UNITED STATES
SECURITIES AND EXCHANGE COMMISSION 
Washington, D.C.  20549 
FORM 10-Q
(Mark One) 
x☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended OctoberJuly 31, 20172022
 or
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
Commission File Number 001-34956
CONN'S,CONN’S, INC.
(Exact name of registrant as specified in its charter)
Delaware06-1672840
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification Number)
40552445 Technology Forest Blvd,Blvd., Suite 210,800, The Woodlands, TX77381
(Address of principal executive offices)(Zip Code)
Registrant'sRegistrant’s telephone number, including area code:  (936) 230-5899
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of Each Exchange on Which Registered
Common Stock, par value $0.01 per shareCONNNASDAQ Global Select Market
Indicate by check mark whether the registrant (l) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý  No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes ý  No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large“large accelerated filer," "accelerated” “accelerated filer," "smaller” “smaller reporting company,"” and "emerging“emerging growth company"company” in Rule 12b-2 of the Exchange Act.
Large accelerated fileroAccelerated filerý
Non-accelerated filero(Do not check if a smaller reporting company)Smaller reporting companyo☐
Emerging growth companyo☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes o☐  No ý
Indicate the number of shares outstanding of each of the issuer'sissuer’s classes of common stock, as of November 30, 2017: 
August 22, 2022: 
ClassOutstanding
Common stock, $0.01 par value per share31,370,58123,902,888


CONN'S,
Table of Contents
CONN’S, INC. AND SUBSIDIARIES


FORM 10-Q
FOR THE FISCAL QUARTER ENDED OCTOBERJULY 31, 20172022


TABLE OF CONTENTS
Page No.
PART I.FINANCIAL INFORMATIONPage No.
PART I.Item 1.FINANCIAL INFORMATIONFinancial Statements
Item 1.Financial Statements
1
2
3
34
45
Item 2.
2719
Item 3.
4335
Item 4.
4435
PART II.OTHER INFORMATION
Item 1.
4435
Item 1A.
4435
Item 2.
4436
Item 3.
4436
Item 4.
4436
Item 5.
4436
Item 6.
4437
4537
4638
This Quarterly Report on Form 10-Q includes our trademarks such as "Conn's," "Conn's“Conn’s,” “Conn’s HomePlus," "YES” “YE$ YOU’RE APPROVED,” “YES Money," "YE$” “YE$ Money,"” “YES Lease,” “YE$ Lease,” and our logos, which are protected under applicable intellectual property laws and are the property of Conn's,Conn’s, Inc.  This report also contains trademarks, service marks, trade names and copyrights of other companies, which are the property of their respective owners.  Solely for convenience, trademarks and trade names referred to in this Quarterly Report may appear without the ® or TM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names.
References to "Conn's," the "Company," "we," "us," and "our"“we,” “our,” “us,” “the Company,” “Conn’s” or “CONN” refer to Conn's,Conn’s, Inc. and, as apparent from the context, its consolidated bankruptcy-remote variable-interest entities (“VIEs”), and its wholly-owned subsidiaries.


PART I.FINANCIAL INFORMATION

Table of Contents
PART I.    FINANCIAL INFORMATION
ITEM 1.
ITEM 1.     FINANCIAL STATEMENTS
CONN'S,
CONN’S, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited and dollars in thousands)thousands, except per share amounts)
October 31,
2017		 January 31,
2017		July 31,
2022		January 31,
2022
Assets   Assets(unaudited)
Current assets:   Current assets:
Cash and cash equivalents$12,742
 $23,566
Cash and cash equivalents$24,256 $7,707 
Restricted cash (all held by VIEs)71,099
 110,698
Customer accounts receivable, net of allowances (includes VIE balance of $360,086 and $529,108, respectively)635,700
 702,162
Restricted cash (includes VIE balances of $45,773 and $29,872, respectively)Restricted cash (includes VIE balances of $45,773 and $29,872, respectively)47,855 31,930 
Customer accounts receivable, net of allowances (includes VIE balances of $311,745 and $212,259, respectively)Customer accounts receivable, net of allowances (includes VIE balances of $311,745 and $212,259, respectively)434,824 455,787 
Other accounts receivable63,203
 69,286
Other accounts receivable55,565 63,055 
Inventories235,479
 164,856
Inventories262,952 246,826 
Income taxes recoverable1,194
 2,150
Income taxes receivableIncome taxes receivable6,813 6,745 
Prepaid expenses and other current assets14,721
 14,955
Prepaid expenses and other current assets10,101 8,756 
Total current assets1,034,138
 1,087,673
Total current assets842,366 820,806 
Long-term portion of customer accounts receivable, net of allowances (includes VIE balance of $231,036 and $320,382, respectively)616,665
 615,904
Long-term portion of customer accounts receivable, net of allowances (includes VIE balances of $335,710 and $167,905, respectively)Long-term portion of customer accounts receivable, net of allowances (includes VIE balances of $335,710 and $167,905, respectively)398,127 432,431 
Property and equipment, net144,747
 159,202
Property and equipment, net210,814 192,763 
Deferred income taxes72,554
 71,442
Operating lease right-of-use assetsOperating lease right-of-use assets252,653 256,267 
Other assets6,285
 6,913
Other assets50,849 52,199 
Total assets$1,874,389
 $1,941,134
Total assets$1,754,809 $1,754,466 
Liabilities and Stockholders' Equity 
  
Liabilities and Stockholders’ EquityLiabilities and Stockholders’ Equity  
Current liabilities: 
  
Current liabilities:  
Current maturities of long-term debt and capital lease obligations (includes VIE balance of $64,952 and $0 respectively)$65,651
 $849
Current finance lease obligationsCurrent finance lease obligations$909 $889 
Accounts payable109,738
 101,612
Accounts payable77,691 74,705 
Accrued compensation and related expenses16,912
 13,325
Accrued compensation and related expenses13,083 36,677 
Accrued expenses45,491
 26,456
Accrued expenses76,851 73,035 
Operating lease liability - currentOperating lease liability - current57,940 54,534 
Income taxes payable2,513
 3,318
Income taxes payable2,315 3,007 
Deferred revenues and other credits22,018
 21,821
Deferred revenues and other credits13,202 15,569 
Total current liabilities262,323
 167,381
Total current liabilities241,991 258,416 
Deferred rent87,152
 87,957
Long-term debt and capital lease obligations (includes VIE balance of $396,010 and $745,581, respectively)973,278
 1,144,393
Operating lease liability - non currentOperating lease liability - non current321,104 330,439 
Long-term debt and finance lease obligations (includes VIE balances of $597,655 and $367,925, respectively)Long-term debt and finance lease obligations (includes VIE balances of $597,655 and $367,925, respectively)602,412 522,149 
Deferred tax liabilityDeferred tax liability— 7,351 
Other long-term liabilities22,245
 23,613
Other long-term liabilities29,425 21,292 
Total liabilities1,344,998
 1,423,344
Total liabilities1,194,932 1,139,647 
Commitments and contingencies 
  
