accounts | (127,485) | (143,115) | ||
Allowances for no-interest option credit programs | 14,645 | 18,228 | ||
Deferred fees and origination costs, net | (6,851) | (9,332) | ||
Total customer accounts receivable, net | 720,892 | 914,710 | ||
Total assets | 803,117 | 1,015,244 | ||
Liabilities: | ||||
Accrued expenses | 5,236 | 6,723 | ||
Other liabilities | 8,344 | 10,639 | ||
Current maturities of long-term debt: | ||||
Current maturities of long-term debt and capital lease obligations | 22,085 | 0 | ||
Total long-term debt | 556,972 | 787,979 | ||
Less: deferred debt issuance costs | (3,626) | (5,497) | ||
Long-term debt | 560,598 | 793,476 | ||
Total liabilities | 592,637 | 805,341 | ||
Variable Interest Entity [Member] | Warehouse Notes [Member] | ||||
Current maturities of long-term debt: | ||||
Less: deferred debt issuance costs | $ (236) | $ 0 |
Segment Reporting (Details)
Segment Reporting (Details) $ in Thousands | 3 Months Ended | |
Apr. 30, 2018USD ($)statestoresegment | Apr. 30, 2017USD ($) | |
Segment Reporting Information [Line Items] | ||
Number of operating segments | segment | 2 | |
Estimated annual rate of reimbursement (in hundredths) | 2.50% | |
Number of states with retail stores | state | 14 | |
Revenues: | ||
Product sales | $ 249,314 | $ 251,362 |
Repair service agreement commissions | 22,863 | 24,696 |
Service revenues | 3,579 | 3,227 |
Total net sales | 275,756 | 279,285 |
Finance charges and other revenues | 82,631 | 76,541 |
Total revenues | 358,387 | 355,826 |
Costs and expenses: | ||
Cost of goods sold | 166,589 | 171,950 |
Selling, general and administrative expense | 114,878 | 106,537 |
Provision for bad debts | 44,156 | 55,930 |
Charges and credits | 0 | 1,227 |
Total costs and expenses | 325,623 | 335,644 |
Operating income | 32,764 | 20,182 |
Interest expense | 16,820 | 24,008 |
Loss on extinguishment of debt | 406 | 349 |
Income (loss) before income taxes | 15,538 | (4,175) |
Allocation of overhead by operating segments | 8,400 | 6,400 |
Intersegment Eliminations [Member] | ||
Revenues: | ||
Total revenues | 9,400 | 9,400 |
Retail [Member] | ||
Revenues: | ||
Product sales | 249,314 | 251,362 |
Repair service agreement commissions | 22,863 | 24,696 |
Service revenues | 3,579 | 3,227 |
Total net sales | 275,756 | 279,285 |
Finance charges and other revenues | 14 | 80 |
Total revenues | 275,770 | 279,365 |
Costs and expenses: | ||
Cost of goods sold | 166,589 | 171,950 |
Selling, general and administrative expense | 77,752 | 73,947 |
Provision for bad debts | 260 | 230 |
Charges and credits | 0 | 1,227 |
Total costs and expenses | 244,601 | 247,354 |
Operating income | 31,169 | 32,011 |
Interest expense | 0 | 0 |
Loss on extinguishment of debt | 0 | 0 |
Income (loss) before income taxes | 31,169 | 32,011 |
Credit [Member] | ||
Revenues: | ||
Product sales | 0 | 0 |
Repair service agreement commissions | 0 | 0 |
Service revenues | 0 | 0 |
Total net sales | 0 | 0 |
Finance charges and other revenues | 82,617 | 76,461 |
Total revenues | 82,617 | 76,461 |
Costs and expenses: | ||
Cost of goods sold | 0 | 0 |
Selling, general and administrative expense | 37,126 | 32,590 |
Provision for bad debts | 43,896 | 55,700 |
Charges and credits | 0 | 0 |
Total costs and expenses | 81,022 | 88,290 |
Operating income | 1,595 | (11,829) |
Interest expense | 16,820 | 24,008 |
Loss on extinguishment of debt | 406 | 349 |
Income (loss) before income taxes | (15,631) | (36,186) |
Furniture and Mattress [Member] | ||
Revenues: | ||
Product sales | 97,020 | 94,443 |
Furniture and Mattress [Member] | Retail [Member] | ||
Revenues: | ||
