Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Oct. 31, 2018 | Nov. 27, 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 | Oct. 31, 2018 | |
Document Fiscal Year Focus | 2,019 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 31,727,947 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Oct. 31, 2018 | Jan. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 3,492 | $ 9,286 |
Restricted cash (includes VIE balance of $68,493 and $85,322, respectively) | 70,043 | 86,872 |
Customer accounts receivable, net of allowances (includes VIE balance of $372,481 and $459,708, respectively) | 630,396 | 636,825 |
Other accounts receivable | 63,752 | 71,186 |
Inventories | 227,164 | 211,894 |
Income taxes receivable | 556 | 32,362 |
Prepaid expenses and other current assets | 15,164 | 31,592 |
Total current assets | 1,010,567 | 1,080,017 |
Long-term portion of customer accounts receivable, net of allowances (includes VIE balance of $326,657 and $455,002, respectively) | 654,320 | 650,608 |
Property and equipment, net | 146,326 | 143,152 |
Deferred income taxes | 23,157 | 21,565 |
Other assets | 6,642 | 5,457 |
Total assets | 1,841,012 | 1,900,799 |
Current liabilities: | ||
Current maturities of capital lease obligations | 804 | 907 |
Accounts payable | 110,359 | 71,617 |
Accrued compensation and related expenses | 19,614 | 21,366 |
Accrued expenses | 60,654 | 44,807 |
Income taxes payable | 7,339 | 2,939 |
Deferred revenues and other credits | 22,206 | 22,475 |
Total current liabilities | 220,976 | 164,111 |
Deferred rent | 90,410 | 87,003 |
Long-term debt and capital lease obligations (includes VIE balance of $611,353 and $787,979, respectively) | 920,366 | 1,090,105 |
Other long-term liabilities | 22,226 | 24,512 |
Total liabilities | 1,253,978 | 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; 31,726,635 and 31,435,775 shares issued, respectively) | 317 | 314 |
Additional paid-in capital | 107,720 | 101,087 |
Retained earnings | 478,997 | 433,667 |
Total stockholders’ equity | 587,034 | 535,068 |
Total liabilities and stockholders' equity | $ 1,841,012 | $ 1,900,799 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Oct. 31, 2018 | Jan. 31, 2018 |
Restricted cash, VIE balance | $ 70,043 | $ 86,872 |
Customer accounts receivable, VIE balance | 630,396 | 636,825 |
Long-term portion of customer accounts receivable, VIE balance | 654,320 | 650,608 |
Current maturities of long-term debt and capital lease obligations, VIE balance | 804 | 907 |
Long-term debt | 615,333 | |
Long-term debt and capital lease obligations | $ 920,366 | $ 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) | 31,726,635 | 31,435,775 |
Variable Interest Entity [Member] | ||
Restricted cash, VIE balance | $ 68,493 | $ 85,322 |
Customer accounts receivable, VIE balance | 372,481 | 459,708 |
Long-term portion of customer accounts receivable, VIE balance | 326,657 | 455,002 |
Current maturities of long-term debt and capital lease obligations, VIE balance | 0 | 0 |
Long-term debt | $ 611,353 | 787,979 |
Long-term debt and capital lease obligations | $ 787,979 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2018 | Oct. 31, 2017 | Oct. 31, 2018 | Oct. 31, 2017 | |
Revenues: | ||||
Product sales | $ 256,731 | $ 263,786 | $ 773,224 | $ 774,741 |
Repair service agreement commissions | 23,579 | 24,488 | 72,104 | 72,703 |
Service revenues | 3,564 | 3,534 | 10,615 | 10,062 |
Total net sales | 283,874 | 291,808 | 855,943 | 857,506 |
Finance charges and other revenues | 89,950 | 81,364 | 260,888 | 238,139 |
Total revenues | 373,824 | 373,172 | 1,116,831 | 1,095,645 |
Costs and expenses: | ||||
Cost of goods sold | 166,886 | 175,591 | 507,102 | 519,847 |
Selling, general and administrative expense | 118,380 | 114,355 | 353,948 | 332,524 |
Provision for bad debts | 47,548 | 56,512 | 142,455 | 161,891 |
Charges and credits | 5,537 | 5,861 | 5,837 | 11,156 |
Total costs and expenses | 338,351 | 352,319 | 1,009,342 | 1,025,418 |
Operating income | 35,473 | 20,853 | 107,489 | 70,227 |
Interest expense | 15,098 | 18,095 | 47,484 | 62,142 |
Loss on extinguishment of debt | 0 | 461 | 1,773 | 2,907 |
Income before income taxes | 20,375 | 2,297 | 58,232 | 5,178 |
Provision for income taxes | 5,745 | 728 | 13,859 | 1,916 |
Net income | $ 14,630 | $ 1,569 | $ 44,373 | $ 3,262 |
Income per share: | ||||
Basic (in dollars per share) | $ 0.46 | $ 0.05 | $ 1.40 | $ 0.10 |
Diluted (in dollars per share) | $ 0.45 | $ 0.05 | $ 1.38 | $ 0.10 |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 31,712,862 | 31,292,913 | 31,636,270 | 31,121,177 |
Diluted (in shares) | 32,321,874 | 31,764,594 | 32,251,952 | 31,457,420 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | |
Cash flows from operating activities: | ||
Net income | $ 44,373 | $ 3,262 |
Adjustments to reconcile net income to net cash from operating activities: | ||
Depreciation | 23,262 | 23,138 |
Amortization of debt issuance costs | 8,795 | 13,157 |
Provision for bad debts and uncollectible interest | 179,702 | 192,354 |
Stock-based compensation expense | 8,514 | 5,899 |
Charges, net of credits, for store and facility closures and relocations | 0 | 428 |
Deferred income tax benefit | (1,847) | (1,112) |
Gain (loss) on sale/disposal of property and equipment | (620) | 5,636 |
Tenant improvement allowances received from landlords | 9,532 | 5,072 |
Change in operating assets and liabilities: | ||
Customer accounts receivable | (176,195) | (126,654) |
Other accounts receivables | 10,589 | 5,641 |
Inventories | (15,269) | (70,623) |
Other assets | 16,427 | 964 |
Accounts payable | 35,357 | 8,186 |
Accrued expenses | 13,505 | 21,371 |
Income taxes | 36,205 | 151 |
Deferred rent, revenues and other credits | (10,236) | (4,971) |
Net cash provided by operating activities | 182,094 | 81,899 |
Cash flows from investing activities: | ||
Purchase of property and equipment | (22,609) | (11,995) |
Net cash used in investing activities | (22,609) | (11,995) |
Cash flows from financing activities: | ||
Proceeds from issuance of asset-backed notes | 358,300 | 469,814 |
Payments on asset-backed notes | (619,674) | (814,568) |
Borrowings from Revolving Credit Facility | 1,266,333 | 1,257,052 |
Payments on Revolving Credit Facility | (1,260,283) | (1,082,552) |
Borrowings from warehouse facility | 173,286 | 79,940 |
Payments on warehouse facility | (88,876) | (23,066) |
Payments for debt issuance costs and amendment fees | (7,381) | (8,172) |
Proceeds from stock issued under employee benefit plans | 1,055 | 3,011 |
Tax payments associated with equity-based compensation transactions | (2,931) | (570) |
Payments from extinguishment of debt | (1,177) | (837) |
Other | (760) | (379) |
Net cash used in financing activities | (182,108) | (120,327) |
Net change in cash, cash equivalents and restricted cash | (22,623) | (50,423) |
Cash, cash equivalents and restricted cash, beginning of period | 96,158 | 134,264 |
Cash, cash equivalents and restricted cash, end of period | 73,535 | 83,841 |
Non-cash investing and financing activities: | ||
Capital lease asset additions and related obligations | 508 | 3,196 |
Property and equipment purchases not yet paid | 5,454 | 1,021 |
Supplemental cash flow data: | ||
Cash interest paid | 33,854 | 44,561 |
Cash income taxes paid (refunded), net | $ (20,468) | $ 2,878 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Oct. 31, 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 generally accepted accounting principles in the United States of America ( “ 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”) which was filed with the United States Securities and Exchange Commission (the “ SEC”) on April 5, 2018, as updated by our Form 8-K filed with the SEC on November 23, 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. As of October 31, 2018 , cash and cash equivalents included cash and credit card deposits in transit. As of January 31, 2018 , cash and cash equivalents included cash, credit card deposits in transit, and highly liquid debt instruments purchased with a maturity of three months or less. Credit card deposits in transit included in cash and cash equivalents were $2.0 million and $2.0 million as of October 31, 2018 and January 31, 2018 , respectively. Restricted Cash. The restricted cash balance as of October 31, 2018 and January 31, 2018 includes $54.7 million and $58.1 million , respectively, of cash we collected as servicer on the securitized receivables that was subsequently remitted to the VIEs and $13.8 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” 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 October 31, 2018 and January 31, 2018 , there was $11.6 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 balance of the loan. At October 31, 2018 , customer receivables carried in non-accrual status were $15.6 million , of which $11.8 million were 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 were in bankruptcy status and less than 60 days past due. At October 31, 2018 and January 31, 2018 , customer receivables that were past due 90 days or more and still accruing interest totaled $110.6 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. At October 31, 2018 , we utilized a qualitative factor related to changes in the nature of the portfolio. 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, as defined in Note 5, Debt and Capital Lease Obligations , are included in other assets on our Condensed Consolidated Balance Sheet and were $6.5 million and $5.2 million as of October 31, 2018 and January 31, 2018 , respectively. Income Taxes. For the nine months ended October 31, 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 nine months ended October 31, 2018 and 2017, the effective tax rate was 23.8% and 37.0% , respectively. The primary factors affecting our effective tax rate for the nine months ended October 31, 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 unit awards (“PSUs”) and stock options granted during the three and nine months ended October 31, 2018 and 2017 : Three Months Ended October 31, Nine Months Ended October 31, 2018 2017 2018 2017 RSUs (1) 3,200 2,740 153,089 646,033 PSUs (2) — — — 501,012 Stock Options (3) — — 620,166 — Total stock awards granted 3,200 2,740 773,255 1,147,045 Aggregate grant date fair value (in thousands) $ 120 $ 50 $ 17,304 $ 14,596 (1) The majority of RSUs issued during the three and nine months ended October 31, 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 nine months ended October 31, 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 nine months ended October 31, 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 nine months ended October 31, 2018 . For the three months ended October 31, 2018 and 2017, stock-based compensation expense was $2.9 million and $1.7 million , respectively. For the nine months ended October 31, 2018 and 2017, stock-based compensation expense was $8.5 million and $5.9 million , respectively. Earnings per Share. Basic earnings per share is calculated by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted earnings per share includes the dilutive effects of any stock options, RSUs and PSUs, 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 October 31, Nine Months Ended 2018 2017 2018 2017 Weighted-average common shares outstanding - Basic 31,712,862 31,292,913 31,636,270 31,121,177 Dilutive effect of stock options, RSUs and PSUs 609,012 471,681 615,682 336,243 Weighted-average common shares outstanding - Diluted 32,321,874 31,764,594 32,251,952 31,457,420 For the three months ended October 31, 2018 and 2017 , the weighted-average number of stock options, RSUs and PSUs not included in the calculation due to their anti-dilutive effect was 630,698 and 158,627 , respectively. For the nine months ended October 31, 2018 and 2017 , the weighted-average number of stock options, RSUs and PSUs not included in the calculation due to their anti-dilutive effect was 503,747 and 356,116 , 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 October 31, 2018 , the fair value of the Senior Notes outstanding, which was determined using Level 1 inputs, was $223.6 million as compared to the carrying value of $227.0 million , excluding the impact of the related discount. At October 31, 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. The FASB 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 also may serve as the administrator of the RSAs sold and defer 5% of the revenue received from the sale of RSAs as compensation for this performance obligation 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 delivery 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 consists of deferred customer deposits and deferred RSA administration fees. During the three and nine months ended October 31, 2018 , we recognized $1.7 million and $1.8 million , respectively, of revenue for customer deposits deferred as of the beginning of those periods. During the three and nine months ended October 31, 2018 , we recognized $1.5 million and $4.2 million respectively, of revenue for RSA administrative fees deferred as of the beginning of those periods. 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 |
Customer Accounts Receivable
Customer Accounts Receivable | 9 Months Ended |
Oct. 31, 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) October 31, January 31, October 31, January 31, October 31, January 31, Customer accounts receivable $ 1,345,361 $ 1,374,269 $ 103,556 $ 114,120 $ 207,805 $ 217,952 Restructured accounts 181,145 153,593 44,880 37,687 181,145 153,593 Total customer portfolio balance $ 1,526,506 $ 1,527,862 $ 148,436 $ 151,807 $ 388,950 $ 371,545 Allowance for uncollectible accounts (207,097 ) (203,572 ) Allowances for no-interest option credit programs (18,716 ) (20,960 ) Deferred fees and origination costs, net (15,977 ) (15,897 ) Total customer accounts receivable, net 1,284,716 1,287,433 Short-term portion of customer accounts receivable, net (630,396 ) (636,825 ) Long-term portion of customer accounts receivable, net $ 654,320 $ 650,608 Securitized receivables held by the VIEs $ 838,835 $ 1,085,385 $ 101,433 $ 124,627 $ 287,902 $ 300,348 Receivables not held by the VIEs 687,671 442,477 47,003 27,180 101,048 71,197 Total customer portfolio balance $ 1,526,506 $ 1,527,862 $ 148,436 $ 151,807 $ 388,950 $ 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 October 31, 2018 and January 31, 2018 , the amounts included within both 60 days past due and re-aged was $92.0 million and $80.8 million , respectively. As of October 31, 2018 and January 31, 2018 , the total customer portfolio balance past due one day or greater was $418.4 million and $401.0 million , respectively. These amounts include the 60 days past due balances shown. (2) The re-aged receivables balance as of October 31, 2018 and January 31, 2018 includes $34.3 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: Nine Months Ended October 31, 2018 Nine Months Ended October 31, 2017 (in thousands) Customer Customer Allowance at beginning of period $ 148,856 $ 54,716 $ 203,572 $ 158,992 $ 51,183 $ 210,175 Provision (1) 127,472 51,440 178,912 139,406 52,948 192,354 Principal charge-offs (2) (119,242 ) (38,990 ) (158,232 ) (133,033 ) (44,657 ) (177,690 ) Interest charge-offs (23,696 ) (7,748 ) (31,444 ) (21,884 ) (7,346 ) (29,230 ) Recoveries (2) 10,768 3,521 14,289 5,463 1,834 7,297 Allowance at end of period $ 144,158 $ 62,939 $ 207,097 $ 148,944 $ 53,962 $ 202,906 Average total customer portfolio balance $ 1,341,415 $ 167,473 $ 1,508,888 $ 1,352,137 $ 141,155 $ 1,493,292 (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 | 9 Months Ended |
Oct. 31, 2018 | |