Stockholders' equity: 
  
Commitments and contingencies (Note 6)Commitments and contingencies (Note 6)00
Stockholders’ equity:Stockholders’ equity:  
Preferred stock ($0.01 par value, 1,000,000 shares authorized; none issued or outstanding)—
 —
Preferred stock ($0.01 par value, 1,000,000 shares authorized; none issued or outstanding)— — 
Common stock ($0.01 par value, 100,000,000 shares authorized; 31,365,028 and 30,961,898 shares issued, respectively)314
 310
Common stock ($0.01 par value, 100,000,000 shares authorized; 33,273,456 and 33,015,053 shares issued, respectively)Common stock ($0.01 par value, 100,000,000 shares authorized; 33,273,456 and 33,015,053 shares issued, respectively)332 330 
Treasury stock (at cost; 9,404,920 shares and 6,088,920 shares issued, respectively)Treasury stock (at cost; 9,404,920 shares and 6,088,920 shares issued, respectively)(193,370)(125,145)
Additional paid-in capital98,611
 90,276
Additional paid-in capital145,350 140,419 
Retained earnings430,466
 427,204
Retained earnings607,565 599,215 
Total stockholders' equity529,391
 517,790
Total liabilities and stockholders' equity$1,874,389
 $1,941,134
Total stockholders’ equityTotal stockholders’ equity559,877 614,819 
Total liabilities and stockholders’ equityTotal liabilities and stockholders’ equity$1,754,809 $1,754,466 
See notes to condensed consolidated financial statements.


CONN'S,1
Table of Contents
CONN’S, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited and dollars in thousands, except per share amounts)
Three Months Ended 
 October 31,		 Nine Months Ended 
 October 31,		Three Months Ended
July 31,		Six Months Ended
July 31,
2017 2016 2017 2016 2022202120222021
Revenues:       Revenues:
Product sales$263,786
 $278,056
 $774,741
 $864,269
Product sales$255,449 $320,245 $505,422 $589,456 
Repair service agreement commissions24,488
 26,354
 72,703
 82,849
Repair service agreement commissions21,615 23,700 41,452 42,831 
Service revenues3,534
 3,623
 10,062
 11,456
Service revenues2,448 2,840 4,901 5,794 
Total net sales291,808
 308,033
 857,506
 958,574
Total net sales279,512 346,785 551,775 638,081 
Finance charges and other revenues81,364
 68,740
 238,139
 205,469
Finance charges and other revenues67,120 71,598 134,677 144,004 
Total revenues373,172
 376,773
 1,095,645
 1,164,043
Total revenues346,632 418,383 686,452 782,085 
Costs and expenses: 
  
    Costs and expenses:
Cost of goods sold175,591
 192,374
 519,847
 605,709
Cost of goods sold182,718 216,042 361,100 400,921 
Selling, general and administrative expenses114,355
 114,457
 332,524
 347,550
Provision for bad debts56,512
 51,564
 161,891
 169,978
Selling, general and administrative expenseSelling, general and administrative expense130,142 137,870 262,925 263,919 
Provision (benefit) for bad debtsProvision (benefit) for bad debts27,226 10,262 41,956 (6,874)
Charges and credits5,861
 1,987
 11,156
 5,408
Charges and credits(1,484)— (1,484)— 
Total costs and expenses352,319
 360,382
 1,025,418
 1,128,645
Total costs and expenses338,602 364,174 664,497 657,966 
Operating income20,853
 16,391
 70,227
 35,398
Operating income8,030 54,209 21,955 124,119 
Interest expense18,095
 23,470
 62,142
 73,504
Interest expense6,808 6,088 12,329 15,292 
Loss on extinguishment of debt461
 —
 2,907
 —
Loss on extinguishment of debt— — — 1,218 
Income (loss) before income taxes2,297
 (7,079) 5,178
 (38,106)
Income before income taxesIncome before income taxes1,222 48,121 9,626 107,609 
Provision (benefit) for income taxes728
 (3,264) 1,916
 (12,618)Provision (benefit) for income taxes(907)11,117 1,276 25,207 
Net income (loss)$1,569
 $(3,815) $3,262
 $(25,488)
Income (loss) per share: 
  
    
Net incomeNet income$2,129 $37,004 $8,350 $82,402 
Income per share:Income per share:
Basic$0.05
 $(0.12) $0.10
 $(0.83)Basic$0.09 $1.26 $0.34 $2.80 
Diluted$0.05
 $(0.12) $0.10
 $(0.83)Diluted$0.09 $1.22 $0.34 $2.74 
Weighted average common shares outstanding: 
  
    Weighted average common shares outstanding:
Basic31,292,913
 30,816,319
 31,121,177
 30,736,636
Basic23,833,100 29,438,605 24,306,524 29,382,162 
Diluted31,764,594
 30,816,319
 31,457,420
 30,736,636
Diluted23,916,269 30,212,448 24,461,836 30,072,401 
See notes to condensed consolidated financial statements.