Product sales | 97,020 | 94,443 |
Furniture and Mattress [Member] | Credit [Member] | ||
Revenues: | ||
Product sales | 0 | 0 |
Home Appliance [Member] | ||
Revenues: | ||
Product sales | 78,023 | 80,122 |
Home Appliance [Member] | Retail [Member] | ||
Revenues: | ||
Product sales | 78,023 | 80,122 |
Home Appliance [Member] | Credit [Member] | ||
Revenues: | ||
Product sales | 0 | 0 |
Consumer Electronic [Member] | ||
Revenues: | ||
Product sales | 52,302 | 55,753 |
Consumer Electronic [Member] | Retail [Member] | ||
Revenues: | ||
Product sales | 52,302 | 55,753 |
Consumer Electronic [Member] | Credit [Member] | ||
Revenues: | ||
Product sales | 0 | 0 |
Home Office [Member] | ||
Revenues: | ||
Product sales | 18,310 | 16,788 |
Home Office [Member] | Retail [Member] | ||
Revenues: | ||
Product sales | 18,310 | 16,788 |
Home Office [Member] | Credit [Member] | ||
Revenues: | ||
Product sales | 0 | 0 |
Other [Member] | ||
Revenues: | ||
Product sales | 3,659 | 4,256 |
Other [Member] | Retail [Member] | ||
Revenues: | ||
Product sales | 3,659 | 4,256 |
Other [Member] | Credit [Member] | ||
Revenues: | ||
Product sales | $ 0 | $ 0 |
Outside of US [Member] | ||
Segment Reporting Information [Line Items] | ||
Number of stores | store | 0 |
Guarantor Financial Informati41
Guarantor Financial Information (Condensed Consolidated Balance Sheet) (Details) - USD ($) $ in Thousands | Apr. 30, 2018 | Jan. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 6,190 | $ 9,286 |
Restricted cash | 76,724 | 86,872 |
Customer accounts receivable, net of allowances (includes VIE balance of $391,853 and $459,708, respectively) | 618,160 | 636,825 |
Other accounts receivable | 73,543 | 71,186 |
Inventories | 190,312 | 211,894 |
Other current assets | 16,284 | 63,954 |
Total current assets | 981,213 | 1,080,017 |
Investment in and advances to subsidiaries | 0 | 0 |
Long-term portion of customer accounts receivable, net of allowances (includes VIE balance of $329,039 and $455,002, respectively) | 635,508 | 650,608 |
Property and equipment, net | 141,314 | 143,152 |
Deferred income taxes | 22,052 | 21,565 |
Other assets | 4,662 | 5,457 |
Total assets | 1,784,749 | 1,900,799 |
Current liabilities: | ||
Current maturities of long-term debt and capital lease obligations | 23,180 | 907 |
Accounts payable | 82,362 | 71,617 |
Accrued expenses | 67,071 | 69,112 |
Other current liabilities | 21,361 | 22,475 |
Total current liabilities | 193,974 | 164,111 |
Deferred rent | 85,729 | 87,003 |
Long-term debt and capital lease obligations | 929,535 | 1,090,105 |
Other long-term liabilities | 25,856 | 24,512 |
Total liabilities | 1,235,094 | 1,365,731 |
Total stockholders' equity | 549,655 | 535,068 |
Total liabilities and stockholders' equity | 1,784,749 | 1,900,799 |
Eliminations [Member] | ||
Current assets: | ||
Cash and cash equivalents | 0 | 0 |
Restricted cash | 0 | 0 |
Customer accounts receivable, net of allowances (includes VIE balance of $391,853 and $459,708, respectively) | 0 | 0 |
Other accounts receivable | 0 | 0 |
Inventories | 0 | 0 |
Other current assets | (10,875) | (19,879) |
Total current assets | (10,875) | (19,879) |
Investment in and advances to subsidiaries | (964,295) | (945,175) |
Long-term portion of customer accounts receivable, net of allowances (includes VIE balance of $329,039 and $455,002, respectively) | 0 | 0 |
Property and equipment, net | 0 | 0 |
Deferred income taxes | 0 | 0 |
Other assets | 0 | 0 |
Total assets | (975,170) | (965,054) |
Current liabilities: | ||
Current maturities of long-term debt and capital lease obligations | 0 | 0 |
Accounts payable | 0 | 0 |