Charges and Credits [Abstract] | |
Charges and Credits | Charges and Credits Charges and credits consisted of the following: Three Months Ended Nine Months Ended (in thousands) 2018 2017 2018 2017 Facility closure costs $ — $ — $ — $ 1,349 Securities-related regulatory matter and other legal fees — — 300 34 Employee severance 737 — 737 1,317 Indirect tax audit reserve — — — 2,595 Legal judgment 4,800 — 4,800 — Write-off of capitalized software costs — 5,861 — 5,861 $ 5,537 $ 5,861 $ 5,837 $ 11,156 During the three months ended October 31, 2018 , we recorded severance costs related to a change in the executive management team and costs related to the TFL Judgment (as defined below). Refer to Note 6, Contingencies , for additional information about the TFL Judgment. During the nine months ended October 31, 2018 , we recorded a contingency reserve related to a regulatory matter, severance costs related to a change in the executive management team and costs related to the TFL Judgment. Refer to Note 6, Contingencies , for additional information about the TFL Judgment. During the three months ended October 31, 2017 , we incurred a loss from the write-off of previously capitalized costs for a software project that was abandoned during the third quarter of fiscal year 2018 related to the implementation of a new point of sale system that began in fiscal year 2013. During the nine months ended October 31, 2017 , we incurred exit costs associated with reducing the square footage of a distribution center, severance costs related to a change in the executive management team, a charge related to an increase in our indirect tax audit reserve, and a loss from the write-off of previously capitalized costs for a software project that was abandoned during the third quarter of fiscal year 2018 related to the implementation of a new point of sale system that began in fiscal year 2013. |
Finance Charges and Other Reven
Finance Charges and Other Revenue | 9 Months Ended |
Oct. 31, 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 Nine Months Ended (in thousands) 2018 2017 2018 2017 Interest income and fees $ 82,964 $ 74,144 $ 239,745 $ 210,765 Insurance income 6,807 7,125 20,852 27,107 Other revenues 179 95 291 267 $ 89,950 $ 81,364 $ 260,888 $ 238,139 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 October 31, 2018 and 2017, interest income and fees reflected provisions for uncollectible interest of $13.4 million and $10.5 million , respectively. The amount included in interest income and fees related to TDR accounts for the three months ended October 31, 2018 and 2017 are $7.1 million and $4.8 million , respectively. During the nine months ended October 31, 2018 and 2017, interest income and fees reflected provisions for uncollectible interest of $37.2 million and $31.0 million , respectively. The amount included in interest income and fees related to TDR accounts for the nine months ended October 31, 2018 and 2017 are $19.4 million and $14.0 million , respectively. Insurance income decreased over the nine month 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 | 9 Months Ended |
Oct. 31, 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) October 31, January 31, Revolving Credit Facility $ 83,050 $ 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 — 59,794 2017-A VIE Asset-backed Class B Notes — 106,270 2017-A VIE Asset-backed Class C Notes — 50,340 2017-B VIE Asset-backed Class A Notes 26,097 292,663 2017-B VIE Asset-backed Class B Notes 132,180 132,180 2017-B VIE Asset-backed Class C Notes 78,640 78,640 2018-A VIE Asset-backed Class A Notes 154,907 — 2018-A VIE Asset-backed Class B Notes 69,550 — 2018-A VIE Asset-backed Class C Notes 69,550 — Warehouse Notes 84,409 — Capital lease obligations 4,698 4,949 Total debt and capital lease obligations 930,081 1,102,425 Less: Discount on debt (2,106 ) (2,527 ) Deferred debt issuance costs (6,805 ) (8,886 ) Current maturities of capital lease obligations (804 ) (907 ) Long-term debt and capital lease obligations $ 920,366 $ 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, excluding certain restricted payments permitted under the Indenture, exceeds the sum of (i) 50% of Consolidated Net Income from November 1, 2015 to the end of the most recent fiscal quarter, (ii) 100% of net cash proceeds and the fair market value of certain capital stock and other property received in or exchanged for the sale or issuance of Capital Stock, (iii) amount by which certain indebtedness is reduced upon conversion or exchange for Capital Stock and (iv) certain reductions in Restricted Investments (the sum of clauses (i) through (iv) as of October 31, 2018, the “Consolidate Net Income Threshold Amount”). These limitations, however, are subject to certain permitted exceptions, including (1) an exception that permits restricted payments regardless of dollar amount so long as, after giving pro forma effect to such dividends and other restricted payments, we would have had a leverage ratio, as defined in the Indenture, of less than or equal to 2.50 to 1.0 and (2) a general exception that permits the payment of up to $375.0 million in restricted payments not otherwise permitted under the Indenture (the “Permitted Distribution Amount”). As a result of the sum of the Consolidated Net Income Threshold Amount and Permitted Distribution Amount, as of October 31, 2018 , $207.8 million would have been free from the distribution restriction. 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 2019, 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, if any, 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-B Class A Notes $ 361,400 $ 358,945 $ 26,097 12/20/2017 7/15/2020 2.73% 5.17% 2017-B Class B Notes 132,180 131,281 132,180 12/20/2017 4/15/2021 4.52% 5.23% 2017-B Class C Notes 78,640 77,843 78,640 12/20/2017 11/15/2022 5.95% 6.34% 2018-A Class A Notes 219,200 217,832 154,907 8/15/2018 1/17/2023 3.25% 4.73% 2018-A Class B Notes 69,550 69,020 69,550 8/15/2018 1/17/2023 4.65% 5.43% 2018-A Class C Notes 69,550 68,850 69,550 8/15/2018 1/17/2023 6.02% 6.79% Warehouse Notes 121,060 118,972 84,409 7/16/2018 1/15/2020 Index + 2.50% (3) 6.56% Total $ 1,051,580 $ 1,042,743 $ 615,333 (1) After giving effect to debt issuance costs and restricted cash held by the VIEs. (2) For the nine months ended October 31, 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 2.50% 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 as a loss on extinguishment of debt. On July 16, 2018, affiliates of the Company closed on $121.1 million of additional financing under a receivables warehouse financing transaction entered into on July 9, 2018 (the “Additional Funding”). The net proceeds of the Additional Funding were used to prepay in full the Series 2017-A Class B and C Notes (the “2017-A Redeemed Notes”) that were still outstanding as of July 16, 2018. On July 16, 2018, the Company completed the redemption of the 2017-A Redeemed Notes at an aggregate redemption price of $127.2 million (which was equal to the entire outstanding principal of, plus accrued interest and the call premiums on the 2017-A Redeemed Notes). The net funds used to call the notes was $119.0 million, which is equal to the redemption price less adjustments of $8.2 million for funds held in reserve and collection accounts in accordance with the terms of the applicable indenture governing the 2017-A Redeemed Notes. The difference between the net proceeds of the Additional Funding and the carrying value of the 2017-A 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 2017-A Redeemed Notes, we wrote-off $1.2 million as a loss on extinguishment of debt. On August 15, 2018, an affiliate of the Company (the “Issuer”) completed the issuance and sale of asset-backed notes at a face amount of $358.3 million secured by the transferred customer accounts receivables and restricted cash held by a VIE, which resulted in net proceeds to us of $355.7 million, net of transaction costs and restricted cash held by the VIE. Net proceeds from the offering were used to repay indebtedness under the Company’s Revolving Credit Facility, as defined below, and for other general corporate purposes. The asset-backed notes mature on January 17, 2023 and consist of $219.2 million of the Issuer’s 3.25% Asset Backed Fixed Rate Notes, Series 2018-A, Class A, $69.6 million of the Issuer’s 4.65% Asset Backed Fixed Rate Notes, Series 2018-A, Class B, and $69.6 million of the Issuer’s 6.02% Asset Backed Fixed Rate Notes, Series 2018-A, Class C. Revolving Credit Facility. On May 23, 2018, Conn's, Inc. and certain of its subsidiaries (the “Borrowers”) entered into a Fourth Amendment to the Fourth Amended and Restated Loan and Security Agreement (the “Fourth Amendment”), dated as of October 30, 2015, with certain lenders, which provides for a $650.0 million asset-based revolving credit facility (the “Revolving Credit Facility”) under which credit availability is subject to a borrowing base. The Fourth Amendment, among other things, (a) extends the maturity date of the credit facility to May 23, 2022; (b) provides for a reduction in the aggregate commitments from $750 million to $650 million; (c) amends the method by which the applicable margin is calculated to be based on the total leverage ratio (ratio of total liabilities less the sum of qualified cash and ABS qualified cash to tangible net worth), 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) eliminates a $10 million availability block in calculating the borrowing base; (e) increases the maximum accounts receivable advance rate from 75% to 80%; (f) decreases the maximum unused line fee by 25 basis points, from 75 basis points to 50 basis points; (g) eliminates the cash recovery covenant; (h) modifies the maximum inventory component of the borrowing base from $175 million to 33.33% of revolving loan commitments in effect; (i) modifies the interest coverage covenant such that the minimum interest coverage on a trailing two quarter basis is 1.5x and the minimum interest coverage during any single quarter is 1.0x; (j) increases the maximum capital expenditures from $75 million to $100 million during any period of four consecutive fiscal quarters; and (k) modifies 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. Subsequent to the adoption of the Fourth Amendment, loans under the Revolving Credit Facility bear interest, at our option, at a rate equal to LIBOR plus the applicable margin based on facility availability which specified a margin ranging from 2.50% 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 1.50% 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 October 31, 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 0.50% 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 7.0% for the nine months ended October 31, 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 October 31, 2018 , we had immediately available borrowing capacity of $401.6 million under our Revolving Credit Facility, net of standby letters of credit issued of $2.5 million . We also had $162.8 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 pay dividends and make distributions to the Company and other obligors under the Revolving Credit Facility without restriction. As of October 31, 2018 , we were restricted from making distributions, including repayments of the Senior Notes or other distributions, in excess of $282.5 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 the debt covenants of our Revolving Credit Facility at October 31, 2018 . A summary of the significant financial covenants that govern our Revolving Credit Facility compared to our actual compliance status at October 31, 2018 is presented below: Actual Required Minimum/ Maximum Interest Coverage Ratio for the quarter must equal or exceed minimum 4.07:1.00 1.00:1.00 Interest Coverage Ratio for the trailing two quarters must equal or exceed minimum 3.97:1.00 1.50:1.00 Leverage Ratio must not exceed maximum 2.01:1.00 4.00:1.00 ABS Excluded Leverage Ratio must not exceed maximum 1.08:1.00 2.00:1.00 Capital Expenditures, net, must not exceed maximum $16.0 million $100.0 million All capitalized terms in the above table are defined by the Revolving Credit Facility and may or may not agree directly to the financial statement captions in this document. The covenants are calculated quarterly, except for capital expenditures, which is calculated for a period of four consecutive fiscal quarters, as of the end of each fiscal quarter. |
Contingencies
Contingencies | 9 Months Ended |
Oct. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies Securities Class Action Litigation. We and two of our former executive officers were 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 plaintiffs in the Consolidated Securities Action alleged that the defendants made false and misleading statements or failed to disclose material adverse facts about our business, operations, and prospects. They alleged violations of sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder and sought 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 did 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. In May 2016, the Court issued a ruling that dismissed 78 of 91 alleged misstatements. 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. On June 14, 2018, the parties filed a motion for preliminary approval of a settlement for the Consolidated Securities Action. The Court granted preliminary approval of the settlement terms and stayed the Consolidated Securities Action on June 28, 2018. The $22.5 million settlement was funded solely by proceeds from our insurance carriers. As part of the settlement, we, along with the other executive officer defendants, have denied and continue to deny any wrongdoing giving rise to any liability or violation of the law, including the U.S. securities laws, as well as each and every one of the claims alleged by plaintiffs in the Consolidated Securities Action. The Court held a final settlement approval hearing on October 11, 2018 and that same day the Court signed its Final Order and Judgment approving the terms of the settlement of the Consolidated Securities Action. On November 16, 2018, after no appeal from the Final Order and Judgment was filed and the settlement became final, we filed a motion to voluntarily dismiss the Fifth Circuit appeal. The Fifth Circuit dismissed the appeal on November 15, 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, as well as a cross-motion to stay this action in its entirety on May 18, 2018. On July 10, 2018, the court granted our cross-motion to stay this action pending final approval of settlement in the Consolidated Securities Action. On November 6, 2018, defendants filed a motion to dismiss plaintiff’s complaint. Plaintiff’s response is due on December 19, 2018, and defendants’ reply in support of their motion to dismiss is due on January 16, 2019. We intend to vigorously defend our interests in the MicroCapital Action. It is not possible at this time to predict the timing or outcome 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 Court has agreed to continue to the stay through the final settlement approval hearing in the Consolidated Securities Action on October 11, 2018, and set a deadline of November 1, 2018, for defendants to respond to the complaint. On November 1, the defendants filed a motion to dismiss plaintiff’s complaint. 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 7, 2018, the Court held a status conference at which the parties informed the Court of the October 11, 2018 final approval hearing for the settlement in the Consolidated Securities Action. In light of the pending settlement, the Court ordered the parties to appear for a status conference on December 7, 2018, and ordered the plaintiff to send us a courtesy copy of the amended petition that his counsel expressed an interest in filing. We received a copy of the amended petition on October 12, 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 stayed pending the resolution of the Consolidated Securities Action. No further activity has occurred in this case since the Final Order and Judgment was entered in the Consolidated Securities Action. 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. TF LoanCo. In April 2014, Conn’s entered into an agreement with TF LoanCo (“TFL”) to sell Conn’s charged-off accounts. In August 2014, Conn’s sued TFL for breach of contract in the U.S. District Court (the “Court”). TFL filed counterclaims. In October 2016, the Court issued a decision in favor of Conn’s on all claims against TFL. TFL appealed the Court’s decision. On September 10, 2018, the U.S. Court of Appeals for the Fifth Circuit unanimously reversed the Court’s decision and entered a judgment (the “TFL Judgment”) in favor of TFL which required Conn’s to pay approximately $4.8 million , which includes the purchase price, statutory pre-judgment interest and attorney’s fees to TFL. The TFL Judgment was recognized as a charge during the three months ended October 31, 2018. 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 | 9 Months Ended |