CONN'S,2
Table of Contents
CONN’S, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(unaudited and in thousands, except for number of shares)
Additional Paid-in Capital
Common StockRetained EarningsTreasury Stock
SharesAmountSharesAmountTotal
Balance January 31, 202233,015,053 $330 $140,419 $599,215 (6,088,920)$(125,145)$614,819 
Exercise of options and vesting of restricted stock, net of withholding tax163,032 2 (2,029)— — — (2,027)
Issuance of common stock under Employee Stock Purchase Plan14,192 — 194 — — — 194 
Stock-based compensation— — 3,409 — — — 3,409 
Common stock repurchase— — — — (3,316,000)(68,225)(68,225)
Net income— — — 6,221 — — 6,221 
Balance April 30, 202233,192,277 $332 $141,993 $605,436 (9,404,920)$(193,370)$554,391 
Exercise of options and vesting of restricted stock, net of withholding tax49,931 — (83)— — — (83)
Issuance of common stock under Employee Stock Purchase Plan31,248 — 216 — — — 216 
Stock-based compensation— — 3,224 — — — 3,224 
Net income— — — 2,129 — — 2,129 
Balance July 31, 202233,273,456 $332 $145,350 $607,565 (9,404,920)$(193,370)$559,877 
Additional Paid-in Capital
Common StockRetained EarningsTreasury Stock
SharesAmountSharesAmountTotal
Balance January 31, 202132,711,623 $327 $132,108 $491,010 (3,485,441)$(66,290)$557,155 
Exercise of options and vesting of restricted stock, net of withholding tax115,159 1 (999)— — — (998)
Issuance of common stock under Employee Stock Purchase Plan18,240 — 180 — — — 180 
Stock-based compensation— — 2,039 — — — 2,039 
Net income— — — 45,398 — — 45,398 
Balance April 30, 202132,845,022 $328 $133,328 $536,408 (3,485,441)$(66,290)$603,774 
Exercise of options and vesting of restricted stock, net of withholding tax112,223 1 (229)— — — (228)
Issuance of common stock under Employee Stock Purchase Plan10,563 — 187 — — — 187 
Stock-based compensation— — 1,713 — — — 1,713 
Net income— — — 37,004 — — 37,004 
Balance July 31, 202132,967,808 $329 $134,999 $573,412 (3,485,441)$(66,290)$642,450 
See notes to condensed consolidated financial statements.

3
Table of Contents
CONN’S, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and dollars in thousands)
Nine Months Ended October 31,Six Months Ended July 31,
2017 2016 20222021
Cash flows from operating activities:   Cash flows from operating activities:
Net income (loss)$3,262
 $(25,488)
Adjustments to reconcile net income (loss) to net cash from operating activities: 
  
Net incomeNet income$8,350 $82,402 
Adjustments to reconcile net income to net cash from operating activities:Adjustments to reconcile net income to net cash from operating activities:  
Depreciation23,138
 21,209
Depreciation22,781 22,836 
Loss from retirement of leasehold improvement—
 1,980
Change in right-of-use assetChange in right-of-use asset19,409 17,005 
Amortization of debt issuance costs11,088
 19,164
Amortization of debt issuance costs2,863 3,254 
Provision for bad debts and uncollectible interest192,354
 200,349
Provision (benefit) for bad debts and uncollectible interestProvision (benefit) for bad debts and uncollectible interest61,521 8,071 
Stock-based compensation expenseStock-based compensation expense6,633 3,752 
Charges, net of creditsCharges, net of credits(1,484)— 
Deferred income taxesDeferred income taxes25 17,251 
Loss on extinguishment of debt2,907
 —
Loss on extinguishment of debt— 1,218 
Stock-based compensation expense5,899
 3,928
Charges, net of credits, for store and facility closures428
 954
Deferred income taxes(1,112) 3,309
Loss (gain) on sale/write-off of fixed assets5,636
 (259)
Loss on disposal of property and equipmentLoss on disposal of property and equipment441 104 
Tenant improvement allowances received from landlords5,072
 23,674
Tenant improvement allowances received from landlords8,048 10,864 
Change in operating assets and liabilities: 
  
Change in operating assets and liabilities:  
Customer accounts receivable(126,654) (131,943)Customer accounts receivable(5,666)24,873 
Other accounts receivable5,641
 13,281
Other accounts receivablesOther accounts receivables6,902 6,296 
Inventories(70,623) (2,568)Inventories(16,126)(27,199)
Other assets964
 1,483
Other assets(825)(11,390)
Accounts payable8,186
 32,342
Accounts payable2,987 19,633 
Accrued expenses21,371
 11,542
Accrued expenses(22,373)17,907 
Operating leasesOperating leases(28,288)(26,293)
Income taxes151
 (355)Income taxes(166)5,622 
Deferred rent, revenues and other credits(4,971) 10,409
Deferred revenues and other creditsDeferred revenues and other credits(2,206)733 
Net cash provided by operating activities82,737
 183,011
Net cash provided by operating activities62,826 176,939 
Cash flows from investing activities: 
  
Cash flows from investing activities:  
Purchase of property and equipment(11,995) (41,804)
Proceeds from sale of property—
 686
Purchases of property and equipmentPurchases of property and equipment(35,146)(19,162)
Net cash used in investing activities(11,995) (41,118)Net cash used in investing activities(35,146)(19,162)
Cash flows from financing activities: 
  
Cash flows from financing activities:  
Proceeds from issuance of asset-backed notes469,814
 1,067,850
Proceeds from issuance of asset-backed notes407,690 62,900 
Payments on asset-backed notes(816,243) (736,266)Payments on asset-backed notes(174,437)(261,356)
Changes in restricted cash balances39,599
 (87,900)
Borrowings from revolving credit facility1,257,052
 529,352
Borrowings under revolving credit facilityBorrowings under revolving credit facility662,364 740,850 
Payments on revolving credit facility(1,082,552) (858,559)Payments on revolving credit facility(811,364)(573,850)
Borrowings on warehouse facility79,940
 —
Payments on warehouse facility(23,066) —
Payment of debt issuance costs and amendment fees(8,172) (9,775)
Payments of debt issuance costs and amendment feesPayments of debt issuance costs and amendment fees(5,634)(4,231)
Proceeds from stock issued under employee benefit plans3,011
 824
Proceeds from stock issued under employee benefit plans410 367 
Tax payments associated with equity-based compensation transactionsTax payments associated with equity-based compensation transactions(2,110)(1,227)
Payment from extinguishment of debtPayment from extinguishment of debt— (141,279)
Purchase of treasury stockPurchase of treasury stock(71,696)— 
Other(949) (608)Other(429)(514)
Net cash used in financing activities(81,566) (95,082)
Net change in cash and cash equivalents(10,824) 46,811
Cash and cash equivalents, beginning of period23,566
 12,254
Cash and cash equivalents, end of period$12,742
 $59,065
Net cash (provided by) used in financing activitiesNet cash (provided by) used in financing activities4,794 (178,340)
Net change in cash, cash equivalents and restricted cashNet change in cash, cash equivalents and restricted cash32,474 (20,563)
Cash, cash equivalents and restricted cash, beginning of periodCash, cash equivalents and restricted cash, beginning of period39,637 60,260 
Cash, cash equivalents and restricted cash, end of periodCash, cash equivalents and restricted cash, end of period$72,111 $39,697 
Non-cash investing and financing activities:   Non-cash investing and financing activities:
Capital lease asset additions and related obligations$3,196
 $—
Right-of-use assets obtained in exchange for new finance lease liabilitiesRight-of-use assets obtained in exchange for new finance lease liabilities$1 $493 
Right-of-use assets obtained in exchange for new operating lease liabilitiesRight-of-use assets obtained in exchange for new operating lease liabilities$21,728 $12,415 
Property and equipment purchases not yet paid$1,021
 $1,805
Property and equipment purchases not yet paid$15,184 $5,962 
Accrual for purchase of treasury stockAccrual for purchase of treasury stock$(3,471)$— 
Supplemental cash flow data:   Supplemental cash flow data:
Cash interest paid$44,561
 $53,074
Cash interest paid$8,340 $10,931 
Cash income taxes paid (refunded), net$2,878
 $(15,624)
Cash income taxes paid, netCash income taxes paid, net$1,418 $2,334 
See notes to condensed consolidated financial statements.