Accrued expenses | (3,824) | (4,667) |
Other current liabilities | (7,051) | (15,212) |
Total current liabilities | (10,875) | (19,879) |
Deferred rent | 0 | 0 |
Long-term debt and capital lease obligations | 0 | 0 |
Other long-term liabilities | 0 | 0 |
Total liabilities | (10,875) | (19,879) |
Total stockholders' equity | (964,295) | (945,175) |
Total liabilities and stockholders' equity | (975,170) | (965,054) |
Conn's, Inc. [Member] | ||
Current assets: | ||
Cash and cash equivalents | 0 | 0 |
Restricted cash | 0 | 0 |
Customer accounts receivable, net of allowances (includes VIE balance of $391,853 and $459,708, respectively) | 0 | 0 |
Other accounts receivable | 0 | 0 |
Inventories | 0 | 0 |
Other current assets | 0 | 0 |
Total current assets | 0 | 0 |
Investment in and advances to subsidiaries | 753,815 | 735,272 |
Long-term portion of customer accounts receivable, net of allowances (includes VIE balance of $329,039 and $455,002, respectively) | 0 | 0 |
Property and equipment, net | 0 | 0 |
Deferred income taxes | 22,052 | 21,565 |
Other assets | 0 | 0 |
Total assets | 775,867 | 756,837 |
Current liabilities: | ||
Current maturities of long-term debt and capital lease obligations | 0 | 0 |
Accounts payable | 0 | 0 |
Accrued expenses | 4,800 | 686 |
Other current liabilities | 0 | 0 |
Total current liabilities | 4,800 | 686 |
Deferred rent | 0 | 0 |
Long-term debt and capital lease obligations | 221,412 | 221,083 |
Other long-term liabilities | 0 | 0 |
Total liabilities | 226,212 | 221,769 |
Total stockholders' equity | 549,655 | 535,068 |
Total liabilities and stockholders' equity | 775,867 | 756,837 |
Guarantors [Member] | ||
Current assets: | ||
Cash and cash equivalents | 6,190 | 9,286 |
Restricted cash | 1,550 | 1,550 |
Customer accounts receivable, net of allowances (includes VIE balance of $391,853 and $459,708, respectively) | 226,307 | 177,117 |
Other accounts receivable | 73,543 | 71,186 |
Inventories | 190,312 | 211,894 |
Other current assets | 20,108 | 68,621 |
Total current assets | 518,010 | 539,654 |
Investment in and advances to subsidiaries | 210,480 | 209,903 |
Long-term portion of customer accounts receivable, net of allowances (includes VIE balance of $329,039 and $455,002, respectively) | 306,469 | 195,606 |
Property and equipment, net | 141,314 | 143,152 |
Deferred income taxes | 0 | 0 |
Other assets | 4,662 | 5,457 |
Total assets | 1,180,935 | 1,093,772 |
Current liabilities: | ||
Current maturities of long-term debt and capital lease obligations | 1,095 | 907 |
Accounts payable | 82,362 | 71,617 |
Accrued expenses | 60,859 | 66,370 |
Other current liabilities | 24,933 | 32,685 |
Total current liabilities | 169,249 | 171,579 |
Deferred rent | 85,729 | 87,003 |
Long-term debt and capital lease obligations | 151,151 | 81,043 |
Other long-term liabilities | 20,991 | 18,875 |
Total liabilities | 427,120 | 358,500 |
Total stockholders' equity | 753,815 | 735,272 |
Total liabilities and stockholders' equity | 1,180,935 | 1,093,772 |
Non-guarantor Subsidiaries [Member] | ||
Current assets: | ||
Cash and cash equivalents | 0 | 0 |
Restricted cash | 75,174 | 85,322 |
Customer accounts receivable, net of allowances (includes VIE balance of $391,853 and $459,708, respectively) | 391,853 | 459,708 |
Other accounts receivable | 0 | 0 |
Inventories | 0 | 0 |
Other current assets | 7,051 | 15,212 |
Total current assets | 474,078 | 560,242 |
Investment in and advances to subsidiaries | 0 | 0 |
Long-term portion of customer accounts receivable, net of allowances (includes VIE balance of $329,039 and $455,002, respectively) | 329,039 | 455,002 |