Oct. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Variable Interest Entity | Variable Interest Entities From time to time, we have 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) October 31, January 31, Assets: Restricted cash $ 68,493 $ 85,322 Due from Conn's, Inc., net — 15,212 Customer accounts receivable: Customer accounts receivable 715,253 987,418 Restructured accounts 123,581 97,967 Allowance for uncollectible accounts (121,021 ) (143,115 ) Allowances for no-interest option credit programs (11,283 ) (18,228 ) Deferred fees and origination costs (7,392 ) (9,332 ) Total customer accounts receivable, net 699,138 914,710 Total assets $ 767,631 $ 1,015,244 Liabilities: Accrued expenses $ 4,889 $ 6,723 Other liabilities 7,172 10,639 Due to Conn's, Inc., net 4,496 — Long-term debt: 2016-B Class B Notes — 73,589 2017-A Class A Notes — 59,794 2017-A Class B Notes — 106,270 2017-A Class C Notes — 50,340 2017-B Class A Notes 26,097 292,663 2017-B Class B Notes 132,180 132,180 2017-B Class C Notes 78,640 78,640 2018-A Class A Notes 154,907 — 2018-A Class B Notes 69,550 — 2018-A Class C Notes 69,550 — Warehouse Notes 84,409 — 615,333 793,476 Less: deferred debt issuance costs (3,980 ) (5,497 ) Total long-term debt 611,353 787,979 Total liabilities $ 627,910 $ 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 | 9 Months Ended |
Oct. 31, 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. 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 condensed 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 October 31, 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 October 31, 2018 Three Months Ended October 31, 2017 (in thousands) Retail Credit Total Retail Credit Total Revenues: Furniture and mattress $ 91,342 $ — $ 91,342 $ 97,146 $ — $ 97,146 Home appliance 79,542 — 79,542 83,837 — 83,837 Consumer electronic 60,008 — 60,008 58,062 — 58,062 Home office 22,661 — 22,661 20,295 — 20,295 Other 3,178 — 3,178 4,446 — 4,446 Product sales 256,731 — 256,731 263,786 — 263,786 Repair service agreement commissions 23,579 — 23,579 24,488 — 24,488 Service revenues 3,564 — 3,564 3,534 — 3,534 Total net sales 283,874 — 283,874 291,808 — 291,808 Finance charges and other revenues 179 89,771 89,950 95 81,269 81,364 Total revenues 284,053 89,771 373,824 291,903 81,269 373,172 Costs and expenses: Cost of goods sold 166,886 — 166,886 175,591 — 175,591 Selling, general and administrative expense (1) 80,894 37,486 118,380 80,676 33,679 114,355 Provision for bad debts 286 47,262 47,548 189 56,323 56,512 Charges and credits 737 4,800 5,537 5,861 — 5,861 Total costs and expenses 248,803 89,548 338,351 262,317 90,002 352,319 Operating income (loss) 35,250 223 35,473 29,586 (8,733 ) 20,853 Interest expense — 15,098 15,098 — 18,095 18,095 Loss on extinguishment of debt — — — — 461 461 Income (loss) before income taxes $ 35,250 $ (14,875 ) $ 20,375 $ 29,586 $ (27,289 ) $ 2,297 Nine Months Ended October 31, 2018 Nine Months Ended October 31, 2017 (in thousands) Retail Credit Total Retail Credit Total Revenues: Furniture and mattress $ 285,428 $ — $ 285,428 $ 286,886 $ — $ 286,886 Home appliance 249,036 — 249,036 253,044 — 253,044 Consumer electronic 167,964 — 167,964 166,761 — 166,761 Home office 60,260 — 60,260 54,945 — 54,945 Other 10,536 — 10,536 13,105 — 13,105 Product sales 773,224 — 773,224 774,741 — 774,741 Repair service agreement commissions 72,104 — 72,104 72,703 — 72,703 Service revenues 10,615 — 10,615 10,062 — 10,062 Total net sales 855,943 — 855,943 857,506 — 857,506 Finance charges and other revenues 291 260,597 260,888 267 237,872 238,139 Total revenues 856,234 260,597 1,116,831 857,773 237,872 1,095,645 Costs and expenses: Cost of goods sold 507,102 — 507,102 519,847 — 519,847 Selling, general and administrative expense (1) 241,649 112,299 353,948 233,290 99,234 332,524 Provision for bad debts 789 141,666 142,455 584 161,307 161,891 Charges and credits 1,037 4,800 5,837 11,156 — 11,156 Total costs and expenses 750,577 258,765 1,009,342 764,877 260,541 1,025,418 Operating income (loss) 105,657 1,832 107,489 92,896 (22,669 ) 70,227 Interest expense — 47,484 47,484 — 62,142 62,142 Loss on extinguishment of debt — 1,773 1,773 — 2,907 2,907 Income (loss) before income taxes $ 105,657 $ (47,425 ) $ 58,232 $ 92,896 $ (87,718 ) $ 5,178 (1) For the three months ended October 31, 2018 and 2017 , the amount of corporate overhead allocated to each segment reflected in selling, general and administrative expense was $9.1 million and $7.3 million , respectively. For the three months ended October 31, 2018 and 2017 , the amount of reimbursement made to the retail segment by the credit segment was $9.5 million and $9.3 million , respectively. For the nine months ended October 31, 2018 and 2017 , the amount of corporate overhead allocated to each segment reflected in selling, general and administrative expense was $ 26.7 million and $21.5 million , respectively. For the nine months ended October 31, 2018 and 2017 , the amount of reimbursement made to the retail segment by the credit segment was $ 28.3 million and $27.9 million , respectively. |
Guarantor Financial Information
Guarantor Financial Information | 9 Months Ended |
Oct. 31, 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 October 31, 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, Condensed Consolidated Statement of Income, and Condensed Consolidated 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 October 31, 2018 and January 31, 2018 (after the elimination of intercompany balances and transactions). Condensed Consolidated Net Income is the same as Condensed Consolidated Comprehensive Income for the periods presented. Condensed Consolidated Balance Sheet as of October 31, 2018 : (in thousands) Conn's, Inc. Guarantors Non-guarantor Subsidiaries Eliminations Consolidated Assets Current assets: Cash and cash equivalents $ — $ 3,492 $ — $ — $ 3,492 Restricted cash — 1,550 68,493 — 70,043 Customer accounts receivable, net of allowances — 257,915 372,481 — 630,396 Other accounts receivable — 63,752 — — 63,752 Inventories — 227,164 — — 227,164 Other current assets — 19,121 — (3,401 ) 15,720 Total current assets — 572,994 440,974 (3,401 ) 1,010,567 Investment in and advances to subsidiaries 790,746 139,723 — (930,469 ) — Long-term portion of customer accounts receivable, net of allowances — 327,663 326,657 — 654,320 Property and equipment, net — 146,326 — — 146,326 Deferred income taxes 23,157 — — — 23,157 Other assets — 6,642 — — 6,642 Total assets $ 813,903 $ 1,193,348 $ 767,631 $ (933,870 ) $ 1,841,012 Liabilities and Stockholders' Equity Current liabilities: Current maturities of capital lease obligations $ — $ 804 $ — $ — $ 804 Accounts payable — 110,359 — — 110,359 Accrued expenses 4,800 81,319 4,889 (3,401 ) 87,607 Other current liabilities — 14,334 7,872 — 22,206 Total current liabilities 4,800 206,816 12,761 (3,401 ) 220,976 Deferred rent — 90,410 — — 90,410 Long-term debt and capital lease obligations 222,069 86,944 611,353 — 920,366 Other long-term liabilities — 18,430 3,796 — 22,226 Total liabilities 226,869 402,600 627,910 (3,401 ) 1,253,978 Total stockholders' equity 587,034 790,746 139,723 (930,469 ) 587,034 Total liabilities and stockholders' equity $ 813,903 $ 1,193,346 $ 767,633 $ (933,870 ) $ 1,841,012 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 Income for the Three Months Ended October 31, 2018 : (in thousands) Conn's, Inc. Guarantors Non-guarantor Subsidiaries Eliminations Consolidated Revenues: Total net sales $ — $ 283,874 $ — $ — $ 283,874 Finance charges and other revenues — 48,666 41,284 — 89,950 Servicing fee revenue — 12,226 — (12,226 ) — Total revenues — 344,766 41,284 (12,226 ) 373,824 Costs and expenses: Cost of goods sold — 166,886 — — 166,886 Selling, general and administrative expense — 118,234 12,372 (12,226 ) 118,380 Provision for bad debts — 7,715 39,833 — 47,548 Charges and credits — 5,537 — — 5,537 Total costs and expenses — 298,372 52,205 (12,226 ) 338,351 Operating income — 46,394 (10,921 ) — 35,473 Interest expense 4,448 2,106 8,544 — 15,098 Loss on extinguishment of debt — — — — — Income (loss) before income taxes (4,448 ) 44,288 (19,465 ) — 20,375 Provision (benefit) for income taxes (1,254 ) 12,487 (5,488 ) — 5,745 Net income (loss) (3,194 ) 31,801 (13,977 ) — 14,630 Income (loss) from consolidated subsidiaries 17,824 (13,977 ) — (3,847 ) — Consolidated net income (loss) $ 14,630 $ 17,824 $ (13,977 ) $ (3,847 ) $ 14,630 Condensed Consolidated Statement of Income for the Three Months Ended October 31, 2017 : (in thousands) Conn's, Inc. Guarantors Non-guarantor Subsidiaries Eliminations Consolidated Revenues: Total net sales $ — $ 291,808 $ — $ — $ 291,808 Finance charges and other revenues — 45,228 36,136 — 81,364 Servicing fee revenue — 18,178 — (18,178 ) — Total revenues — 355,214 36,136 (18,178 ) 373,172 Costs and expenses: Cost of goods sold — 175,591 — — 175,591 Selling, general and administrative expense — 125,355 7,178 (18,178 ) 114,355 Provision for bad debts — 44,454 12,058 — 56,512 Charges and credits — 5,861 — — 5,861 Total costs and expenses — 351,261 19,236 (18,178 ) 352,319 Operating income — 3,953 16,900 — 20,853 Interest expense 4,443 4,979 8,673 — 18,095 Loss on extinguishment of debt — — 461 — 461 Income (loss) before income taxes (4,443 ) (1,026 ) 7,766 — 2,297 Provision (benefit) for income taxes (1,408 ) (324 ) 2,460 — 728 Net income (loss) (3,035 ) (702 ) 5,306 — 1,569 Income (loss) from consolidated subsidiaries 4,742 1,988 — (6,730 ) — Consolidated net income (loss) $ 1,707 $ 1,286 $ 5,306 $ (6,730 ) $ 1,569 Condensed Consolidated Statement of Income for the Nine Months Ended October 31, 2018 : (in thousands) Conn's, Inc. Guarantors Non-guarantor Subsidiaries Eliminations Consolidated Revenues: Total net sales $ — $ 855,943 $ — $ — $ 855,943 Finance charges and other revenues — 150,974 109,914 — 260,888 Servicing fee revenue — 32,007 — (32,007 ) — Total revenues — 1,038,924 109,914 (32,007 ) 1,116,831 Costs and expenses: Cost of goods sold — 507,102 — — 507,102 Selling, general and administrative expense — 353,542 32,413 (32,007 ) 353,948 Provision for bad debts — 44,591 97,864 — 142,455 Charges and credits — 5,837 — — 5,837 Total costs and expenses — 911,072 130,277 (32,007 ) 1,009,342 Operating income (loss) — 127,852 (20,363 ) — 107,489 Interest expense 13,339 8,872 25,273 — 47,484 Loss on extinguishment of debt — 142 1,631 — 1,773 Income (loss) before income taxes (13,339 ) 118,838 (47,267 ) — 58,232 Provision (benefit) for income taxes (3,175 ) 28,284 (11,250 ) — 13,859 Net income (loss) (10,164 ) 90,554 (36,017 ) — 44,373 Income (loss) from consolidated subsidiaries 54,537 (36,017 ) — (18,520 ) — Consolidated net income (loss) $ 44,373 $ 54,537 $ (36,017 ) $ (18,520 ) $ 44,373 Condensed Consolidated Statement of Income for the Nine Months Ended October 31, 2017 : (in thousands) Conn's, Inc. Guarantors Non-guarantor Subsidiaries Eliminations Consolidated Revenues: Total net sales $ — $ 857,506 $ — $ — $ 857,506 Finance charges and other revenues — 122,305 115,834 — 238,139 Servicing fee revenue — 46,010 — (46,010 ) — Total revenues — 1,025,821 115,834 (46,010 ) 1,095,645 Costs and expenses: Cost of goods sold — 519,847 — — 519,847 Selling, general and administrative expense — 343,043 35,491 (46,010 ) 332,524 Provision for bad debts — 64,438 97,453 — 161,891 Charges and credits — 11,156 — — 11,156 Total costs and expenses — 938,484 132,944 (46,010 ) 1,025,418 Operating income (loss) — 87,337 (17,110 ) — 70,227 Interest expense 13,329 7,501 41,312 — 62,142 Loss on extinguishment of debt — 349 2,558 — 2,907 Income (loss) before income taxes (13,329 ) 79,487 (60,980 ) — 5,178 Provision (benefit) for income taxes (4,934 ) 29,420 (22,570 ) — 1,916 Net income (loss) (8,395 ) 50,067 (38,410 ) — 3,262 Income (loss) from consolidated subsidiaries 11,657 (38,410 ) — 26,753 — Consolidated net income (loss) $ 3,262 $ 11,657 $ (38,410 ) $ 26,753 $ 3,262 Condensed Consolidated Statement of Cash Flows for the Nine Months Ended October 31, 2018 : (in thousands) Conn's, Inc. Guarantors Non-guarantor Subsidiaries Eliminations Consolidated Net cash provided by (used in) operating activities $ (1,055 ) $ 188,302 $ (5,153 ) $ — $ 182,094 Cash flows from investing activities: Purchase of customer accounts receivables — — (525,846 ) 525,846 — Sale of customer accounts receivables — — 525,846 (525,846 ) — Purchase of property and equipment — (22,609 ) — — (22,609 ) Net cash used in investing activities — (22,609 ) — — (22,609 ) Cash flows from financing activities: Proceeds from issuance of asset-backed notes — — 358,300 — 358,300 Payments on asset-backed notes — (169,443 ) (450,231 ) — (619,674 ) Borrowings from Revolving Credit Facility — 1,266,333 — — 1,266,333 Payments on Revolving Credit Facility — (1,260,283 ) — — (1,260,283 ) Borrowings from warehouse facility — — 173,286 — 173,286 Payments of debt issuance costs and amendment fees — (3,226 ) (4,155 ) — (7,381 ) Payments on warehouse facility — — (88,876 ) — (88,876 ) Proceeds from stock issued under employee benefit plans 1,055 — — — 1,055 Tax payments associated with equity-based compensation transactions — (2,931 ) — — (2,931 ) Payments from extinguishment of debt — (1,177 ) — — (1,177 ) Other — (760 ) — — (760 ) Net cash provided by (used in) financing activities 1,055 (171,487 ) (11,676 ) — (182,108 ) Net change in cash, cash equivalents and restricted cash — (5,794 ) (16,829 ) — (22,623 ) Cash, cash equivalents and restricted cash, beginning of period — 10,836 85,322 — 96,158 Cash, cash equivalents and restricted cash, end of period $ — $ 5,042 $ 68,493 $ — $ 73,535 Condensed Consolidated Statement of Cash Flows for the Nine Months Ended October 31, 2017 : (in thousands) Conn's, Inc. Guarantors Non-guarantor Subsidiaries Eliminations Consolidated Net cash provided by (used in) operating activities $ (3,011 ) $ (636,406 ) $ 721,316 $ — $ 81,899 Cash flows from investing activities: Purchase of customer accounts receivables — — (544,833 ) 544,833 — Sale of customer accounts receivables — 544,833 — (544,833 ) — Purchase of property and equipment — (11,995 ) — — (11,995 ) Net cash provided by (used in) investing