CONN'S,4
Table of Contents
CONN’S, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.     Summary of Significant Accounting Policies
Business. Conn's,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 subsidiaries. Conn'sConn’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 two2 reportable segments: retail and credit. Our retail stores bear the "Conn's" or "Conn's HomePlus"“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.decisions or collection efforts. 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 statementsCondensed Consolidated Financial Statements of Conn's,Conn’s, Inc. and its wholly-owned subsidiaries, including the VIEs (as defined below)its Variable Interest Entities (“VIEs”), have been prepared by management in accordance with U.S. generally accepted accounting principles generally accepted in the United States ("GAAP"(“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 accounting principles generally accepted in the United StatesGAAP 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, 20172022 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, 2017,2022 (the “2022 Form 10-K”) filed with the United States Securities and Exchange Commission (the “SEC”) on April 4, 2017.March 29, 2022.
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. Consolidation. The consolidated financial statementsCondensed Consolidated Financial Statements include the accounts of Conn's,Conn’s, Inc. and its wholly-owned subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation. 
Variable Interest Entities. Variable interest entities ("VIEs")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.Condensed Consolidated Financial Statements.
Refer to Note 6, 5, Debt and CapitalFinancing Lease Obligations, and Note 8, 7, Variable Interest Entities, for additional information.
Use of Estimates. 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, and deferred interest, which are particularly sensitive given the size of our customer portfolio balance.
Cash and Cash Equivalents. CashEquivalents. As of July 31, 2022 and January 31, 2022, cash and cash equivalents includeincluded cash and credit card deposits in-transit, and highly liquid debt instruments purchased with a maturity of three months or less. Cashin transit. Credit card deposits in transit included in cash and cash equivalents include credit card deposits in-transit of $2.1were $7.8 million and $2.4$5.2 million as of OctoberJuly 31, 20172022 and January 31, 2017,2022, respectively. 
CONN'S,

5
CONN’S, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



Restricted Cash. The restricted cash balance as of OctoberJuly 31, 20172022 and January 31, 20172022 includes $52.8$40.6 million and $75.2$25.7 million, respectively, of cash we collected as servicer on the securitized receivables that was subsequently remitted to the VIEs and $18.3$5.2 million and $35.5$4.2 million, respectively, of cash held by the VIEs as additional collateral for the asset-backed notes.
Customer accounts receivable.  Accounts Receivable.Customer accounts receivable reported in the consolidated balance sheetCondensed 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 interestExpected lifetime losses on customer receivablesaccounts receivable are recognized upon origination through an allowance for credit losses account that is expected to be collected withindeducted from the next twelve months in current assets with the remainingcustomer account receivable balance in long-term assets on the consolidated balance sheet.and presented net. Customer accounts receivable include 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"“re-age” a portion of our customer accounts, which involves modifying the payment terms to defer a portion of the cash payments due. Our re-aging of customer accounts does not change the interest rate or the total principal amount due from the customer and typically does not reduce the monthly contractual payments. To a much lesser extent, we may provide the customer the ability to re-agerefinance their obligation by refinancing the account, which typically 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"(“TDR” or "Restructured Accounts"“Restructured Accounts”).
Interest incomeIncome on customer accounts receivable.  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. We reserve for interest that is more than 60 days past due. 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. Our calculation of interest income for customers with similar financing arrangements for which the timing and amount of prepayments can be reasonably estimated includes an estimate of the benefit from future prepayments based on our historical experience. At OctoberJuly 31, 20172022 and January 31, 2017,2022, there was $13.0$8.3 million and $13.7$8.6 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 12-and 18-montha 12-month no-interest option programs.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.
No-interest option finance programs with terms greater than 12 months are discounted to their present value at origination, resulting in a reduction in sales and customer receivables, and the discount amount is amortized into finance charges and other revenues over the term of the contract.
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 beare applied to principal and reduce the amountbalance of the loan. At OctoberJuly 31, 20172022 and January 31, 2017,2022, the carrying value of customer receivables carriedaccounts receivable in non-accrual status were $21.4was $7.0 million and $22.9$5.9 million, respectively. At OctoberJuly 31, 20172022 and January 31, 2017,2022, the carrying value of customer receivablesaccounts receivable that were past due 90 days or more and still accruing interest totaled $105.2$82.1 million and $124.0$84.1 million, respectively. At OctoberJuly 31, 20172022 and January 31, 2017,2022, the carrying value of customer receivablesaccounts receivable in a bankruptcy status that arewere less than 60 days past due of $11.7$6.5 million and $19.5$5.5 million, respectively, arewere included within the customer receivables balance carried in non-accrual status balance.status.
Allowance for doubtful accounts.Doubtful Accounts. The determination of the amount of the allowance for bad debtscredit losses 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.credit losses. General economic conditions, changes to state or federal regulations and a variety of other factors that affect the ability of borrowers’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,credit losses, including estimated uncollectible interest, to cover probable and estimableexpected credit losses on our customer accounts receivable resulting from the failure of customers to make contractual payments. Our customer accounts receivable 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. The allowance for credit losses is measured on a collective (pool) basis where similar risk characteristics exist. The allowance for credit losses is determined for each pool and added to the pool’s carrying amount to establish a new amortized cost basis.
CONN'S,