Property and equipment, net | 0 | 0 |
Deferred income taxes | 0 | 0 |
Other assets | 0 | 0 |
Total assets | 803,117 | 1,015,244 |
Current liabilities: | ||
Current maturities of long-term debt and capital lease obligations | 22,085 | 0 |
Accounts payable | 0 | 0 |
Accrued expenses | 5,236 | 6,723 |
Other current liabilities | 3,479 | 5,002 |
Total current liabilities | 30,800 | 11,725 |
Deferred rent | 0 | 0 |
Long-term debt and capital lease obligations | 556,972 | 787,979 |
Other long-term liabilities | 4,865 | 5,637 |
Total liabilities | 592,637 | 805,341 |
Total stockholders' equity | 210,480 | 209,903 |
Total liabilities and stockholders' equity | $ 803,117 | $ 1,015,244 |
Guarantor Financial Informati42
Guarantor Financial Information (Condensed Consolidated Statement of Operations) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 30, 2018 | Apr. 30, 2017 | |
Revenues: | ||
Total net sales | $ 275,756 | $ 279,285 |
Finance charges and other revenues | 82,631 | 76,541 |
Servicing fee revenue | 0 | 0 |
Total revenues | 358,387 | 355,826 |
Costs and expenses: | ||
Cost of goods sold | 166,589 | 171,950 |
Selling, general and administrative expense | 114,878 | 106,537 |
Provision for bad debts | 44,156 | 55,930 |
Charges and credits | 0 | 1,227 |
Total costs and expenses | 325,623 | 335,644 |
Operating income | 32,764 | 20,182 |
Interest expense | 16,820 | 24,008 |
Loss on extinguishment of debt | 406 | 349 |
Income (loss) before income taxes | 15,538 | (4,175) |
Provision (benefit) for income taxes | 2,806 | (1,595) |
Net income (loss) | 12,732 | (2,580) |
Income (loss) from consolidated subsidiaries | 0 | 0 |
Net income (loss) | 12,732 | (2,580) |
Eliminations [Member] | ||
Revenues: | ||
Total net sales | 0 | 0 |
Finance charges and other revenues | 0 | 0 |
Servicing fee revenue | (16,746) | (15,184) |
Total revenues | (16,746) | (15,184) |
Costs and expenses: | ||
Cost of goods sold | 0 | 0 |
Selling, general and administrative expense | (16,746) | (15,184) |
Provision for bad debts | 0 | 0 |
Charges and credits | 0 | |
Total costs and expenses | (16,746) | (15,184) |
Operating income | 0 | 0 |
Interest expense | 0 | 0 |
Loss on extinguishment of debt | 0 | 0 |
Income (loss) before income taxes | 0 | 0 |
Provision (benefit) for income taxes | 0 | 0 |
Net income (loss) | 0 | 0 |
Income (loss) from consolidated subsidiaries | 1,451 | 33,755 |
Net income (loss) | 1,451 | 33,755 |
Conn's, Inc. [Member] | ||
Revenues: | ||
Total net sales | 0 | 0 |
Finance charges and other revenues | 0 | 0 |
Servicing fee revenue | 0 | 0 |
Total revenues | 0 | 0 |
Costs and expenses: | ||
Cost of goods sold | 0 | 0 |
Selling, general and administrative expense | 0 | 0 |
Provision for bad debts | 0 | 0 |
Charges and credits | 0 | |
Total costs and expenses | 0 | 0 |
Operating income | 0 | 0 |
Interest expense | 4,443 | 4,443 |
Loss on extinguishment of debt | 0 | 0 |
Income (loss) before income taxes | (4,443) | (4,443) |
Provision (benefit) for income taxes | (802) | (1,698) |
Net income (loss) | (3,641) | (2,745) |
Income (loss) from consolidated subsidiaries | 16,373 | 165 |
Net income (loss) | 12,732 | (2,580) |
Guarantors [Member] | ||
Revenues: | ||
Total net sales | 275,756 | 279,285 |
Finance charges and other revenues | 45,655 | 36,798 |
Servicing fee revenue | 16,746 | 15,184 |
Total revenues | 338,157 | 331,267 |
Costs and expenses: | ||
Cost of goods sold | 166,589 | 171,950 |
Selling, general and administrative expense | 119,793 | 106,233 |
Provision for bad debts | 7,008 | (5,433) |
Charges and credits | 1,227 | |
Total costs and expenses | 293,390 | 273,977 |