activities — 532,838 (544,833 ) — (11,995 ) Cash flows from financing activities: Proceeds from issuance of asset-backed notes — — 469,814 — 469,814 Payments on asset-backed notes — (77,105 ) (737,463 ) — (814,568 ) Borrowings from Revolving Credit Facility — 1,257,052 — — 1,257,052 Payments on Revolving Credit Facility — (1,082,552 ) — — (1,082,552 ) Borrowings from warehouse facility — — 79,940 — 79,940 Payments of debt issuance costs and amendment fees — (2,865 ) (5,307 ) — (8,172 ) Payments on warehouse facility — — (23,066 ) — (23,066 ) Proceeds from stock issued under employee benefit plans 3,011 — — — 3,011 Tax payments associated with equity-based compensation transactions — (570 ) — — (570 ) Payments from extinguishment of debt — (837 ) — — (837 ) Other — (379 ) — — (379 ) Net cash provided by (used in) financing activities 3,011 92,744 (216,082 ) — (120,327 ) Net change in cash, cash equivalents and restricted cash — (10,824 ) (39,599 ) — (50,423 ) Cash, cash equivalents and restricted cash, beginning of period — 23,566 110,698 — 134,264 Cash, cash equivalents and restricted cash, end of period $ — $ 12,742 $ 71,099 $ — $ 83,841 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Oct. 31, 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 generally accepted accounting principles in the United States of America ( “ 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”) which was filed with the United States Securities and Exchange Commission (the “ SEC”) on April 5, 2018, as updated by our Form 8-K filed with the SEC on November 23, 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. As of October 31, 2018 , cash and cash equivalents included cash and credit card deposits in transit. As of January 31, 2018 , cash and cash equivalents included cash, credit card deposits in transit, and highly liquid debt instruments purchased with a maturity of three months or less. Credit card deposits in transit included in cash and cash equivalents were $2.0 million and $2.0 million as of October 31, 2018 and January 31, 2018 , respectively. Restricted Cash. The restricted cash balance as of October 31, 2018 and January 31, 2018 includes $54.7 million and $58.1 million , respectively, of cash we collected as servicer on the securitized receivables that was subsequently remitted to the VIEs and $13.8 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” 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 October 31, 2018 and January 31, 2018 , there was $11.6 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 balance of the loan. At October 31, 2018 , customer receivables carried in non-accrual status were $15.6 million , of which $11.8 million were 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 were in bankruptcy status and less than 60 days past due. At October 31, 2018 and January 31, 2018 , customer receivables that were past due 90 days or more and still accruing interest totaled $110.6 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. At October 31, 2018 , we utilized a qualitative factor related to changes in the nature of the portfolio. 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, as defined in Note 5, Debt and Capital Lease Obligations , are included in other assets on our Condensed Consolidated Balance Sheet and were $6.5 million and $5.2 million as of October 31, 2018 and January 31, 2018 , respectively. |
Income Taxes | Income Taxes. For the nine months ended October 31, 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 nine months ended October 31, 2018 and 2017, the effective tax rate was 23.8% and 37.0% , respectively. The primary factors affecting our effective tax rate for the nine months ended October 31, 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 by the weighted-average number of common shares outstanding during the period. Diluted earnings per share includes the dilutive effects of any stock options, RSUs and PSUs, 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 October 31, 2018 , the fair value of the Senior Notes outstanding, which was determined using Level 1 inputs, was $223.6 million as compared to the carrying value of $227.0 million , excluding the impact of the related discount. At October 31, 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 also may serve as the administrator of the RSAs sold and defer 5% of the revenue received from the sale of RSAs as compensation for this performance obligation 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 delivery 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 consists of deferred customer deposits and deferred RSA administration fees. During the three and nine months ended October 31, 2018 , we recognized $1.7 million and $1.8 million , respectively, of revenue for customer deposits deferred as of the beginning of those periods. During the three and nine months ended October 31, 2018 , we recognized $1.5 million and $4.2 million respectively, of revenue for RSA administrative fees deferred as of the beginning of those periods. 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 and nine months ended October 31, 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 . 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 retrospectively 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 including 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 nine months ended October 31, 2017 was an increase in the cash used in financing activities of $39.6 million . The balances of cash and cash equivalents and restricted cash are separately presented within the Condensed Consolidated Balance Sheet as of October 31, 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 . 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 flows. Effective February 1, 2018, the Company retrospectively adopted the ASU, which resulted in us no longer presenting the cash payment for debt extinguishment costs as a component of cash flows from operating activities but instead including the cash payment as a component of cash flows from financing activities. The adoption of this ASU resulted in the reclassification of $0.8 million in payments on extinguishment of debt previously classified as a cash outflow from operating activities to a cash outflow from financing activities for the nine months ended October 31, 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. 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 , in our audited consolidated financial statements included in our 2018 Form 10-K, as updated by our Form 8-K filed with the SEC on November 23, 2018. 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. Based on our preliminary assessment, we believe the adoption of this ASU will have a material impact on our Condensed Consolidated Balance Sheet as we will be required to report additional leases on our Condensed Consolidated Balance Sheet. The Company plans to elect certain optional practical expedients which include the option to retain the current classification of leases entered into prior to February 1, 2019, and thus does not anticipate a material impact to the consolidated statements of earnings or consolidated statements of cash flows. The Company also plans to adopt an optional transition method finalized by the FASB in July 2018 that waives the requirement to apply this ASU in the comparative periods presented within the financial statements in the year of adoption. The Company expects to be affected by the transition guidance related to recognition of deferred gains recorded under previous sale and operating leaseback transactions, which requires companies to recognize any deferred gains not resulting from off-market terms as a cumulative-effect adjustment to retained earnings upon adoption of ASU 2016-02. The Company is also evaluating and implementing changes to our accounting policies, processes, and internal controls to ensure compliance with the standard’s reporting and disclosure requirements as well as implementing a new lease accounting module within its lease management system to support the new accounting requirements. The Company is currently quantifying the impact of ASU 2016-02 to its consolidated financial statements, including the impact of recognizing a lease obligation and right-of-use asset on its consolidated balance sheet for lease agreements currently accounted for as operating leases. We will adopt the new standard in the first quarter of fiscal year 2020. 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 Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Oct. 31, 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 unit awards (“PSUs”) and stock options granted during the three and nine months ended October 31, 2018 and 2017 : Three Months Ended October 31, Nine Months Ended October 31, 2018 2017 2018 2017 RSUs (1) 3,200 2,740 153,089 646,033 PSUs (2) — — — 501,012 Stock Options (3) — — 620,166 — Total stock awards granted 3,200 2,740 773,255 1,147,045 Aggregate grant date fair value (in thousands) $ 120 $ 50 $ 17,304 $ 14,596 (1) The majority of RSUs issued during the three and nine months ended October 31, 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 nine months ended October 31, 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 nine months ended October 31, 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 nine months ended October 31, 2018 . |
Shares outstanding for the earnings per share calculations | Earnings per Share. Basic earnings per share is calculated by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted earnings per share includes the dilutive effects of any stock options, RSUs and PSUs, 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 October 31, Nine Months Ended 2018 2017 2018 2017 Weighted-average common shares outstanding - Basic 31,712,862 31,292,913 31,636,270 31,121,177 Dilutive effect of stock options, RSUs and PSUs 609,012 471,681 615,682 336,243 Weighted-average common shares outstanding - Diluted 32,321,874 31,764,594 32,251,952 31,457,420 |
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) | 9 Months Ended |
Oct. 31, 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) October 31, January 31, October 31, January 31, October 31, January 31, Customer accounts receivable $ 1,345,361 $ 1,374,269 $ 103,556 $ 114,120 $ 207,805 $ 217,952 Restructured accounts 181,145 153,593 44,880 37,687 181,145 153,593 Total customer portfolio balance $ 1,526,506 $ 1,527,862 $ 148,436 $ 151,807 $ 388,950 $ 371,545 Allowance for uncollectible accounts (207,097 ) (203,572 ) Allowances for no-interest option credit programs (18,716 ) (20,960 ) Deferred fees and origination costs, net (15,977 ) (15,897 ) Total customer accounts receivable, net 1,284,716 1,287,433 Short-term portion of customer accounts receivable, net (630,396 ) (636,825 ) Long-term portion of customer accounts receivable, net $ 654,320 $ 650,608 Securitized receivables held by the VIEs $ 838,835 $ 1,085,385 $ 101,433 $ 124,627 $ 287,902 $ 300,348 Receivables not held by the VIEs 687,671 442,477 47,003 27,180 101,048 71,197 Total customer portfolio balance $ 1,526,506 $ 1,527,862 $ 148,436 $ 151,807 $ 388,950 $ 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 October 31, 2018 and January 31, 2018 , the amounts included within both 60 days past due and re-aged was $92.0 million and $80.8 million , respectively. As of October 31, 2018 and January 31, 2018 , the total customer portfolio balance past due one day or greater was $418.4 million and $401.0 million , respectively. These amounts include the 60 days past due balances shown. (2) The re-aged receivables balance as of October 31, 2018 and January 31, 2018 includes $34.3 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: Nine Months Ended October 31, 2018 Nine Months Ended October 31, 2017 (in thousands) Customer Customer Allowance at beginning of period $ 148,856 $ 54,716 $ 203,572 $ 158,992 $ 51,183 $ 210,175 Provision (1) 127,472 51,440 178,912 139,406 52,948 192,354 Principal charge-offs (2) (119,242 ) (38,990 ) (158,232 ) (133,033 ) (44,657 ) (177,690 ) Interest charge-offs (23,696 ) (7,748 ) (31,444 ) (21,884 ) (7,346 ) (29,230 ) Recoveries (2) 10,768 3,521 14,289 5,463 1,834 7,297 Allowance at end of period $ 144,158 $ 62,939 $ 207,097 $ 148,944 $ 53,962 $ 202,906 Average total customer portfolio balance $ 1,341,415 $ 167,473 $ 1,508,888 $ 1,352,137 $ 141,155 $ 1,493,292 (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) | 9 Months Ended |
Oct. 31, 2018 | |
Charges and Credits [Abstract] | |
Schedule of Charges and Credits | Charges and credits consisted of the following: Three Months Ended Nine Months Ended (in thousands) 2018 2017 2018 2017 Facility closure costs $ — $ — $ — $ 1,349 Securities-related regulatory matter and other legal fees — — 300 34 Employee severance 737 — 737 1,317 Indirect tax audit reserve — — — 2,595 Legal judgment 4,800 — 4,800 — Write-off of capitalized software costs — 5,861 — 5,861 $ 5,537 $ 5,861 $ 5,837 $ 11,156 |
Finance Charges and Other Rev_2
Finance Charges and Other Revenue (Tables) | 9 Months Ended |
Oct. 31, 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 Nine Months Ended (in thousands) 2018 2017 2018 2017 Interest income and fees $ 82,964 $ 74,144 $ 239,745 $ 210,765 Insurance income 6,807 7,125 20,852 27,107 Other revenues 179 95 291 267 $ 89,950 $ 81,364 $ 260,888 $ 238,139 |
Debt and Capital Lease Obliga_2
Debt and Capital Lease Obligations (Tables) | 9 Months Ended |
Oct. 31, 2018 | |
Debt Disclosure [Abstract] | |
Long-term Debt | Debt and capital lease obligations consisted of the following: (in thousands) October 31, January 31, Revolving Credit Facility $ 83,050 $ 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 — 59,794 2017-A VIE Asset-backed Class B Notes — 106,270 2017-A VIE Asset-backed Class C Notes — 50,340 2017-B VIE Asset-backed Class A Notes 26,097 292,663 2017-B VIE Asset-backed Class B Notes 132,180 132,180 2017-B VIE Asset-backed Class C Notes 78,640 78,640 2018-A VIE Asset-backed Class A Notes 154,907 — 2018-A VIE Asset-backed Class B Notes 69,550 — 2018-A VIE Asset-backed Class C Notes 69,550 — Warehouse Notes 84,409 — Capital lease obligations 4,698 4,949 Total debt and capital lease obligations 930,081 1,102,425 Less: Discount on debt (2,106 ) (2,527 ) Deferred debt issuance costs (6,805 ) (8,886 ) Current maturities of capital lease obligations (804 ) (907 ) Long-term debt and capital lease obligations $ 920,366 $ 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-B Class A Notes $ 361,400 $ 358,945 $ 26,097 12/20/2017 7/15/2020 2.73% 5.17% 2017-B Class B Notes 132,180 131,281 132,180 12/20/2017 4/15/2021 4.52% 5.23% 2017-B Class C Notes 78,640 77,843 78,640 12/20/2017 11/15/2022 5.95% 6.34% 2018-A Class A Notes 219,200 217,832 154,907 8/15/2018 1/17/2023 3.25% 4.73% 2018-A Class B Notes 69,550 69,020 69,550 8/15/2018 1/17/2023 4.65% 5.43% 2018-A Class C Notes 69,550 68,850 69,550 8/15/2018 1/17/2023 6.02% 6.79% Warehouse Notes 121,060 118,972 84,409 7/16/2018 1/15/2020 Index + 2.50% (3) 6.56% Total $ 1,051,580 $ 1,042,743 $ 615,333 (1) After giving effect to debt issuance costs and restricted cash held by the VIEs. (2) For the nine months ended October 31, 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 2.50% fixed margin. |
Covenant Compliance | A summary of the significant financial covenants that govern our Revolving Credit Facility compared to our actual compliance status at October 31, 2018 is presented below: Actual Required Minimum/ Maximum Interest Coverage Ratio for the quarter must equal or exceed minimum 4.07:1.00 1.00:1.00 Interest Coverage Ratio for the trailing two quarters must equal or exceed minimum 3.97:1.00 1.50:1.00 Leverage Ratio must not exceed maximum 2.01:1.00 4.00:1.00 ABS Excluded Leverage Ratio must not exceed maximum 1.08:1.00 2.00:1.00 Capital Expenditures, net, must not exceed maximum $16.0 million $100.0 million |