6
CONN’S, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



We record an allowance for doubtful accountsuse a risk-based, pool-level segmentation framework to calculate the expected loss rate. This framework is based 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.history. 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 and repair service agreement (“RSA”) 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 the quality of the loan review system, changes in the value of underlying collateral, 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 debtsconsider forward-looking economic forecasts based on a measurestatistical analysis of economic factors (specifically, forecast of unemployment rates over the dispersion of historical charge-off rates.  reasonable and supportable forecasting period). To the extent that situations and trends arise which are not captured in our model, management will layer on additional qualitative adjustments.
Pursuant to ASC 326 requirements, the Company uses a 24-month reasonable and supportable forecast period for the customer accounts receivable portfolio. We determine allowances for those accounts that are TDRestimate losses beyond the 24-month forecast period based on the discounted present value of cash flows expected to be collectedhistoric loss rates experienced over the life of those accounts based primarily onour historic loan portfolio by loan pool type. We revisit our measurement methodology and assumption annually, or more frequently if circumstances warrant.
As of July 31, 2022 and January 31, 2022, the performancebalance 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 lossdoubtful accounts and uncollectible interest for non-TDR customer receivables was $144.2 million and $165.0 million, respectively. As of July 31, 2022 and January 31, 2022, the amount included in the allowance for doubtful accounts associated with principal and interest on those accounts.TDR accounts was $35.6 million and $44.0 million, respectively.
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 were $5.9 millionRevolving Credit Facility, as defined in Note 5, Debt and $5.7 million as of October 31, 2017 and January 31, 2017, respectively, and wereFinancing Lease Obligations, are included in other assets on our consolidated balance sheet.Condensed Consolidated Balance Sheet and were $4.3 million and $5.1 million as of July 31, 2022 and January 31, 2022, respectively.
Loss on Extinguishment. During the six months ended July 31, 2021, we incurred a loss of $1.0 million related to the retirement of the remaining $141.2 million aggregate principal amount of our 7.25% Senior Notes due 2022 and a loss of $0.2 million related to the amendment of our Fifth Amended and Restated Loan and Security Agreement.
Income Taxes. For the ninesix months ended OctoberJuly 31, 20172022 and 20162021, we utilized the estimated annual effective tax rate based on our estimated fiscal year 20182023 and 20172022 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.
For the six months ended July 31, 2022 and 2021, the effective tax rate was 13.3% and 23.4%, respectively. The primary factor affecting the decrease in our effective tax rate for the six months ended July 31, 2022 was the impact of state taxes and compensation expense.
Stock-based compensation. Compensation. During the six months ended July 31, 2022, the Company granted performance stock awards (“PSUs”) and restricted stock awards (“RSUs”). The awards had a combined aggregate grant date fair value of $15.8 million. The PSUs will vest in fiscal year 2025, if at all, upon certification by the Compensation Committee of the Board of Directors of satisfaction of certain total stockholder return performance conditions over the three fiscal years commencing with fiscal year 2023. The RSUs will vest ratably, over periods of three years from the date of grant.
Stock-based compensation expense is recorded, net of estimatedactual 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. For grants of performance-based restricted stock units, the fair value is the market value of our stock at the date of issuance adjusted for the market condition using a Monte Carlo model.

7
CONN’S, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 Three Months Ended 
 October 31,		 Nine Months Ended 
 October 31,
 2017 2016 2017 2016
Restricted stock awards ("RSUs") (1)
2,740
 14,502
 646,033
 343,369
Performance stock awards ("PSUs") (2)
—
 —
 501,012
 131,759
Total stock awards granted2,740
 14,502
 1,147,045
 475,128
Aggregate grant date fair value (in thousands)$50
 $96
 $14,596
 $5,046
The following table sets forth the RSUs and PSUs granted during the three and six months ended July 31, 2022 and 2021: 
Three Months Ended
July 31,		Six Months Ended
July 31,
2022202120222021
RSUs (1)
82,206 41,087 476,586 381,731 
PSUs (2)
— — 176,509 152,349 
Total stock awards granted82,206 41,087 653,095 534,080 
Aggregate grant date fair value (in thousands)$1,071 $960 $15,762 $9,250 
(1)The majority of the RSUs issued during the ninethree and six months ended OctoberJuly 31, 2017 will2022 and 2021 are scheduled to vest if at all,ratably over periods of three years to fivefour years from the date of grant.grant with the exception of RSU grants issued to the Board of Directors.
(2)The majority ofweighted-average assumptions used in the Monte Carlo model for the PSUs issuedgranted during the ninesix months ended OctoberJuly 31, 2017 will vest, if at all, upon2022 included expected volatility of 78.0%-80.0%, an expected term of 3 years and risk-free interest rate of 1.39%-2.58%.  No dividend yield was included in the certification, after fiscal year 2020, byweighted-average assumptions for the compensation committeePSUs granted during the six months ended July 31, 2022. The weighted-average assumptions used in the Monte Carlo model for the PSUs granted during the six months ended July 31, 2021 included expected volatility of 83.0%, an expected term of 3 years and risk-free interest rate of 0.17%. No dividend yield was included in the satisfaction ofweighted average assumptions for the annual and cumulative Earnings Before Interest, Taxes, Depreciation and Amortization performance conditions overPSUs granted during the three fiscal years commencing with fiscal year 2018.six months ended July 31, 2021.
For the three months ended OctoberJuly 31, 20172022 and 2016,2021, stock-based compensation expense was $1.7$3.2 million and $1.0$1.7 million, respectively. For the ninesix months ended OctoberJuly 31, 20172022 and 2016,2021, stock-based compensation expense was $5.9$6.6 million and $3.9 million, respectively, inclusive of severance related stock-based compensation expense of $0.6 million and $0.2$3.8 million, respectively.