Operating income | 44,767 | 57,290 |
Interest expense | 3,033 | 1,778 |
Loss on extinguishment of debt | 0 | 349 |
Income (loss) before income taxes | 41,734 | 55,163 |
Provision (benefit) for income taxes | 7,537 | 21,078 |
Net income (loss) | 34,197 | 34,085 |
Income (loss) from consolidated subsidiaries | (17,824) | (33,920) |
Net income (loss) | 16,373 | 165 |
Non-guarantor Subsidiaries [Member] | ||
Revenues: | ||
Total net sales | 0 | 0 |
Finance charges and other revenues | 36,976 | 39,743 |
Servicing fee revenue | 0 | 0 |
Total revenues | 36,976 | 39,743 |
Costs and expenses: | ||
Cost of goods sold | 0 | 0 |
Selling, general and administrative expense | 11,831 | 15,488 |
Provision for bad debts | 37,148 | 61,363 |
Charges and credits | 0 | |
Total costs and expenses | 48,979 | 76,851 |
Operating income | (12,003) | (37,108) |
Interest expense | 9,344 | 17,787 |
Loss on extinguishment of debt | 406 | 0 |
Income (loss) before income taxes | (21,753) | (54,895) |
Provision (benefit) for income taxes | (3,929) | (20,975) |
Net income (loss) | (17,824) | (33,920) |
Income (loss) from consolidated subsidiaries | 0 | 0 |
Net income (loss) | $ (17,824) | $ (33,920) |
Guarantor Financial Informati43
Guarantor Financial Information (Condensed Consolidated Statement of Cash Flows) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 30, 2018 | Apr. 30, 2017 | |
Condensed Cash Flow Statements, Captions [Line Items] | ||
Net cash provided by (used in) operating activities | $ 135,339 | $ 90,764 |
Cash flows from investing activities: | ||
Purchase of customer accounts receivables | 0 | 0 |
Sale of customer accounts receivables | 0 | 0 |
Purchase of property and equipment | (6,169) | (4,286) |
Net cash used in investing activities | (6,169) | (4,286) |
Cash flows from financing activities: | ||
Proceeds from issuance of asset-backed notes | 0 | 469,814 |
Payments on asset-backed notes | (232,584) | (232,931) |
Borrowings from revolving credit facility | 393,158 | 265,935 |
Payments on revolving credit facility | (322,608) | (443,435) |
Borrowings from warehouse facility | 52,226 | 0 |
Payments of debt issuance costs and amendment fees | (533) | (7,605) |
Payments on warehouse facility | (29,905) | 0 |
Proceeds from stock issued under employee benefit plans | 267 | 256 |
Tax payments associated with equity-based compensation transactions | (1,888) | 0 |
Payments from extinguishment of debt | (294) | 0 |
Other | (253) | 84 |
Net cash (used in) provided by financing activities | (142,414) | 52,118 |
Net change in cash, cash equivalents and restricted cash | (13,244) | 138,596 |
Cash, cash equivalents and restricted cash, beginning of period | 96,158 | 134,264 |
Cash, cash equivalents and restricted cash, end of period | 82,914 | 272,860 |
Eliminations [Member] | ||
Condensed Cash Flow Statements, Captions [Line Items] | ||
Net cash provided by (used in) operating activities | 0 | 0 |
Cash flows from investing activities: | ||
Purchase of customer accounts receivables | 50,774 | 466,056 |
Sale of customer accounts receivables | (50,774) | (466,056) |
Purchase of property and equipment | 0 | 0 |
Net cash used in investing activities | 0 | 0 |
Cash flows from financing activities: | ||
Proceeds from issuance of asset-backed notes | 0 | |
Payments on asset-backed notes | 0 | 0 |
Borrowings from revolving credit facility | 0 | 0 |
Payments on revolving credit facility | 0 | 0 |
Borrowings from warehouse facility | 0 | |
Payments of debt issuance costs and amendment fees | 0 | 0 |
Payments on warehouse facility | 0 | |
Proceeds from stock issued under employee benefit plans | 0 | 0 |