Variable Interest Entity (Table
Variable Interest Entity (Tables) | 9 Months Ended |
Oct. 31, 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) October 31, January 31, Assets: Restricted cash $ 68,493 $ 85,322 Due from Conn's, Inc., net — 15,212 Customer accounts receivable: Customer accounts receivable 715,253 987,418 Restructured accounts 123,581 97,967 Allowance for uncollectible accounts (121,021 ) (143,115 ) Allowances for no-interest option credit programs (11,283 ) (18,228 ) Deferred fees and origination costs (7,392 ) (9,332 ) Total customer accounts receivable, net 699,138 914,710 Total assets $ 767,631 $ 1,015,244 Liabilities: Accrued expenses $ 4,889 $ 6,723 Other liabilities 7,172 10,639 Due to Conn's, Inc., net 4,496 — Long-term debt: 2016-B Class B Notes — 73,589 2017-A Class A Notes — 59,794 2017-A Class B Notes — 106,270 2017-A Class C Notes — 50,340 2017-B Class A Notes 26,097 292,663 2017-B Class B Notes 132,180 132,180 2017-B Class C Notes 78,640 78,640 2018-A Class A Notes 154,907 — 2018-A Class B Notes 69,550 — 2018-A Class C Notes 69,550 — Warehouse Notes 84,409 — 615,333 793,476 Less: deferred debt issuance costs (3,980 ) (5,497 ) Total long-term debt 611,353 787,979 Total liabilities $ 627,910 $ 805,341 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 9 Months Ended |
Oct. 31, 2018 | |
Segment Reporting [Abstract] | |
Financial information by segment | Financial information by segment is presented in the following tables: Three Months Ended October 31, 2018 Three Months Ended October 31, 2017 (in thousands) Retail Credit Total Retail Credit Total Revenues: Furniture and mattress $ 91,342 $ — $ 91,342 $ 97,146 $ — $ 97,146 Home appliance 79,542 — 79,542 83,837 — 83,837 Consumer electronic 60,008 — 60,008 58,062 — 58,062 Home office 22,661 — 22,661 20,295 — 20,295 Other 3,178 — 3,178 4,446 — 4,446 Product sales 256,731 — 256,731 263,786 — 263,786 Repair service agreement commissions 23,579 — 23,579 24,488 — 24,488 Service revenues 3,564 — 3,564 3,534 — 3,534 Total net sales 283,874 — 283,874 291,808 — 291,808 Finance charges and other revenues 179 89,771 89,950 95 81,269 81,364 Total revenues 284,053 89,771 373,824 291,903 81,269 373,172 Costs and expenses: Cost of goods sold 166,886 — 166,886 175,591 — 175,591 Selling, general and administrative expense (1) 80,894 37,486 118,380 80,676 33,679 114,355 Provision for bad debts 286 47,262 47,548 189 56,323 56,512 Charges and credits 737 4,800 5,537 5,861 — 5,861 Total costs and expenses 248,803 89,548 338,351 262,317 90,002 352,319 Operating income (loss) 35,250 223 35,473 29,586 (8,733 ) 20,853 Interest expense — 15,098 15,098 — 18,095 18,095 Loss on extinguishment of debt — — — — 461 461 Income (loss) before income taxes $ 35,250 $ (14,875 ) $ 20,375 $ 29,586 $ (27,289 ) $ 2,297 Nine Months Ended October 31, 2018 Nine Months Ended October 31, 2017 (in thousands) Retail Credit Total Retail Credit Total Revenues: Furniture and mattress $ 285,428 $ — $ 285,428 $ 286,886 $ — $ 286,886 Home appliance 249,036 — 249,036 253,044 — 253,044 Consumer electronic 167,964 — 167,964 166,761 — 166,761 Home office 60,260 — 60,260 54,945 — 54,945 Other 10,536 — 10,536 13,105 — 13,105 Product sales 773,224 — 773,224 774,741 — 774,741 Repair service agreement commissions 72,104 — 72,104 72,703 — 72,703 Service revenues 10,615 — 10,615 10,062 — 10,062 Total net sales 855,943 — 855,943 857,506 — 857,506 Finance charges and other revenues 291 260,597 260,888 267 237,872 238,139 Total revenues 856,234 260,597 1,116,831 857,773 237,872 1,095,645 Costs and expenses: Cost of goods sold 507,102 — 507,102 519,847 — 519,847 Selling, general and administrative expense (1) 241,649 112,299 353,948 233,290 99,234 332,524 Provision for bad debts 789 141,666 142,455 584 161,307 161,891 Charges and credits 1,037 4,800 5,837 11,156 — 11,156 Total costs and expenses 750,577 258,765 1,009,342 764,877 260,541 1,025,418 Operating income (loss) 105,657 1,832 107,489 92,896 (22,669 ) 70,227 Interest expense — 47,484 47,484 — 62,142 62,142 Loss on extinguishment of debt — 1,773 1,773 — 2,907 2,907 Income (loss) before income taxes $ 105,657 $ (47,425 ) $ 58,232 $ 92,896 $ (87,718 ) $ 5,178 (1) For the three months ended October 31, 2018 and 2017 , the amount of corporate overhead allocated to each segment reflected in selling, general and administrative expense was $9.1 million and $7.3 million , respectively. For the three months ended October 31, 2018 and 2017 , the amount of reimbursement made to the retail segment by the credit segment was $9.5 million and $9.3 million , respectively. For the nine months ended October 31, 2018 and 2017 , the amount of corporate overhead allocated to each segment reflected in selling, general and administrative expense was $ 26.7 million and $21.5 million , respectively. For the nine months ended October 31, 2018 and 2017 , the amount of reimbursement made to the retail segment by the credit segment was $ 28.3 million and $27.9 million , respectively. |
Guarantor Financial Informati_2
Guarantor Financial Information (Tables) | 9 Months Ended |
Oct. 31, 2018 | |
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |
Condensed Consolidated Balance Sheet | (in thousands) Conn's, Inc. Guarantors Non-guarantor Subsidiaries Eliminations Consolidated Assets Current assets: Cash and cash equivalents $ — $ 3,492 $ — $ — $ 3,492 Restricted cash — 1,550 68,493 — 70,043 Customer accounts receivable, net of allowances — 257,915 372,481 — 630,396 Other accounts receivable — 63,752 — — 63,752 Inventories — 227,164 — — 227,164 Other current assets — 19,121 — (3,401 ) 15,720 Total current assets — 572,994 440,974 (3,401 ) 1,010,567 Investment in and advances to subsidiaries 790,746 139,723 — (930,469 ) — Long-term portion of customer accounts receivable, net of allowances — 327,663 326,657 — 654,320 Property and equipment, net — 146,326 — — 146,326 Deferred income taxes 23,157 — — — 23,157 Other assets — 6,642 — — 6,642 Total assets $ 813,903 $ 1,193,348 $ 767,631 $ (933,870 ) $ 1,841,012 Liabilities and Stockholders' Equity Current liabilities: Current maturities of capital lease obligations $ — $ 804 $ — $ — $ 804 Accounts payable — 110,359 — — 110,359 Accrued expenses 4,800 81,319 4,889 (3,401 ) 87,607 Other current liabilities — 14,334 7,872 — 22,206 Total current liabilities 4,800 206,816 12,761 (3,401 ) 220,976 Deferred rent — 90,410 — — 90,410 Long-term debt and capital lease obligations 222,069 86,944 611,353 — 920,366 Other long-term liabilities — 18,430 3,796 — 22,226 Total liabilities 226,869 402,600 627,910 (3,401 ) 1,253,978 Total stockholders' equity 587,034 790,746 139,723 (930,469 ) 587,034 Total liabilities and stockholders' equity $ 813,903 $ 1,193,346 $ 767,633 $ (933,870 ) $ 1,841,012 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 |
Condensed Consolidated Statement of Operations | Condensed Consolidated Statement of Income for the Three Months Ended October 31, 2018 : (in thousands) Conn's, Inc. Guarantors Non-guarantor Subsidiaries Eliminations Consolidated Revenues: Total net sales $ — $ 283,874 $ — $ — $ 283,874 Finance charges and other revenues — 48,666 41,284 — 89,950 Servicing fee revenue — 12,226 — (12,226 ) — Total revenues — 344,766 41,284 (12,226 ) 373,824 Costs and expenses: Cost of goods sold — 166,886 — — 166,886 Selling, general and administrative expense — 118,234 12,372 (12,226 ) 118,380 Provision for bad debts — 7,715 39,833 — 47,548 Charges and credits — 5,537 — — 5,537 Total costs and expenses — 298,372 52,205 (12,226 ) 338,351 Operating income — 46,394 (10,921 ) — 35,473 Interest expense 4,448 2,106 8,544 — 15,098 Loss on extinguishment of debt — — — — — Income (loss) before income taxes (4,448 ) 44,288 (19,465 ) — 20,375 Provision (benefit) for income taxes (1,254 ) 12,487 (5,488 ) — 5,745 Net income (loss) (3,194 ) 31,801 (13,977 ) — 14,630 Income (loss) from consolidated subsidiaries 17,824 (13,977 ) — (3,847 ) — Consolidated net income (loss) $ 14,630 $ 17,824 $ (13,977 ) $ (3,847 ) $ 14,630 Condensed Consolidated Statement of Income for the Three Months Ended October 31, 2017 : (in thousands) Conn's, Inc. Guarantors Non-guarantor Subsidiaries Eliminations Consolidated Revenues: Total net sales $ — $ 291,808 $ — $ — $ 291,808 Finance charges and other revenues — 45,228 36,136 — 81,364 Servicing fee revenue — 18,178 — (18,178 ) — Total revenues — 355,214 36,136 (18,178 ) 373,172 Costs and expenses: Cost of goods sold — 175,591 — — 175,591 Selling, general and administrative expense — 125,355 7,178 (18,178 ) 114,355 Provision for bad debts — 44,454 12,058 — 56,512 Charges and credits — 5,861 — — 5,861 Total costs and expenses — 351,261 19,236 (18,178 ) 352,319 Operating income — 3,953 16,900 — 20,853 Interest expense 4,443 4,979 8,673 — 18,095 Loss on extinguishment of debt — — 461 — 461 Income (loss) before income taxes (4,443 ) (1,026 ) 7,766 — 2,297 Provision (benefit) for income taxes (1,408 ) (324 ) 2,460 — 728 Net income (loss) (3,035 ) (702 ) 5,306 — 1,569 Income (loss) from consolidated subsidiaries 4,742 1,988 — (6,730 ) — Consolidated net income (loss) $ 1,707 $ 1,286 $ 5,306 $ (6,730 ) $ 1,569 Condensed Consolidated Statement of Income for the Nine Months Ended October 31, 2018 : (in thousands) Conn's, Inc. Guarantors Non-guarantor Subsidiaries Eliminations Consolidated Revenues: Total net sales $ — $ 855,943 $ — $ — $ 855,943 Finance charges and other revenues — 150,974 109,914 — 260,888 Servicing fee revenue — 32,007 — (32,007 ) — Total revenues — 1,038,924 109,914 (32,007 ) 1,116,831 Costs and expenses: Cost of goods sold — 507,102 — — 507,102 Selling, general and administrative expense — 353,542 32,413 (32,007 ) 353,948 Provision for bad debts — 44,591 97,864 — 142,455 Charges and credits — 5,837 — — 5,837 Total costs and expenses — 911,072 130,277 (32,007 ) 1,009,342 Operating income (loss) — 127,852 (20,363 ) — 107,489 Interest expense 13,339 8,872 25,273 — 47,484 Loss on extinguishment of debt — 142 1,631 — 1,773 Income (loss) before income taxes (13,339 ) 118,838 (47,267 ) — 58,232 Provision (benefit) for income taxes (3,175 ) 28,284 (11,250 ) — 13,859 Net income (loss) (10,164 ) 90,554 (36,017 ) — 44,373 Income (loss) from consolidated subsidiaries 54,537 (36,017 ) — (18,520 ) — Consolidated net income (loss) $ 44,373 $ 54,537 $ (36,017 ) $ (18,520 ) $ 44,373 Condensed Consolidated Statement of Income for the Nine Months Ended October 31, 2017 : (in thousands) Conn's, Inc. Guarantors Non-guarantor Subsidiaries Eliminations Consolidated Revenues: Total net sales $ — $ 857,506 $ — $ — $ 857,506 Finance charges and other revenues — 122,305 115,834 — 238,139 Servicing fee revenue — 46,010 — (46,010 ) — Total revenues — 1,025,821 115,834 (46,010 ) 1,095,645 Costs and expenses: Cost of goods sold — 519,847 — — 519,847 Selling, general and administrative expense — 343,043 35,491 (46,010 ) 332,524 Provision for bad debts — 64,438 97,453 — 161,891 Charges and credits — 11,156 — — 11,156 Total costs and expenses — 938,484 132,944 (46,010 ) 1,025,418 Operating income (loss) — 87,337 (17,110 ) — 70,227 Interest expense 13,329 7,501 41,312 — 62,142 Loss on extinguishment of debt — 349 2,558 — 2,907 Income (loss) before income taxes (13,329 ) 79,487 (60,980 ) — 5,178 Provision (benefit) for income taxes (4,934 ) 29,420 (22,570 ) — 1,916 Net income (loss) (8,395 ) 50,067 (38,410 ) — 3,262 Income (loss) from consolidated subsidiaries 11,657 (38,410 ) — 26,753 — Consolidated net income (loss) $ 3,262 $ 11,657 $ (38,410 ) $ 26,753 $ 3,262 |
Condensed Consolidated Statement of Cash Flows | Condensed Consolidated Statement of Cash Flows for the Nine Months Ended October 31, 2018 : (in thousands) Conn's, Inc. Guarantors Non-guarantor Subsidiaries Eliminations Consolidated Net cash provided by (used in) operating activities $ (1,055 ) $ 188,302 $ (5,153 ) $ — $ 182,094 Cash flows from investing activities: Purchase of customer accounts receivables — — (525,846 ) 525,846 — Sale of customer accounts receivables — — 525,846 (525,846 ) — Purchase of property and equipment — (22,609 ) — — (22,609 ) Net cash used in investing activities — (22,609 ) — — (22,609 ) Cash flows from financing activities: Proceeds from issuance of asset-backed notes — — 358,300 — 358,300 Payments on asset-backed notes — (169,443 ) (450,231 ) — (619,674 ) Borrowings from Revolving Credit Facility — 1,266,333 — — 1,266,333 Payments on Revolving Credit Facility — (1,260,283 ) — — (1,260,283 ) Borrowings from warehouse facility — — 173,286 — 173,286 Payments of debt issuance costs and amendment fees — (3,226 ) (4,155 ) — (7,381 ) Payments on warehouse facility — — (88,876 ) — (88,876 ) Proceeds from stock issued under employee benefit plans 1,055 — — — 1,055 Tax payments associated with equity-based compensation transactions — (2,931 ) — — (2,931 ) Payments from extinguishment of debt — (1,177 ) — — (1,177 ) Other — (760 ) — — (760 ) Net cash provided by (used in) financing activities 1,055 (171,487 ) (11,676 ) — (182,108 ) Net change in cash, cash equivalents and restricted cash — (5,794 ) (16,829 ) — (22,623 ) Cash, cash equivalents and restricted cash, beginning of period — 10,836 85,322 — 96,158 Cash, cash equivalents and restricted cash, end of period $ — $ 5,042 $ 68,493 $ — $ 73,535 Condensed Consolidated Statement of Cash Flows for the Nine Months Ended October 31, 2017 : (in thousands) Conn's, Inc. Guarantors Non-guarantor Subsidiaries Eliminations Consolidated Net cash provided by (used in) operating activities $ (3,011 ) $ (636,406 ) $ 721,316 $ — $ 81,899 Cash flows from investing activities: Purchase of customer accounts receivables — — (544,833 ) 544,833 — Sale of customer accounts receivables — 544,833 — (544,833 ) — Purchase of property and equipment — (11,995 ) — — (11,995 ) Net cash provided by (used in) investing activities — 532,838 (544,833 ) — (11,995 ) Cash flows from financing activities: Proceeds from issuance of asset-backed notes — — 469,814 — 469,814 Payments on asset-backed notes — (77,105 ) (737,463 ) — (814,568 ) Borrowings from Revolving Credit Facility — 1,257,052 — — 1,257,052 Payments on Revolving Credit Facility — (1,082,552 ) — — (1,082,552 ) Borrowings from warehouse facility — — 79,940 — 79,940 Payments of debt issuance costs and amendment fees — (2,865 ) (5,307 ) — (8,172 ) Payments on warehouse facility — — (23,066 ) — (23,066 ) Proceeds from stock issued under employee benefit plans 3,011 — — — 3,011 Tax payments associated with equity-based compensation transactions — (570 ) — — (570 ) Payments from extinguishment of debt — (837 ) — — (837 ) Other — (379 ) — — (379 ) Net cash provided by (used in) financing activities 3,011 92,744 (216,082 ) — (120,327 ) Net change in cash, cash equivalents and restricted cash — (10,824 ) (39,599 ) — (50,423 ) Cash, cash equivalents and restricted cash, beginning of period — 23,566 110,698 — 134,264 Cash, cash equivalents and restricted cash, end of period $ — $ 12,742 $ 71,099 $ — $ 83,841 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Narrative (Details) $ in Thousands | 9 Months Ended | ||
Oct. 31, 2018USD ($)segment | Oct. 31, 2017 | Jan. 31, 2018USD ($) | |
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 | $ 2,000 | $ 2,000 | |
Restricted cash | 70,043 | 86,872 | |
Interest Income on Customer Accounts Receivable | |||
Deferred revenue | 11,600 | 12,500 | |