CONN'S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Earnings per Share. Share. Basic earnings per share for a particular period is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding during the period. Diluted earnings per share includes the dilutive effects of any stock options, RSUs and restricted stock units granted,PSUs, which isare calculated using the treasury-stock method. The following table sets forth the shares outstanding for the earnings per share calculations: 
Three Months Ended
July 31,		Six Months Ended
July 31,
Three Months Ended 
 October 31,		 Nine Months Ended 
 October 31,		2022202120222021
(in thousands)2017 2016 2017 2016
Weighted-average common shares outstanding - Basic31,292,913
 30,816,319
 31,121,177
 30,736,636
Weighted-average common shares outstanding - Basic23,833,100 29,438,605 24,306,524 29,382,162 
Dilutive effect of stock options and restricted stock units471,681
 —
 336,243
 —
Dilutive effect of stock options, PSUs and RSUsDilutive effect of stock options, PSUs and RSUs83,169 773,843 155,312 690,239 
Weighted-average common shares outstanding - Diluted31,764,594
 30,816,319
 31,457,420
 30,736,636
Weighted-average common shares outstanding - Diluted23,916,269 30,212,448 24,461,836 30,072,401 
For the three months ended OctoberJuly 31, 20172022 and 20162021, the weighted-averageweighted average number of stock options, RSUs and restricted stock unitsPSUs not included in the calculation due to their anti-dilutive effect, was 0.2 million1,548,376 and 1.2 million,656,987, respectively. For the ninesix months ended OctoberJuly 31, 20172022 and 2016,2021, the weighted-averageweighted average number of stock options, RSUs and restricted stock unitsPSUs not included in the calculation due to their anti-dilutive effect, was 0.4 million1,234,872 and 1.2 million,731,647, respectively.
Fair Value of Financial Instruments.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

8
CONN’S, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 held by the consolidated VIEs and accounts payable approximate their carrying amounts because of the short maturity of these instruments. The fair value of customer accounts receivables,receivable, determined using a Level 3 discounted cash flow analysis, approximates their carrying amount, which includesvalue, net of the allowance for doubtful accounts. The fair value of our revolving credit facilityRevolving Credit Facility approximates carrying value based on the current borrowing rate for similar types of borrowing arrangements. At OctoberJuly 31, 2017,2022, the fair value of the Senior Notes outstanding, whichasset backed notes was determined using Level 1 inputs, was $225.3$595.1 million as compared to the carrying value of $227.0$604.0 million excluding the impact of the related discount. At October 31, 2017, the fair value of the asset-backed notes approximates their carrying value and was determined using Level 2 inputs based on inactive trading activity.
CONN'S, INC. AND SUBSIDIARIESDeferred Revenue. Deferred revenue related to contracts with customers consists of deferred customer deposits and deferred RSA administration fees. During the six months ended July 31, 2022, we recognized $5.0 million of revenue for customer deposits deferred as of January 31, 2022. During the six months ended July 31, 2022, we recognized $1.8 million of revenue for RSA administrative fees deferred as of January 31, 2022.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Recent Accounting Pronouncements Adopted.
Simplifying the Accounting for Income Taxes.In March 2016,December 2019, the FASB issued ASU 2016-09, Compensation—Stock Compensation2019-12, Income Taxes (Topic 718)740): ImprovementsSimplifying the Accounting for Income Taxes, an update intended to Employee Share-Based Payment Accounting, which modifies thesimplify various aspects related to accounting for excess tax benefitsincome taxes. This guidance removes certain exceptions to the general principles in Topic 740 and tax deficiencies associated with share-based payments, thealso clarifies and amends existing guidance to improve consistent application. This accounting for forfeitures, and the classification of certain items on the statement of cash flows. ASU 2016-09 eliminates the requirement to recognize excess tax benefits in additional paid-in capital ("APIC"), and the requirement to evaluate tax deficiencies for APIC or income tax expense classification, and provides for these benefits or deficiencies to be recorded as an income tax expense or benefit in the income statement. With these changes, tax-related cash flows resulting from share-based payments are classified as operating activities as opposed to financing. The standardstandards update became effective for us in the first quarter of fiscal year 2018.2022. The amendment requiring the recognition of excess tax benefits and deficiencies as income tax benefit or expense in the income statement as opposed to being recognized as additional paid-in-capital was applied prospectively and the impact was not material. The Company retrospectively adopted the amendments requiring the classification of excess tax benefits and deficiencies with other income tax cash flows as operating activities and cash paid when directly withholding shares as financing activities in the accompanying consolidated statements of cash flows; the impact was not material. The Company has elected to continue its current practice of estimating the number of awards expected to vest in determining the amount of compensation cost to be recognized related to share based payment transactions.
In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. ASU 2015-11 requires that inventory that has historically been measured using first-in, first-out or average cost method be measured at the lower of cost and net realizable value. The update requires prospective application and became effective for us in the first quarter of fiscal year 2018. The adoption of this ASU did not have a material impact on our consolidated financial statements.
Recent Accounting Pronouncements Yet Toto Be Adopted.
Reference Rate Reform on Financial Reporting. In May 2014,March 2020, the FASB issued ASU 2014-09, Revenue from Contracts with Customers2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, whichan update that provides a single comprehensive accounting standardoptional expedients and exceptions for revenue recognition forapplying GAAP to contracts, with customershedging relationships, and supersedes current guidance. Upon adoption of ASU 2014-09, entitiesother transactions affected by reference rate reform if certain criteria 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.met. In August 2015,January 2021, the FASB issued ASU 2015-14, Revenue from Contracts with Customers: Deferral of Effective Date2021-01, Reference Rate Reform (Topic 848), which defers the effective date of ASU 2014-09 by one year and allows early adoption on a limited basis. The FASB has also issued ASU 2016-08, Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net); ASU 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing; ASU 2016-11, Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 PursuantScope, 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 scope of the guidance and reduce potential diversity in ASU 2014-09. These ASUs willpractice. The amendments in this update apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be effective for us beginning in the first quarterdiscontinued because of fiscal year 2019reference rate reform. We expect to adopt ASC 2020-04 and will result in retrospective application, either in the form of recasting allASC 2021-01 upon transition from LIBOR, prior periods presented or a cumulative adjustment to equity in the period of adoption. Based on our preliminary assessment, weDecember 31, 2022. We do not expect the adoption of these ASUs to have a material impact on our consolidated financial statements other than the expected additional disclosure requirements.statements.
Financial Instruments - Troubled Debt Restructurings and Vintage Disclosures. In February 2016,March 2022, the FASB issued ASU 2016-02, Leases2022-02, Financial Instruments - Credit Losses (Topic 842)326): Troubled Debt Restructurings and Vintage Disclosures, which will change how lessees account an update that eliminate the accounting guidance for leases. For most leases,troubled debt restructurings (TDRs) by creditors in ASC 310-40 while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a liability willborrower is experiencing financial difficulty. Specifically, rather than applying the recognition and measurement guidance for TDRs, an entity must apply the loan refinancing and restructuring guidance in ASC 310-20 to determine whether a modification results in a new loan or a continuation of an existing loan. The amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, and should be recorded on the balance sheet based on the present value of future lease obligationsapplied prospectively, 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 requiredan option to be accounted for as financing arrangements similar to how we currently account for capital leases. On transition, we will recognize and measure leases at the beginning of the earliest period presented usingapply a modified retrospective approach. The final standard will become effectivetransition approach for us beginning inthe recognition and measurement of TDRs. We expect to adopt ASU 2022-02 during the first quarter of fiscal year 2020. Based on our preliminary assessment, we believe the adoption of this ASU will have a material impact on our financial statements as we will be required to report additional leases on our consolidated balance sheet. We are the lessee under various lease agreements for our retail stores and equipment that are currently accounted for as operating leases as discussed in Note 6, Leases, of our audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2017.
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 should 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 earlier adoption is permitted beginning in the first quarter of fiscal year 2020.2024. We are currently assessing the impact this ASU will have on our consolidated financial statements.