Tax payments associated with equity-based compensation transactions | 0 | |
Other | 0 | 0 |
Net cash (used in) provided by financing activities | 0 | 0 |
Net change in cash, cash equivalents and restricted cash | 0 | 0 |
Cash, cash equivalents and restricted cash, beginning of period | 0 | 0 |
Cash, cash equivalents and restricted cash, end of period | 0 | 0 |
Conn's, Inc. [Member] | ||
Condensed Cash Flow Statements, Captions [Line Items] | ||
Net cash provided by (used in) operating activities | (267) | (256) |
Cash flows from investing activities: | ||
Purchase of customer accounts receivables | 0 | 0 |
Sale of customer accounts receivables | 0 | 0 |
Purchase of property and equipment | 0 | 0 |
Net cash used in investing activities | 0 | 0 |
Cash flows from financing activities: | ||
Proceeds from issuance of asset-backed notes | 0 | |
Payments on asset-backed notes | 0 | 0 |
Borrowings from revolving credit facility | 0 | 0 |
Payments on revolving credit facility | 0 | 0 |
Borrowings from warehouse facility | 0 | |
Payments of debt issuance costs and amendment fees | 0 | 0 |
Payments on warehouse facility | 0 | |
Proceeds from stock issued under employee benefit plans | 267 | 256 |
Tax payments associated with equity-based compensation transactions | 0 | |
Other | 0 | |
Net cash (used in) provided by financing activities | 267 | 256 |
Net change in cash, cash equivalents and restricted cash | 0 | 0 |
Cash, cash equivalents and restricted cash, beginning of period | 0 | 0 |
Cash, cash equivalents and restricted cash, end of period | 0 | 0 |
Guarantors [Member] | ||
Condensed Cash Flow Statements, Captions [Line Items] | ||
Net cash provided by (used in) operating activities | (14,194) | (192,236) |
Cash flows from investing activities: | ||
Purchase of customer accounts receivables | 0 | 0 |
Sale of customer accounts receivables | 0 | 466,056 |
Purchase of property and equipment | (6,169) | (4,286) |
Net cash used in investing activities | (6,169) | 461,770 |
Cash flows from financing activities: | ||
Proceeds from issuance of asset-backed notes | 0 | |
Payments on asset-backed notes | (50,847) | 0 |
Borrowings from revolving credit facility | 393,158 | 265,935 |
Payments on revolving credit facility | (322,608) | (443,435) |
Borrowings from warehouse facility | 0 | |
Payments of debt issuance costs and amendment fees | (1) | (2,865) |
Payments on warehouse facility | 0 | |
Proceeds from stock issued under employee benefit plans | 0 | 0 |
Tax payments associated with equity-based compensation transactions | (1,888) | |
Payments from extinguishment of debt | (294) | |
Other | (253) | 84 |
Net cash (used in) provided by financing activities | 17,267 | (180,281) |
Net change in cash, cash equivalents and restricted cash | (3,096) | 89,253 |
Cash, cash equivalents and restricted cash, beginning of period | 10,836 | 23,566 |
Cash, cash equivalents and restricted cash, end of period | 7,740 | 112,819 |
Non-guarantor Subsidiaries [Member] | ||
Condensed Cash Flow Statements, Captions [Line Items] | ||
Net cash provided by (used in) operating activities | 149,800 | 283,256 |
Cash flows from investing activities: | ||
Purchase of customer accounts receivables | (50,774) | (466,056) |
Sale of customer accounts receivables | 50,774 | 0 |
Purchase of property and equipment | 0 | 0 |
Net cash used in investing activities | 0 | (466,056) |
Cash flows from financing activities: | ||
Proceeds from issuance of asset-backed notes | 469,814 | |
Payments on asset-backed notes | (181,737) | (232,931) |
Borrowings from revolving credit facility | 0 | 0 |
Payments on revolving credit facility | 0 | 0 |