Nonaccrual status | 15,600 | 16,900 | |
Amount in bankruptcy and less than 60 days past due | 11,800 | 14,500 | |
90 days past due and still accruing | 110,600 | 109,700 | |
Debt Issuance Costs | |||
Deferred debt issuance costs | $ 6,805 | 8,886 | |
Income Taxes | |||
Effective tax rate | 23.80% | 37.00% | |
Fair Value of Financial Instruments | |||
Long-term debt | $ 615,333 | ||
Senior Notes [Member] | |||
Fair Value of Financial Instruments | |||
Debt fair value | 223,600 | ||
Secured Debt [Member] | |||
Fair Value of Financial Instruments | |||
Long-term debt | 227,000 | ||
Revolving Credit Facility [Member] | |||
Debt Issuance Costs | |||
Deferred debt issuance costs | 6,500 | 5,200 | |
Securitized Receivables Servicer [Member] | |||
Cash and Cash Equivalents and Restricted Cash | |||
Restricted cash | 13,800 | 27,200 | |
Collateral Held by VIE [Member] | |||
Cash and Cash Equivalents and Restricted Cash | |||
Restricted cash | $ 54,700 | $ 58,100 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Stock-based Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2018 | Oct. 31, 2017 | Oct. 31, 2018 | Oct. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock awards granted (in shares) | 3,200 | 2,740 | 773,255 | 1,147,045 |
Aggregate grant date fair value | $ 120 | $ 50 | $ 17,304 | $ 14,596 |
Dividend yield | 0.00% | |||
Stock-based compensation expense | $ 2,900 | $ 1,700 | $ 8,514 | $ 5,899 |
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) | 3,200 | 2,740 | 153,089 | 646,033 |
(PSUs) [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
RSUs and PSUs (in shares) | 0 | 0 | 0 | 501,012 |
Stock Option [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock Options (in shares) | 0 | 0 | 620,166 | 0 |
Expected volatility rate | 68.00% | |||
Expected term | 6 years 6 months | |||
Risk free interest rate | 2.67% |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Earnings per Share (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2018 | Oct. 31, 2017 | Oct. 31, 2018 | Oct. 31, 2017 | |
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||||
Weighted average common shares outstanding - Basic (in shares) | 31,712,862 | 31,292,913 | 31,636,270 | 31,121,177 |
Weighted average common shares outstanding - Diluted (in shares) | 32,321,874 | 31,764,594 | 32,251,952 | 31,457,420 |
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) | 630,698 | 158,627 | 503,747 | 356,116 |
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) | 609,012 | 471,681 | 615,682 | 336,243 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Oct. 31, 2018 | Oct. 31, 2018 | Oct. 31, 2017 | Feb. 01, 2018 | Jan. 31, 2018 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Deferred revenue | $ 11,600 | $ 11,600 | $ 12,500 | ||
Other accounts receivable | 63,752 | 63,752 | 71,186 | ||
Deferred income taxes | 23,157 | 23,157 | 21,565 | ||
Stockholder's Equity | 587,034 | 587,034 | 535,068 | ||
Net cash provided by (used in) financing activities | (182,108) | $ (120,327) | |||
Payment for debt extinguishment | 1,177 | 837 | |||
Customer Deposits [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Deferred revenue, revenue recognized | $ 1,700 | $ 1,800 | |||
RSA Administration Fees [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Percent of revenue deferred | 5.00% | 5.00% | |||
Deferred revenue, revenue recognized | $ 1,500 | $ 4,200 | |||
Topic 606 [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Cumulative impact on adoption of ASU | $ 1,000 | ||||
Other accounts receivable | 72,396 | ||||
Deferred income taxes | 21,311 | ||||
Stockholder's Equity | 536,024 | ||||
Topic 606 [Member] | Balance at January 31, 2018 [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Other accounts receivable | 71,186 | ||||
Deferred income taxes | 21,565 | ||||
Stockholder's Equity | $ 535,068 | ||||
Topic 606 [Member] | Adjustments due to Topic 606 [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Other accounts receivable | 1,210 | ||||
Deferred income taxes | (254) | ||||
Stockholder's Equity | $ 956 | ||||
ASU 2016-18 [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Net cash provided by (used in) financing activities | $ 39,600 |
Customer Accounts Receivable (D
Customer Accounts Receivable (Details) - USD ($) $ in Thousands | 9 Months Ended | ||||
Oct. 31, 2018 | Oct. 31, 2017 | Oct. 31, 2018 | Jan. 31, 2018 | Oct. 31, 2017 | |
Total Outstanding Balance | |||||
Customer accounts receivable | $ 1,526,506 | $ 1,527,862 | |||
60 Days Past Due | 148,436 | 151,807 | |||
Reaged | 388,950 | 371,545 | |||
Allowance for uncollectible accounts | $ (203,572) | $ (210,175) | (207,097) | (203,572) | $ (202,906) |
Allowances for no-interest option credit programs | (18,716) | (20,960) | |||
Deferred fees and origination costs, net | (15,977) | (15,897) | |||
Total customer accounts receivable, net | 1,284,716 | 1,287,433 | |||
Short-term portion of customer accounts receivable, net | (630,396) | (636,825) | |||
Long-term portion of customer accounts receivable, net | 654,320 | 650,608 | |||
Amounts included within past due and reaged accounts | 92,000 | 80,800 | |||
Past due | 418,400 | 401,000 | |||
Reaged | 34,300 | 62,000 | |||
Allowance for doubtful accounts and uncollectible interest for customer receivables [Abstract] | |||||
Allowance at beginning of period | 203,572 | 210,175 | |||
Provision | 178,912 | 192,354 | |||
Principal charge-offs | (158,232) | (177,690) | |||
Interest charge-offs | (31,444) | (29,230) | |||
Recoveries | 14,289 | 7,297 | |||
Allowance at end of period | 207,097 | 202,906 | |||
Average total customer portfolio balance | 1,508,888 | 1,493,292 | |||
Excluding VIE [Member] | |||||
Total Outstanding Balance | |||||
Customer accounts receivable | 687,671 | 442,477 | |||
60 Days Past Due | 47,003 | 27,180 | |||
Reaged | 101,048 | 71,197 | |||
Variable Interest Entity [Member] | |||||
Total Outstanding Balance | |||||
Customer accounts receivable | 838,835 | 1,085,385 | |||
60 Days Past Due | 101,433 | 124,627 | |||
Reaged | 287,902 | 300,348 | |||
Allowance for uncollectible accounts | (143,115) | (121,021) | (143,115) | ||
Allowances for no-interest option credit programs | (11,283) | (18,228) | |||
Deferred fees and origination costs, net | (7,392) | (9,332) | |||
Total customer accounts receivable, net | 699,138 | 914,710 | |||
Short-term portion of customer accounts receivable, net | (372,481) | (459,708) | |||
Long-term portion of customer accounts receivable, net | 326,657 | 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 | 121,021 | ||||
Customer Accounts Receivable [Member] | |||||
Total Outstanding Balance | |||||
Customer accounts receivable | 1,345,361 | 1,374,269 | |||
60 Days Past Due | 103,556 | 114,120 | |||
Reaged | 207,805 | 217,952 | |||
Allowance for uncollectible accounts | (148,856) | (158,992) | (144,158) | (148,856) | (148,944) |
Allowance for doubtful accounts and uncollectible interest for customer receivables [Abstract] | |||||
Allowance at beginning of period | 148,856 | 158,992 | |||
Provision | 127,472 | 139,406 | |||
Principal charge-offs | (119,242) | (133,033) | |||
Interest charge-offs | (23,696) | (21,884) | |||
Recoveries | 10,768 | 5,463 | |||
Allowance at end of period | 144,158 | 148,944 | |||
Average total customer portfolio balance | 1,341,415 | 1,352,137 | |||
Restructured Accounts [Member] | |||||
Total Outstanding Balance | |||||
Customer accounts receivable | 181,145 | 153,593 | |||
60 Days Past Due | 44,880 | 37,687 | |||
Reaged | 181,145 | 153,593 | |||
Allowance for uncollectible accounts | (54,716) | (51,183) | (62,939) | $ (54,716) | (53,962) |
Allowance for doubtful accounts and uncollectible interest for customer receivables [Abstract] | |||||
Allowance at beginning of period | 54,716 | 51,183 | |||
Provision | 51,440 | 52,948 | |||
Principal charge-offs | (38,990) | (44,657) | |||
Interest charge-offs | (7,748) | (7,346) | |||
Recoveries | 3,521 | 1,834 | |||
Allowance at end of period | $ 62,939 | $ 53,962 | |||
Average total customer portfolio balance | $ 167,473 | $ 141,155 |
Charges and Credits (Details)
Charges and Credits (Details) - USD ($) $ in Thousands | Sep. 10, 2018 | Oct. 31, 2018 | Oct. 31, 2017 | Oct. 31, 2018 | Oct. 31, 2017 |
Charges and Credits [Abstract] | |||||
Facility closure costs | $ 0 | $ 0 | $ 0 | $ 1,349 | |
Securities-related regulatory matter and other legal fees | 0 | 0 | 300 | 34 | |
Employee severance | 737 | 0 | 737 | 1,317 | |
Indirect tax audit reserve | 0 | 0 | 0 | 2,595 | |
Legal judgment | $ 4,800 | 4,800 | 0 | 4,800 | 0 |
Write-off of capitalized software costs | 0 | 5,861 | 0 | 5,861 | |
Charges and credits | $ 5,537 | $ 5,861 | $ 5,837 | $ 11,156 |
Finance Charges and Other Rev_3
Finance Charges and Other Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2018 | Oct. 31, 2017 | Oct. 31, 2018 | Oct. 31, 2017 | |
Troubled Debt Restructuring, Debtor, Subsequent Periods [Line Items] | ||||
Interest income and fees | $ 82,964 | $ 74,144 | $ 239,745 | $ 210,765 |
Insurance income | 6,807 | 7,125 | 20,852 | 27,107 |
Other revenues | 179 | 95 | 291 | 267 |
Finance charges and other | 89,950 | 81,364 | 260,888 | 238,139 |
Provisions for uncollectible interest | 13,400 | 10,500 | 37,200 | 31,000 |
Financing Receivable [Member] | ||||
Troubled Debt Restructuring, Debtor, Subsequent Periods [Line Items] | ||||
Interest income and fees | $ 7,100 | $ 4,800 | $ 19,400 | $ 14,000 |
Debt and Capital Lease Obliga_3
Debt and Capital Lease Obligations - Schedule of Debt and Capital Lease Obligations (Details) - USD ($) $ in Thousands | Oct. 31, 2018 | Jan. 31, 2018 |
Long-term debt [Abstract] | ||
Long-term debt | $ 615,333 | |
Capital lease obligations | 4,698 | $ 4,949 |
Total debt and capital lease obligations | 930,081 | 1,102,425 |
Less: | ||
Discount on debt | (2,106) | (2,527) |
Deferred debt issuance costs | (6,805) | (8,886) |
Current maturities of capital lease obligations | (804) | (907) |
Long-term debt and capital lease obligations | 920,366 | 1,090,105 |
2017-B Class A Notes [Member] | ||
Long-term debt [Abstract] | ||
Long-term debt | 26,097 | |
2017-B Class B Notes [Member] | ||
Long-term debt [Abstract] | ||
Long-term debt | 132,180 | |
2017-B Class C Notes [Member] | ||
Long-term debt [Abstract] | ||
Long-term debt | 78,640 | |
2018-A VIE Class A Notes [Member] | ||
Long-term debt [Abstract] | ||
Long-term debt | 154,907 | |
2018-A VIE Class B Notes [Member] | ||
Long-term debt [Abstract] | ||
Long-term debt | 69,550 | |
2018-A VIE Class C Notes [Member] | ||
Long-term debt [Abstract] | ||
Long-term debt | 69,550 | |
Warehouse Notes [Member] | ||
Long-term debt [Abstract] | ||
Long-term debt | 84,409 | 0 |
Senior Notes [Member] | ||
Long-term debt [Abstract] | ||
Long-term debt | 227,000 | 227,000 |
Secured Debt [Member] | 2016-B Class B Notes [Member] | ||
Long-term debt [Abstract] | ||
Long-term debt | 0 | 73,589 |
Secured Debt [Member] | 2017-A Class A Notes [Member] | ||
Long-term debt [Abstract] | ||
Long-term debt | 0 | 59,794 |
Secured Debt [Member] | 2017-A Class B Notes [Member] | ||
Long-term debt [Abstract] | ||
Long-term debt | 0 | 106,270 |
Secured Debt [Member] | 2017-A Class C Notes [Member] | ||
Long-term debt [Abstract] | ||
Long-term debt | 0 | 50,340 |
Secured Debt [Member] | 2017-B Class A Notes [Member] | ||
Long-term debt [Abstract] | ||
Long-term debt | 26,097 | 292,663 |
Secured Debt [Member] | 2017-B Class B Notes [Member] | ||
Long-term debt [Abstract] | ||
Long-term debt | 132,180 | 132,180 |
Secured Debt [Member] | 2017-B Class C Notes [Member] | ||
Long-term debt [Abstract] | ||
Long-term debt | 78,640 | 78,640 |
Secured Debt [Member] | 2018-A VIE Class A Notes [Member] | ||
Long-term debt [Abstract] | ||
Long-term debt | 154,907 | 0 |
Secured Debt [Member] | 2018-A VIE Class B Notes [Member] | ||
Long-term debt [Abstract] | ||
Long-term debt | 69,550 | 0 |
Secured Debt [Member] | 2018-A VIE Class C Notes [Member] | ||
Long-term debt [Abstract] | ||
Long-term debt | 69,550 | 0 |
Revolving Credit Facility [Member] | ||
Less: | ||
Deferred debt issuance costs | (6,500) | (5,200) |
Revolving Credit Facility [Member] | Line of Credit [Member] | ||
Long-term debt [Abstract] | ||
Long-term debt | $ 83,050 | $ 77,000 |
Debt and Capital Lease Obliga_4
Debt and Capital Lease Obligations - Senior Notes (Details) | 36 Months Ended | 52 Months Ended | |
Oct. 31, 2018USD ($) | Oct. 31, 2018USD ($) | Jul. 01, 2014USD ($) | |
Debt Instrument [Line Items] | |||
Original Principal Amount | $ 1,051,580,000 | $ 1,051,580,000 | |
Minimum percentage of consolidated net income | 50.00% | ||
Limit on percentage of net cash proceeds | 100.00% | ||
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% | ||
Restricted payment basket amount | $ 375,000,000 | $ 375,000,000 | |
Leverage ratio | 2.50 | 2.50 | |
Restrictions on payment of dividends, amount free from restriction | $ 207,800,000 | $ 207,800,000 | |
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 | $ 282,500,000 | $ 282,500,000 |
Debt and Capital Lease Obliga_5
Debt and Capital Lease Obligations - Asset Backed Notes (Details) - USD ($) | Aug. 15, 2018 | Jul. 16, 2018 | Feb. 15, 2018 | Dec. 20, 2017 | Oct. 31, 2018 | Jan. 31, 2018 |
Debt Instrument [Line Items] | ||||||
Original Principal Amount | $ 1,051,580,000 | |||||
Original Net Proceeds | 1,042,743,000 | |||||
Current Principal Amount | 615,333,000 | |||||
2017-A Class A Notes [Member] | Secured Debt [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Current Principal Amount | 0 | $ 59,794,000 | ||||
Redemption amount | $ 127,200,000 | |||||
Payments to redeem debt | 119,000,000 | |||||
Adjustments | 8,200,000 | |||||
Write off debt issuance costs | 1,200,000 | |||||
2017-A Class B Notes [Member] | Secured Debt [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Current Principal Amount | 0 | 106,270,000 | ||||
2017-A Class C Notes [Member] | Secured Debt [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Current Principal Amount | 0 | 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 | $ 26,097,000 | |||||
Fixed Interest Rate | 2.73% | |||||
Effective interest rate | 5.17% | |||||
2017-B Class A Notes [Member] | Secured Debt [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Current Principal Amount | $ 26,097,000 | 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 | 5.23% | |||||
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 | 6.34% | |||||
2017-B Class C Notes [Member] | Secured Debt [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Current Principal Amount | $ 78,640,000 | 78,640,000 | ||||
2018-A VIE Class A Notes [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Original Principal Amount | 219,200,000 | |||||
Original Net Proceeds | 217,832,000 | |||||
Current Principal Amount | $ 154,907,000 | |||||
Fixed Interest Rate | 3.25% | |||||
Effective interest rate | 4.73% | |||||
2018-A VIE Class A Notes [Member] | Secured Debt [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Current Principal Amount | $ 154,907,000 | 0 | ||||
2018-A VIE Class B Notes [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Original Principal Amount | 69,550,000 | |||||
Original Net Proceeds | 69,020,000 | |||||
Current Principal Amount | $ 69,550,000 | |||||
Fixed Interest Rate | 4.65% | |||||
Effective interest rate | 5.43% | |||||
2018-A VIE Class B Notes [Member] | Secured Debt [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Current Principal Amount | $ 69,550,000 | 0 | ||||
2018-A VIE Class C Notes [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Original Principal Amount | 69,550,000 | |||||
Original Net Proceeds | $ 68,850,000 | |||||