CONN'S,

9
CONN’S, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force). ASU 2016-15 clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows to reduce diversity in practice. Among other things, debt prepayment or debt extinguishment costs will be presented as cash outflows for financing activities on the statement of cash flow. The standard will become effective for us in the first quarter of fiscal year 2019 and early adoption is permitted. The adoption of this ASU is not expected to have a significant impact on our consolidated financial statements.
In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory, which eliminates the exception that prohibits the recognition of current and deferred income tax effects for intra-entity transfers of assets other than inventory until the asset has been sold to an outside party. The standard will become effective for us in the first quarter of fiscal year 2019 and early adoption is permitted. The application of the amendments will require the use of a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. We are evaluating the standard and the impact it will have on our consolidated financial statements.
In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force). ASU 2016-18 requires that the statement of cash flows provides the change in the total of cash, cash equivalents, and restricted cash or restricted cash equivalents. We hold restricted cash related to our asset-backed security transactions. The adoption of this standard will result in us no longer showing the changes in restricted cash balances as a component of cash flows from financing activities but instead include the balances of both current and long-term restricted cash with cash and cash equivalents in total cash, cash equivalents and restricted cash for the beginning and end of the periods presented. The ASU will become effective for us in the first quarter of fiscal year 2019, and early adoption is permitted.

2.    Customer Accounts Receivable
Customer accounts receivable consisted of the following:
(in thousands)July 31,
2022		January 31,
2022
Customer accounts receivable (1)
$1,042,777 $1,130,395 
Deferred fees and origination costs, net(12,347)(13,503)
Allowance for no-interest option credit programs(17,704)(19,654)
Allowance for uncollectible interest(14,184)(15,124)
Carrying value of customer accounts receivable998,542 1,082,114 
Allowance for credit losses (2)
(165,591)(193,896)
Carrying value of customer accounts receivable, net of allowance for credit losses832,951 888,218 
  Short-term portion of customer accounts receivable, net(434,824)(455,787)
Long-term customer accounts receivable, net$398,127 $432,431 
Carrying Value
(in thousands)July 31,
2022		January 31,
2022
Customer accounts receivable 60+ days past due (3)
$109,928 $112,858 
Re-aged customer accounts receivable (4)
160,552 181,996 
Restructured customer accounts receivable (5)
78,600 99,557 
(1)As of July 31, 2022 and January 31, 2022, the customer accounts receivable balance included $21.2 million and $22.3 million, respectively, in interest receivable. Net of the allowance for uncollectible interest, interest receivable outstanding as of July 31, 2022 and January 31, 2022 was $7.0 million and $7.2 million, respectively.
(2)Our current methodology to estimate expected credit losses utilized macroeconomic forecasts as of July 31, 2022 and January 31, 2022, which incorporated the continued estimated impact of the global COVID-19 outbreak on the U.S. economy. Our forecast utilized economic projections from a major rating service reflecting an increase in unemployment rates.
(3)As of July 31, 2022 and January 31, 2022, the carrying value of customer accounts receivable past due one day or greater was $298.2 million and $299.0 million, respectively. These amounts include the 60+ days past due balances shown above.
(4)The re-aged carrying value as of July 31, 2022 and January 31, 2022 includes $44.8 million and $48.6 million, respectively, in carrying value that are both 60+ days past due and re-aged.
(5)The restructured carrying value as of July 31, 2022 and January 31, 2022 includes $22.0 million and $29.0 million, respectively, in carrying value that are both 60+ days past due and restructured.

10
 Total Outstanding Balance
 Customer Accounts Receivable 
60 Days Past Due (1)
 
Re-aged (1)
(in thousands)October 31,
2017		 January 31,
2017		 
October 31, 2017 (2)
 January 31,
2017		 
October 31, 2017 (3)
 January 31,
2017
Customer accounts receivable$1,341,939
 $1,417,581
 $110,382
 $127,747
 $208,047
 $111,585
Restructured accounts146,967
 138,858
 37,484
 38,010
 146,967
 138,858
Total customer portfolio balance1,488,906
 1,556,439
 $147,866
 $165,757
 $355,014
 $250,443
Allowance for uncollectible accounts(202,906) (210,175)        
Allowances for no-interest option credit programs(19,616) (21,207)        
Deferred fees and origination costs, net(14,019) (6,991)        
Total customer accounts receivable, net1,252,365
 1,318,066
        
Short-term portion of customer accounts receivable, net(635,700) (702,162)        
Long-term portion of customer accounts receivable, net$616,665
 $615,904
        