Borrowings from warehouse facility | 52,226 | |
Payments of debt issuance costs and amendment fees | (532) | (4,740) |
Payments on warehouse facility | (29,905) | |
Proceeds from stock issued under employee benefit plans | 0 | 0 |
Tax payments associated with equity-based compensation transactions | 0 | |
Payments from extinguishment of debt | 0 | |
Other | 0 | 0 |
Net cash (used in) provided by financing activities | (159,948) | 232,143 |
Net change in cash, cash equivalents and restricted cash | (10,148) | 49,343 |
Cash, cash equivalents and restricted cash, beginning of period | 85,322 | 110,698 |
Cash, cash equivalents and restricted cash, end of period | $ 75,174 | $ 160,041 |
Subsequent Events (Details)
Subsequent Events (Details) | May 23, 2018USD ($) | Mar. 31, 2017USD ($) | Apr. 30, 2018 |
Subsequent Event [Line Items] | |||
Determination period | 12 months | ||
Revolving Credit Facility [Member] | Line of Credit [Member] | |||
Subsequent Event [Line Items] | |||
Aggregate commitments | $ 750,000,000 | ||
Accounts receivable advance rate | 75.00% | ||
Unused line fee | 0.75% | ||
Maximum capital expenditures | $ 75,000,000 | ||
Revolving Credit Facility [Member] | Line of Credit [Member] | Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Aggregate commitments | $ 650,000,000 | ||
Available block in calculating borrowing base | $ 10,000,000 | ||
Accounts receivable advance rate | 80.00% | ||
Unused line fee | 0.50% | ||
Maximum inventory component of the borrowing base | $ 175,000,000 | ||
Percent of revolving loan commitment in effect | 33.33% | ||
Maximum capital expenditures | $ 100,000,000 | ||
Determination period | 12 months | ||
Revolving Credit Facility [Member] | Line of Credit [Member] | Two quarter basis [Member] | Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Minimum interest coverage rate | 1.5 | ||
Revolving Credit Facility [Member] | Line of Credit [Member] | Single quarter [Member] | Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Minimum interest coverage rate | 1 | ||
Revolving Credit Facility [Member] | Line of Credit [Member] | Minimum [Member] | |||
Subsequent Event [Line Items] | |||
Unused line fee | 0.25% | ||
Revolving Credit Facility [Member] | Line of Credit [Member] | Maximum [Member] | |||
Subsequent Event [Line Items] | |||
Unused line fee | 0.75% | ||
Revolving Credit Facility [Member] | Line of Credit [Member] | LIBOR [Member] | |||
Subsequent Event [Line Items] | |||
Variable basis spread | 1.00% | ||
Revolving Credit Facility [Member] | Line of Credit [Member] | LIBOR [Member] | Minimum [Member] | Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Variable basis spread | 2.50% | ||
Revolving Credit Facility [Member] | Line of Credit [Member] | LIBOR [Member] | Maximum [Member] | Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Variable basis spread | 3.25% | ||
Revolving Credit Facility [Member] | Line of Credit [Member] | Base Rate [Member] | Minimum [Member] | |||
Subsequent Event [Line Items] | |||
Variable basis spread | 1.75% | ||
Revolving Credit Facility [Member] | Line of Credit [Member] | Base Rate [Member] | Minimum [Member] | Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Variable basis spread | 1.50% | ||
Revolving Credit Facility [Member] | Line of Credit [Member] | Base Rate [Member] | Maximum [Member] | |||
Subsequent Event [Line Items] | |||
Variable basis spread | 2.25% | ||
Revolving Credit Facility [Member] | Line of Credit [Member] | Base Rate [Member] | Maximum [Member] | Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Variable basis spread | 2.25% |