Current Principal Amount | $ 69,550,000 | |||||
Fixed Interest Rate | 6.02% | |||||
Effective interest rate | 6.79% | |||||
2018-A VIE Class C Notes [Member] | Secured Debt [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Current Principal Amount | $ 69,550,000 | 0 | ||||
2018-A VIE Class A, B, and C Notes [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Original Principal Amount | $ 358,300,000 | |||||
Original Net Proceeds | $ 355,700,000 | |||||
Warehouse Notes [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Original Principal Amount | $ 52,200,000 | 121,060,000 | ||||
Original Net Proceeds | 118,972,000 | |||||
Current Principal Amount | $ 84,409,000 | 0 | ||||
Fixed Interest Rate | 2.50% | |||||
Effective interest rate | 6.56% | |||||
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 | |||||
Additional Funding [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Original Principal Amount | $ 121,100,000 | |||||
Asset-backed Securities [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Monthly fee percentage on outstanding balance | 4.75% | 4.75% |
Debt and Capital Lease Obliga_6
Debt and Capital Lease Obligations - Revolving Credit Facility (Details) | May 22, 2018USD ($) | Oct. 31, 2018USD ($) | Oct. 31, 2018USD ($) | May 23, 2018USD ($) | Jan. 31, 2018USD ($) |
Line of Credit Facility [Line Items] | |||||
Interest Coverage Ratio for the trailing two quarters must equal or exceed (minimum) | 3.97 | ||||
Interest Coverage Ratio for the quarter must equal or exceed minimum | 1 | ||||
Original Principal Amount | $ 1,051,580,000 | $ 1,051,580,000 | |||
Deferred debt issuance costs | 6,805,000 | 6,805,000 | $ 8,886,000 | ||
Revolving Credit Facility [Member] | |||||
Line of Credit Facility [Line Items] | |||||
Deferred debt issuance costs | 6,500,000 | 6,500,000 | $ 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 | $ 650,000,000 | $ 650,000,000 | $ 650,000,000 | |
Borrowing base availability block | $ 10,000,000 | ||||
Maximum accounts receivable advance rate | 75.00% | 80.00% | |||
Decrease in commitment fee | 0.25% | ||||
Unused capacity fee percentage | 0.75% | 0.50% | |||
Maximum inventory component | $ 175,000,000 | ||||
Maximum inventory component percent | 33.33% | ||||
Interest Coverage Ratio for the trailing two quarters must equal or exceed (minimum) | 1.5 | ||||
Interest Coverage Ratio for the quarter must equal or exceed minimum | 1 | ||||
Maximum capital expenditures | $ 75,000,000 | $ 100,000,000 | |||
Weighted-average interest rate | 6.50% | 6.50% | |||
Restrictions on payment of dividends, amount free from restriction | $ 282,500,000 | $ 282,500,000 | |||
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 | 0.50% | ||||
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 | 1.50% | ||||
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 | $ 40,000,000 | |||
Revolving Credit Facility [Member] | |||||
Line of Credit Facility [Line Items] | |||||
Sub-facility for letters of credit | 2,500,000 | 2,500,000 | |||
Available borrowing capacity | 401,600,000 | 401,600,000 | |||
Additional remaining borrowing capacity | $ 162,800,000 | $ 162,800,000 | |||
Revolving Credit Facility [Member] | LIBOR [Member] | Minimum [Member] | |||||
Line of Credit Facility [Line Items] | |||||
Variable basis spread | 2.50% | ||||
Revolving Credit Facility [Member] | LIBOR [Member] | Maximum [Member] | |||||
Line of Credit Facility [Line Items] | |||||
Variable basis spread | 3.25% |
Debt and Capital Lease Obliga_7
Debt and Capital Lease Obligations - Debt Covenants (Details) $ in Millions | 9 Months Ended |
Oct. 31, 2018USD ($) | |
Actual | |
Interest Coverage Ratio for the quarter must equal or exceed minimum | 4.07 |
Interest Coverage Ratio for the trailing two quarters must equal or exceed (minimum) | 3.97 |
Leverage Ratio must not exceed maximum | 2.01 |
ABS Excluded Leverage Ratio must not exceed maximum | 1.08 |
Capital Expenditures, net, must not exceed maximum | $ 16 |
Required Minimum/ Maximum | |
Interest Coverage Ratio for the quarter must equal or exceed minimum | 1 |
Interest Coverage Ratio for the trailing two quarters must equal or exceed (minimum) | 1.5 |
Leverage Ratio must not exceed maximum | 4 |
ABS Excluded Leverage Ratio must not exceed maximum | 2 |
Capital Expenditures, net, must not exceed maximum | $ 100 |
Determination period | 12 months |
Contingencies (Details)
Contingencies (Details) $ in Thousands | Sep. 10, 2018USD ($) | Jun. 28, 2018USD ($) | Jun. 30, 2015allegation | Oct. 31, 2018USD ($) | Oct. 31, 2017USD ($) | Oct. 31, 2018USD ($)defendant | Oct. 31, 2017USD ($) |
Loss Contingencies [Line Items] | |||||||
Litigation settlement | $ | $ 4,800 | $ 4,800 | $ 0 | $ 4,800 | $ 0 | ||
False and Misleading Statements and Failure to Disclosure Adverse Information [Member] | |||||||
Loss Contingencies [Line Items] | |||||||
Number of allegations dismissed in claim | allegation | 78 | ||||||
Number of allegations in claim | allegation | 91 | ||||||
Settlement amount funded | $ | $ 22,500 | ||||||
Executive Officer [Member] | False and Misleading Statements and Failure to Disclosure Adverse Information [Member] | |||||||
Loss Contingencies [Line Items] | |||||||
Number of defendants | defendant | 2 |
Variable Interest Entity - Add
Variable Interest Entity - Additional Information (Details) | 9 Months Ended | 12 Months Ended |
Oct. 31, 2018 | Jan. 31, 2018 | |
Asset-backed Securities [Member] | ||
Variable Interest Entity [Line Items] | ||
Monthly fee percentage on outstanding balance | 4.75% | 4.75% |
Variable Interest Entity (Detai
Variable Interest Entity (Details) - USD ($) $ in Thousands | Oct. 31, 2018 | Jan. 31, 2018 | Oct. 31, 2017 | Jan. 31, 2017 |
Assets: | ||||
Restricted cash | $ 70,043 | $ 86,872 | ||
Customer accounts receivable: | ||||
Allowance for uncollectible accounts | (207,097) | (203,572) | $ (202,906) | $ (210,175) |
Allowances for no-interest option credit programs | 18,716 | 20,960 | ||
Deferred fees and origination costs, net | (15,977) | (15,897) | ||
Total customer accounts receivable, net | 1,284,716 | 1,287,433 | ||
Total assets | 1,841,012 | 1,900,799 | ||
Liabilities: | ||||
Total long-term debt | 615,333 | |||
Long-term debt | 920,366 | 1,090,105 | ||
Less: deferred debt issuance costs | (6,805) | (8,886) | ||
Total liabilities | 1,253,978 | 1,365,731 | ||
2017-B Class A Notes [Member] | ||||
Liabilities: | ||||
Total long-term debt | 26,097 | |||
2017-B Class B Notes [Member] | ||||
Liabilities: | ||||
Total long-term debt | 132,180 | |||
2017-B Class C Notes [Member] | ||||
Liabilities: | ||||
Total long-term debt | 78,640 | |||
2018-A VIE Class A Notes [Member] | ||||
Liabilities: | ||||
Total long-term debt | 154,907 | |||
2018-A VIE Class B Notes [Member] | ||||
Liabilities: | ||||
Total long-term debt | 69,550 | |||
2018-A VIE Class C Notes [Member] | ||||
Liabilities: | ||||
Total long-term debt | 69,550 | |||
Warehouse Notes [Member] | ||||
Liabilities: | ||||
Total long-term debt | 84,409 | 0 | ||
Secured Debt [Member] | 2016-B Class B Notes [Member] | ||||
Liabilities: | ||||
Total long-term debt | 0 | 73,589 | ||
Secured Debt [Member] | 2017-A Class A Notes [Member] | ||||
Liabilities: | ||||
Total long-term debt | 0 | 59,794 | ||
Secured Debt [Member] | 2017-A Class B Notes [Member] | ||||
Liabilities: | ||||
Total long-term debt | 0 | 106,270 | ||
Secured Debt [Member] | 2017-A Class C Notes [Member] | ||||
Liabilities: | ||||
Total long-term debt | 0 | 50,340 | ||
Secured Debt [Member] | 2017-B Class A Notes [Member] | ||||
Liabilities: | ||||
Total long-term debt | 26,097 | 292,663 | ||
Secured Debt [Member] | 2017-B Class B Notes [Member] | ||||
Liabilities: | ||||
Total long-term debt | 132,180 | 132,180 | ||
Secured Debt [Member] | 2017-B Class C Notes [Member] | ||||
Liabilities: | ||||
Total long-term debt | 78,640 | 78,640 | ||
Secured Debt [Member] | 2018-A VIE Class A Notes [Member] | ||||
Liabilities: | ||||
Total long-term debt | 154,907 | 0 | ||
Secured Debt [Member] | 2018-A VIE Class B Notes [Member] | ||||
Liabilities: | ||||
Total long-term debt | 69,550 | 0 | ||
Secured Debt [Member] | 2018-A VIE Class C Notes [Member] | ||||
Liabilities: | ||||
Total long-term debt | 69,550 | 0 | ||
Variable Interest Entity [Member] | ||||
Assets: | ||||
Restricted cash | 68,493 | 85,322 | ||
Due from Conn's, Inc., net | 0 | 15,212 | ||
Customer accounts receivable: | ||||
Customer accounts receivable | 715,253 | 987,418 | ||
Restructured accounts | 123,581 | 97,967 | ||
Allowance for uncollectible accounts | (121,021) | (143,115) | ||
Allowances for no-interest option credit programs | 11,283 | 18,228 | ||
Deferred fees and origination costs, net | (7,392) | (9,332) | ||
Total customer accounts receivable, net | 699,138 | 914,710 | ||
Total assets | 767,631 | 1,015,244 | ||
Liabilities: | ||||
Accrued expenses | 4,889 | 6,723 | ||
Other liabilities | 7,172 | 10,639 | ||
Due to Conn's, Inc., net | 4,496 | 0 | ||
Total long-term debt | 611,353 | 787,979 | ||
Long-term debt | 615,333 | 793,476 | ||
Less: deferred debt issuance costs | (3,980) | (5,497) | ||
Total liabilities | $ 627,910 | $ 805,341 |
Segment Reporting (Details)
Segment Reporting (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2018USD ($)storestate | Oct. 31, 2017USD ($) | Oct. 31, 2018USD ($)segmentstorestate | Oct. 31, 2017USD ($) | |
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 | 14 | ||
Revenues: | ||||
Product sales | $ 256,731 | $ 263,786 | $ 773,224 | $ 774,741 |
Repair service agreement commissions | 23,579 | 24,488 | 72,104 | 72,703 |
Service revenues | 3,564 | 3,534 | 10,615 | 10,062 |
Total net sales | 283,874 | 291,808 | 855,943 | 857,506 |
Finance charges and other revenues | 89,950 | 81,364 | 260,888 | 238,139 |
Total revenues | 373,824 | 373,172 | 1,116,831 | 1,095,645 |
Costs and expenses: | ||||
Cost of goods sold | 166,886 | 175,591 | 507,102 | 519,847 |
Selling, general and administrative expense | 118,380 | 114,355 | 353,948 | 332,524 |
Provision for bad debts | 47,548 | 56,512 | 142,455 | 161,891 |
Charges and credits | 5,537 | 5,861 | 5,837 | 11,156 |
Total costs and expenses | 338,351 | 352,319 | 1,009,342 | 1,025,418 |
Operating income | 35,473 | 20,853 | 107,489 | 70,227 |
Interest expense | 15,098 | 18,095 | 47,484 | 62,142 |
Loss on extinguishment of debt | 0 | 461 | 1,773 | 2,907 |
Income before income taxes | 20,375 | 2,297 | 58,232 | 5,178 |
Allocation of overhead by operating segments | 9,100 | 7,300 | 26,700 | 21,500 |
Intersegment Eliminations [Member] | ||||
Revenues: | ||||
Total revenues | 9,500 | 9,300 | 28,300 | 27,900 |
Retail [Member] | ||||
Revenues: | ||||
Product sales | 256,731 | 263,786 | 773,224 | 774,741 |
Repair service agreement commissions | 23,579 | 24,488 | 72,104 | 72,703 |
Service revenues | 3,564 | 3,534 | 10,615 | 10,062 |
Total net sales | 283,874 | 291,808 | 855,943 | 857,506 |
Finance charges and other revenues | 179 | 95 | 291 | 267 |
Total revenues | 284,053 | 291,903 | 856,234 | 857,773 |
Costs and expenses: | ||||
Cost of goods sold | 166,886 | 175,591 | 507,102 | 519,847 |
Selling, general and administrative expense | 80,894 | 80,676 | 241,649 | 233,290 |
Provision for bad debts | 286 | 189 | 789 | 584 |
Charges and credits | 737 | 5,861 | 1,037 | 11,156 |
Total costs and expenses | 248,803 | 262,317 | 750,577 | 764,877 |
Operating income | 35,250 | 29,586 | 105,657 | 92,896 |
Interest expense | 0 | 0 | 0 | 0 |
Loss on extinguishment of debt | 0 | 0 | 0 | 0 |
Income before income taxes | 35,250 | 29,586 | 105,657 | 92,896 |
Credit [Member] | ||||
Revenues: | ||||
Product sales | 0 | 0 | 0 | 0 |
Repair service agreement commissions | 0 | 0 | 0 | 0 |
Service revenues | 0 | 0 | 0 | 0 |
Total net sales | 0 | 0 | 0 | 0 |
Finance charges and other revenues | 89,771 | 81,269 | 260,597 | 237,872 |
Total revenues | 89,771 | 81,269 | 260,597 | 237,872 |
Costs and expenses: | ||||
Cost of goods sold | 0 | 0 | 0 | 0 |
Selling, general and administrative expense | 37,486 | 33,679 | 112,299 | 99,234 |
Provision for bad debts | 47,262 | 56,323 | 141,666 | 161,307 |
Charges and credits | 4,800 | 0 | 4,800 | 0 |
Total costs and expenses | 89,548 | 90,002 | 258,765 | 260,541 |
Operating income | 223 | (8,733) | 1,832 | (22,669) |
Interest expense | 15,098 | 18,095 | 47,484 | 62,142 |
Loss on extinguishment of debt | 0 | 461 | 1,773 | 2,907 |
Income before income taxes | (14,875) | (27,289) | (47,425) | (87,718) |
Furniture and Mattress [Member] | ||||
Revenues: | ||||
Product sales | 91,342 | 97,146 | 285,428 | 286,886 |
Furniture and Mattress [Member] | Retail [Member] | ||||
Revenues: | ||||
Product sales | 91,342 | 97,146 | 285,428 | 286,886 |
Furniture and Mattress [Member] | Credit [Member] | ||||
Revenues: | ||||
Product sales | 0 | 0 | 0 | 0 |
Home Appliance [Member] | ||||
Revenues: | ||||
Product sales | 79,542 | 83,837 | 249,036 | 253,044 |
Home Appliance [Member] | Retail [Member] | ||||
Revenues: | ||||
Product sales | 79,542 | 83,837 | 249,036 | 253,044 |
Home Appliance [Member] | Credit [Member] | ||||
Revenues: | ||||
Product sales | 0 | 0 | 0 | 0 |
Consumer Electronic [Member] | ||||
Revenues: | ||||
Product sales | 60,008 | 58,062 | 167,964 | 166,761 |
Consumer Electronic [Member] | Retail [Member] | ||||
Revenues: | ||||
Product sales | 60,008 | 58,062 | 167,964 | 166,761 |
Consumer Electronic [Member] | Credit [Member] | ||||
Revenues: | ||||
Product sales | 0 | 0 | 0 | 0 |
Home Office [Member] | ||||
Revenues: | ||||
Product sales | 22,661 | 20,295 | 60,260 | 54,945 |
Home Office [Member] | Retail [Member] | ||||
Revenues: | ||||
Product sales | 22,661 | 20,295 | 60,260 | 54,945 |
Home Office [Member] | Credit [Member] | ||||
Revenues: | ||||
Product sales | 0 | 0 | 0 | 0 |
Other [Member] | ||||
Revenues: | ||||
Product sales | 3,178 | 4,446 | 10,536 | 13,105 |
Other [Member] | Retail [Member] | ||||
Revenues: | ||||
Product sales | 3,178 | 4,446 | 10,536 | 13,105 |
Other [Member] | Credit [Member] | ||||
Revenues: | ||||
Product sales | $ 0 | $ 0 | $ 0 | $ 0 |
Outside of US [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Number of stores | store | 0 | 0 |
Guarantor Financial Informati_3
Guarantor Financial Information (Condensed Consolidated Balance Sheet) (Details) - USD ($) $ in Thousands | Oct. 31, 2018 | Jan. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 3,492 | $ 9,286 |
Restricted cash | 70,043 | 86,872 |
Customer accounts receivable, net of allowances (includes VIE balance of $372,481 and $459,708, respectively) | 630,396 | 636,825 |
Other accounts receivable | 63,752 | 71,186 |
Inventories | 227,164 | 211,894 |
Other current assets | 15,720 | 63,954 |
Total current assets | 1,010,567 | 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 $326,657 and $455,002, respectively) | 654,320 | 650,608 |
Property and equipment, net | 146,326 | 143,152 |
Deferred income taxes | 23,157 | 21,565 |
Other assets | 6,642 | 5,457 |
Total assets | 1,841,012 | 1,900,799 |
Current liabilities: | ||
Current maturities of long-term debt and capital lease obligations | 804 | 907 |
Accounts payable | 110,359 | 71,617 |
Accrued expenses | 87,607 | 69,112 |
Other current liabilities | 22,206 | 22,475 |
Total current liabilities | 220,976 | 164,111 |
Deferred rent | 90,410 | 87,003 |
Long-term debt and capital lease obligations | 920,366 | 1,090,105 |
Other long-term liabilities | 22,226 | 24,512 |
Total liabilities | 1,253,978 | 1,365,731 |
Total stockholders' equity | 587,034 | 535,068 |
Total liabilities and stockholders' equity | 1,841,012 | 1,900,799 |
Eliminations | ||
Current assets: | ||
Cash and cash equivalents | 0 | 0 |
Restricted cash | 0 | 0 |
Customer accounts receivable, net of allowances (includes VIE balance of $372,481 and $459,708, respectively) | 0 | 0 |
Other accounts receivable | 0 | 0 |
Inventories | 0 | 0 |
Other current assets | (3,401) | (19,879) |
Total current assets | (3,401) | (19,879) |
Investment in and advances to subsidiaries | (930,469) | (945,175) |
Long-term portion of customer accounts receivable, net of allowances (includes VIE balance of $326,657 and $455,002, respectively) | 0 | 0 |
Property and equipment, net | 0 | 0 |
Deferred income taxes | 0 | 0 |
Other assets | 0 | 0 |
Total assets | (933,870) | (965,054) |
Current liabilities: | ||
Current maturities of long-term debt and capital lease obligations | 0 | 0 |
Accounts payable | 0 | 0 |
Accrued expenses | (3,401) | (4,667) |
Other current liabilities | 0 | (15,212) |
Total current liabilities | (3,401) | (19,879) |
Deferred rent | 0 | 0 |
Long-term debt and capital lease obligations | 0 | 0 |
Other long-term liabilities | 0 | 0 |
Total liabilities | (3,401) | (19,879) |
Total stockholders' equity | (930,469) | (945,175) |
Total liabilities and stockholders' equity | (933,870) | (965,054) |
Conn's, Inc. | ||
Current assets: | ||
Cash and cash equivalents | 0 | 0 |
Restricted cash | 0 | 0 |
Customer accounts receivable, net of allowances (includes VIE balance of $372,481 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 | 790,746 | 735,272 |
Long-term portion of customer accounts receivable, net of allowances (includes VIE balance of $326,657 and $455,002, respectively) | 0 | 0 |
Property and equipment, net | 0 | 0 |
Deferred income taxes | 23,157 | 21,565 |
Other assets | 0 | 0 |
Total assets | 813,903 | 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 | 222,069 | 221,083 |
Other long-term liabilities | 0 | 0 |
Total liabilities | 226,869 | 221,769 |
Total stockholders' equity | 587,034 | 535,068 |
Total liabilities and stockholders' equity | 813,903 | 756,837 |
Guarantors | ||
Current assets: | ||
Cash and cash equivalents | 3,492 | 9,286 |
Restricted cash | 1,550 | 1,550 |
Customer accounts receivable, net of allowances (includes VIE balance of $372,481 and $459,708, respectively) | 257,915 | 177,117 |
Other accounts receivable | 63,752 | 71,186 |
Inventories | 227,164 | 211,894 |
Other current assets | 19,121 | 68,621 |
Total current assets | 572,994 | 539,654 |
Investment in and advances to subsidiaries | 139,723 | 209,903 |
Long-term portion of customer accounts receivable, net of allowances (includes VIE balance of $326,657 and $455,002, respectively) | 327,663 | 195,606 |
Property and equipment, net | 146,326 | 143,152 |
Deferred income taxes | 0 | 0 |
Other assets | 6,642 | 5,457 |
Total assets | 1,193,348 | 1,093,772 |
Current liabilities: | ||
Current maturities of long-term debt and capital lease obligations | 804 | 907 |
Accounts payable | 110,359 | 71,617 |
Accrued expenses | 81,319 | 66,370 |
Other current liabilities | 14,334 | 32,685 |
Total current liabilities | 206,816 | 171,579 |
Deferred rent | 90,410 | 87,003 |
Long-term debt and capital lease obligations | 86,944 | 81,043 |
Other long-term liabilities | 18,430 | 18,875 |
Total liabilities | 402,600 | 358,500 |
Total stockholders' equity | 790,746 | 735,272 |
Total liabilities and stockholders' equity | 1,193,346 | 1,093,772 |
Non-guarantor Subsidiaries | ||
Current assets: | ||
Cash and cash equivalents | 0 | 0 |
Restricted cash | 85,322 | |
Customer accounts receivable, net of allowances (includes VIE balance of $372,481 and $459,708, respectively) | 459,708 | |
Other accounts receivable | 0 | 0 |
Inventories | 0 | 0 |
Other current assets | 0 | 15,212 |
Total current assets | 440,974 | 560,242 |
Investment in and advances to subsidiaries | 0 | 0 |
Long-term portion of customer accounts receivable, net of allowances (includes VIE balance of $326,657 and $455,002, respectively) | 455,002 | |
Property and equipment, net | 0 | 0 |
Deferred income taxes | 0 | 0 |
Other assets | 0 | 0 |
Total assets | 767,631 | 1,015,244 |
Current liabilities: | ||
Current maturities of long-term debt and capital lease obligations | 0 | 0 |
Accounts payable | 0 | 0 |
Accrued expenses | 4,889 | 6,723 |
Other current liabilities | 7,872 | 5,002 |
Total current liabilities | 12,761 | 11,725 |
Deferred rent | 0 | 0 |
Long-term debt and capital lease obligations | 611,353 | 787,979 |
Other long-term liabilities | 3,796 | 5,637 |
Total liabilities | 627,910 | 805,341 |
Total stockholders' equity | 139,723 | 209,903 |
Total liabilities and stockholders' equity | $ 767,633 | $ 1,015,244 |
Guarantor Financial Informati_4
Guarantor Financial Information (Condensed Consolidated Statement of Operations) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2018 | Oct. 31, 2017 | Oct. 31, 2018 | Oct. 31, 2017 | |
Revenues: | ||||
Total net sales | $ 283,874 | $ 291,808 | $ 855,943 | $ 857,506 |
Finance charges and other revenues | 89,950 | 81,364 | 260,888 | 238,139 |
Servicing fee revenue | 0 | 0 | 0 | 0 |
Total revenues | 373,824 | 373,172 | 1,116,831 | 1,095,645 |
Costs and expenses: | ||||
Cost of goods sold | 166,886 | 175,591 | 507,102 | 519,847 |
Selling, general and administrative expense | 118,380 | 114,355 | 353,948 | 332,524 |
Provision for bad debts | 47,548 | 56,512 | 142,455 | 161,891 |
Charges and credits | 5,537 | 5,861 | 5,837 | 11,156 |
Total costs and expenses | 338,351 | 352,319 | 1,009,342 | 1,025,418 |
Operating income | 35,473 | 20,853 | 107,489 | 70,227 |
Interest expense | 15,098 | 18,095 | 47,484 | 62,142 |
Loss on extinguishment of debt | 0 | 461 | 1,773 | 2,907 |
Income before income taxes | 20,375 | 2,297 | 58,232 | 5,178 |
Provision for income taxes | 5,745 | 728 | 13,859 | 1,916 |
Net income | 14,630 | 1,569 | 44,373 | 3,262 |
Income (loss) from consolidated subsidiaries | 0 | 0 | 0 | 0 |
Consolidated net income (loss) | 14,630 | 1,569 | 44,373 | 3,262 |
Eliminations | ||||
Revenues: | ||||
Total net sales | 0 | 0 | 0 | 0 |
Finance charges and other revenues | 0 | 0 | 0 | 0 |
Servicing fee revenue | (12,226) | (18,178) | (32,007) | (46,010) |
Total revenues | (12,226) | (18,178) | (32,007) | (46,010) |
Costs and expenses: | ||||
Cost of goods sold | 0 | 0 | 0 | 0 |
Selling, general and administrative expense | (12,226) | (18,178) | (32,007) | (46,010) |
Provision for bad debts | 0 | 0 | 0 | 0 |
Charges and credits | 0 | 0 | 0 | 0 |
Total costs and expenses | (12,226) | (18,178) | (32,007) | (46,010) |
Operating income | 0 | 0 | 0 | 0 |
Interest expense | 0 | 0 | 0 | 0 |
Loss on extinguishment of debt | 0 | 0 | 0 | 0 |
Income before income taxes | 0 | 0 | 0 | 0 |
Provision for income taxes | 0 | 0 | 0 | 0 |
Net income | 0 | 0 | 0 | 0 |
Income (loss) from consolidated subsidiaries | (3,847) | (6,730) | (18,520) | 26,753 |
Consolidated net income (loss) | (3,847) | (6,730) | (18,520) | 26,753 |
Conn's, Inc. | ||||
Revenues: | ||||
Total net sales | 0 | 0 | 0 | 0 |
Finance charges and other revenues | 0 | 0 | 0 | 0 |
Servicing fee revenue | 0 | 0 | 0 | 0 |
Total revenues | 0 | 0 | 0 | 0 |
Costs and expenses: | ||||
Cost of goods sold | 0 | 0 | 0 | 0 |
Selling, general and administrative expense | 0 | 0 | 0 | 0 |
Provision for bad debts | 0 | 0 | 0 | 0 |
Charges and credits | 0 | 0 | 0 | 0 |
Total costs and expenses | 0 | 0 | 0 | 0 |
Operating income | 0 | 0 | 0 | 0 |
Interest expense | 4,448 | 4,443 | 13,339 | 13,329 |
Loss on extinguishment of debt | 0 | 0 | 0 | 0 |
Income before income taxes | (4,448) | (4,443) | (13,339) | (13,329) |
Provision for income taxes | (1,254) | (1,408) | (3,175) | (4,934) |
Net income | (3,194) | (3,035) | (10,164) | (8,395) |
Income (loss) from consolidated subsidiaries | 17,824 | 4,742 | 54,537 | 11,657 |
Consolidated net income (loss) | 14,630 | 1,707 | 44,373 | 3,262 |
Guarantors | ||||
Revenues: | ||||
Total net sales | 283,874 | 291,808 | 855,943 | 857,506 |
Finance charges and other revenues | 48,666 | 45,228 | 150,974 | 122,305 |
Servicing fee revenue | 12,226 | 18,178 | 32,007 | 46,010 |
Total revenues | 344,766 | 355,214 | 1,038,924 | 1,025,821 |
Costs and expenses: | ||||
Cost of goods sold | 166,886 | 175,591 | 507,102 | 519,847 |
Selling, general and administrative expense | 118,234 | 125,355 | 353,542 | 343,043 |
Provision for bad debts | 7,715 | 44,454 | 44,591 | 64,438 |
Charges and credits | 5,537 | 5,861 | 5,837 | 11,156 |
Total costs and expenses | 298,372 | 351,261 | 911,072 | 938,484 |
Operating income | 46,394 | 3,953 | 127,852 | 87,337 |
Interest expense | 2,106 | 4,979 | 8,872 | 7,501 |
Loss on extinguishment of debt | 0 | 0 | 142 | 349 |
Income before income taxes | 44,288 | (1,026) | 118,838 | 79,487 |
Provision for income taxes | 12,487 | (324) | 28,284 | 29,420 |
Net income | 31,801 | (702) | 90,554 | 50,067 |
Income (loss) from consolidated subsidiaries | (13,977) | 1,988 | (36,017) | (38,410) |
Consolidated net income (loss) | 17,824 | 1,286 | 54,537 | 11,657 |
Non-guarantor Subsidiaries | ||||
Revenues: | ||||
Total net sales | 0 | 0 | 0 | 0 |
Finance charges and other revenues | 41,284 | 36,136 | 109,914 | 115,834 |
Servicing fee revenue | 0 | 0 | 0 | 0 |
Total revenues | 41,284 | 36,136 | 109,914 | 115,834 |
Costs and expenses: | ||||
Cost of goods sold | 0 | 0 | 0 | 0 |
Selling, general and administrative expense | 12,372 | 7,178 | 32,413 | 35,491 |
Provision for bad debts | 39,833 | 12,058 | 97,864 | 97,453 |
Charges and credits | 0 | 0 | 0 | 0 |
Total costs and expenses | 52,205 | 19,236 | 130,277 | 132,944 |
Operating income | (10,921) | 16,900 | (20,363) | (17,110) |
Interest expense | 8,544 | 8,673 | 25,273 | 41,312 |
Loss on extinguishment of debt | 0 | 461 | 1,631 | 2,558 |
Income before income taxes | (19,465) | 7,766 | (47,267) | (60,980) |
Provision for income taxes | (5,488) | 2,460 | (11,250) | (22,570) |
Net income | (13,977) | 5,306 | (36,017) | (38,410) |
Income (loss) from consolidated subsidiaries | 0 | 0 | 0 | 0 |
Consolidated net income (loss) | $ (13,977) | $ 5,306 | $ (36,017) | $ (38,410) |
Guarantor Financial Informati_5
Guarantor Financial Information (Condensed Consolidated Statement of Cash Flows) (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2017 | |
Condensed Cash Flow Statements, Captions [Line Items] | ||
Net cash provided by (used in) operating activities | $ 182,094 | $ 81,899 |
Cash flows from investing activities: | ||
Purchase of customer accounts receivables | 0 | 0 |
Sale of customer accounts receivables | 0 | 0 |
Purchase of property and equipment | (22,609) | (11,995) |
Net cash used in investing activities | (22,609) | (11,995) |
Cash flows from financing activities: | ||
Proceeds from issuance of asset-backed notes | 358,300 | 469,814 |
Payments on asset-backed notes | (619,674) | (814,568) |
Borrowings from Revolving Credit Facility | 1,266,333 | 1,257,052 |
Payments on Revolving Credit Facility | (1,260,283) | (1,082,552) |
Borrowings from warehouse facility | 173,286 | 79,940 |
Payments for debt issuance costs and amendment fees | (7,381) | (8,172) |
Payments on warehouse facility | (88,876) | (23,066) |
Proceeds from stock issued under employee benefit plans | 1,055 | 3,011 |
Tax payments associated with equity-based compensation transactions | (2,931) | (570) |
Payments from extinguishment of debt | (1,177) | (837) |
Other | (760) | (379) |
Net cash used in financing activities | (182,108) | (120,327) |
Net change in cash, cash equivalents and restricted cash | (22,623) | (50,423) |
Cash, cash equivalents and restricted cash, beginning of period | 96,158 | 134,264 |
Cash, cash equivalents and restricted cash, end of period | 73,535 | 83,841 |
Eliminations | ||
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 | 525,846 | 544,833 |
Sale of customer accounts receivables | (525,846) | (544,833) |
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 | 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 | 0 |
Payments for debt issuance costs and amendment fees | 0 | 0 |
Payments on warehouse facility | 0 | 0 |
Proceeds from stock issued under employee benefit plans | 0 | 0 |
Tax payments associated with equity-based compensation transactions | 0 | 0 |
Payments from extinguishment of debt | 0 | 0 |
Other | 0 | 0 |
Net cash used in 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. | ||
Condensed Cash Flow Statements, Captions [Line Items] | ||
Net cash provided by (used in) operating activities | (1,055) | (3,011) |
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 | 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 | 0 |
Payments for debt issuance costs and amendment fees | 0 | 0 |
Payments on warehouse facility | 0 | 0 |
Proceeds from stock issued under employee benefit plans | 1,055 | 3,011 |
Tax payments associated with equity-based compensation transactions | 0 | 0 |
Payments from extinguishment of debt | 0 | 0 |
Other | 0 | 0 |
Net cash used in financing activities | 1,055 | 3,011 |
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 | ||
Condensed Cash Flow Statements, Captions [Line Items] | ||
Net cash provided by (used in) operating activities | 188,302 | (636,406) |
Cash flows from investing activities: | ||
Purchase of customer accounts receivables | 0 | 0 |
Sale of customer accounts receivables | 0 | 544,833 |
Purchase of property and equipment | (22,609) | (11,995) |
Net cash used in investing activities | (22,609) | 532,838 |
Cash flows from financing activities: | ||
Proceeds from issuance of asset-backed notes | 0 | 0 |
Payments on asset-backed notes | (169,443) | (77,105) |
Borrowings from Revolving Credit Facility | 1,266,333 | 1,257,052 |
Payments on Revolving Credit Facility | (1,260,283) | (1,082,552) |
Borrowings from warehouse facility | 0 | 0 |
Payments for debt issuance costs and amendment fees | (3,226) | (2,865) |
Payments on warehouse facility | 0 | 0 |
Proceeds from stock issued under employee benefit plans | 0 | 0 |
Tax payments associated with equity-based compensation transactions | (2,931) | (570) |
Payments from extinguishment of debt | (1,177) | (837) |
Other | (760) | (379) |
Net cash used in financing activities | (171,487) | 92,744 |
Net change in cash, cash equivalents and restricted cash | (5,794) | (10,824) |
Cash, cash equivalents and restricted cash, beginning of period | 10,836 | 23,566 |
Cash, cash equivalents and restricted cash, end of period | 5,042 | 12,742 |
Non-guarantor Subsidiaries | ||
Condensed Cash Flow Statements, Captions [Line Items] | ||
Net cash provided by (used in) operating activities | (5,153) | 721,316 |
Cash flows from investing activities: | ||
Purchase of customer accounts receivables | (525,846) | (544,833) |
Sale of customer accounts receivables | 525,846 | 0 |
Purchase of property and equipment | 0 | 0 |
Net cash used in investing activities | 0 | (544,833) |
Cash flows from financing activities: | ||
Proceeds from issuance of asset-backed notes | 358,300 | 469,814 |
Payments on asset-backed notes | (450,231) | (737,463) |
Borrowings from Revolving Credit Facility | 0 | 0 |
Payments on Revolving Credit Facility | 0 | 0 |
Borrowings from warehouse facility | 173,286 | 79,940 |
Payments for debt issuance costs and amendment fees | (4,155) | (5,307) |
Payments on warehouse facility | (88,876) | (23,066) |
Proceeds from stock issued under employee benefit plans | 0 | 0 |
Tax payments associated with equity-based compensation transactions | 0 | 0 |
Payments from extinguishment of debt | 0 | 0 |
Other | 0 | 0 |
Net cash used in financing activities | (11,676) | (216,082) |
Net change in cash, cash equivalents and restricted cash | (16,829) | (39,599) |
Cash, cash equivalents and restricted cash, beginning of period | 85,322 | 110,698 |
Cash, cash equivalents and restricted cash, end of period | $ 68,493 | $ 71,099 |