Securitized receivables held by the VIEs$712,727
 $1,015,837
 $99,763
 $156,344
 $246,333
 $238,375
Receivables not held by the VIEs776,179
 540,602
 48,103
 9,413
 108,681
 12,068
Total customer portfolio balance$1,488,906
 $1,556,439
 $147,866
 $165,757
 $355,014
 $250,443
(1)Due to the fact that an account can become past due after having been re-aged, accounts could be represented as both past due and re-aged. As of October 31, 2017 and January 31, 2017, the amounts included within both 60 days past due and re-aged were $64.8 million and $66.7 million, respectively. As of October 31, 2017 and January 31, 2017, the total customer portfolio balance past due one day or greater was $394.5 million and $406.1 million, respectively. These amounts include the 60 days past due balances shown.
CONN'S,CONN’S, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



The allowance for credit losses included in the current and long-term portion of customer accounts receivable, net as shown in the Condensed Consolidated Balance Sheet were as follows:
(2)The balance of accounts 60 days past due as of October 31, 2017 reflects the impact of first time re-ages related to customers within FEMA-designated Hurricane Harvey disaster areas.
(3)The re-aged receivable balance as of October 31, 2017 includes $71.8 million in first time re-ages related to customers within FEMA-designated Hurricane Harvey disaster areas.
(in thousands)July 31, 2022January 31, 2022
Customer accounts receivable - current$528,420 $564,825 
Allowance for credit losses for customer accounts receivable - current(93,596)(109,038)
Customer accounts receivable, net of allowances434,824 455,787 
Customer accounts receivable - non current484,306 532,413 
Allowance for credit losses for customer accounts receivable - non current(86,179)(99,982)
Long-term portion of customer accounts receivable, net of allowances398,127 432,431 
Total customer accounts receivable, net$832,951 $888,218 
The following presents the activity in theour allowance for doubtful accountscredit losses and uncollectible interest for customer receivables: 
 Six Months Ended July 31, 2022Six Months Ended July 31, 2021
(in thousands)Customer
Accounts
Receivable		 
Restructured
Accounts		 
 
Total		Customer
Accounts
Receivable		 
Restructured
Accounts		 
 
Total
Allowance at beginning of period$165,044 $43,976 $209,020 $219,740 $78,297 $298,037 
Provision (benefit) for credit loss expense (1)
45,326 15,607 60,933 (5,422)13,333 7,911 
Principal charge-offs (2)
(65,919)(23,882)(89,801)(61,323)(38,709)(100,032)
Interest charge-offs(15,887)(5,756)(21,643)(16,997)(10,729)(27,726)
Recoveries (2)
15,610 5,656 21,266 14,657 9,252 23,909 
Allowance at end of period$144,174 $35,601 $179,775 $150,655 $51,444 $202,099 
Average total customer portfolio balance$982,639 $92,262 $1,074,901 $982,186 $159,894 $1,142,080 
 Nine Months Ended October 31, 2017 Nine Months Ended October 31, 2016
(in thousands)
Customer
Accounts
Receivable
 
 
Restructured
Accounts
 
 
 
Total
 
Customer
Accounts
Receivable
 
 
Restructured
Accounts
 
 
 
Total
Allowance at beginning of period$158,992
 $51,183
 $210,175
 $149,226
 $41,764
 $190,990
Provision (1)
139,406
 52,948
 192,354
 156,063
 44,286
 200,349
Principal charge-offs (2)
(133,033) (44,657) (177,690) (132,028) (31,802) (163,830)
Interest charge-offs(21,884) (7,346) (29,230) (22,400) (5,405) (27,805)
Recoveries (2)
5,463
 1,834
 7,297
 3,727
 899
 4,626
Allowance at end of period$148,944
 $53,962
 $202,906
 $154,588
 $49,742
 $204,330
Average total customer portfolio balance$1,352,137
 $141,155
 $1,493,292
 $1,422,473
 $126,493
 $1,548,966
(1)Includes provision for uncollectible interest, which is included in finance charges and other revenues.
(2)Charge-offs include the principal amount of losses (excluding accrued and unpaid interest). Recoveries include principal collections of previously charged-off balances. Net charge-offs are calculated as the net of principal charge-offs and recoveries.
(1)Includes provision for uncollectible interest, which is included in finance charges and other revenues, and changes in expected future recoveries.
3.     Accrual(2)Charge-offs include the principal amount of losses (excluding accrued and unpaid interest). Recoveries include the principal amount collected during the period for Storepreviously charged-off balances. Net charge-offs are calculated as the net of principal charge-offs and Facility Closuresrecoveries.
We have closed or relocated retail and facility locations that did not perform atmanage our customer accounts receivable portfolio using delinquency as a level expected for mature store locations or that did not align with our long-term retail objectives. Certain of the closed or relocated stores and facilities had non-cancelable lease agreements, resulting in the accrual of the present value of the remaining lease payments and estimated related occupancy obligations, net of estimated sublease income. Adjustments to these projections for changes in estimated marketing times and sublease rates, as well as other revisions, are made to the obligation as further information related to the actual terms and costs become available.
key credit quality indicator. The following table presents detailthe delinquency distribution of the activity in the accrual for store and facility closures: carrying value of customer accounts receivable by year of origination. The information is presented as of July 31, 2022:
(in thousands)
Delinquency Bucket2022202120202019PriorTotal% of Total
Current$298,380 $292,662 $87,626 $18,858 $2,767 $700,293 70.1 %
1-3035,983 69,396 25,441 9,927 2,145 142,892 14.3 %
31-609,571 22,902 8,234 3,913 809 45,429 4.6 %
61-905,130 13,958 5,220 2,650 629 27,587 2.8 %
91+7,644 45,783 17,569 9,126 2,219 82,341 8.2 %
Total$356,708 $444,701 $144,090 $44,474 $8,569 $998,542 100.0 %


11
 Nine Months Ended 
 October 31,
(in thousands)2017 2016
Balance at beginning of period$1,874
 $1,866
Accrual for additional closures1,314
 954
Adjustments16
 (74)
Cash payments, net of sublease income(2,010) (767)
Balance at end of period1,194
 1,979
Current portion, included in accrued expenses(170) (923)
Long-term portion, included in other long-term liabilities$1,024
 $1,056
CONN'S,CONN’S, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



4.3.     Charges and Credits
Charges and credits consisted of the following:
Three Months Ended
July 31,		Six Months Ended
July 31,
(in thousands)2022202120222021
Lease termination$(1,484)$— $(1,484)$— 
Total charges and credits$(1,484)$— $(1,484)$— 
 Three Months Ended 
 October 31,		 Nine Months Ended 
 October 31,
(in thousands)2017 2016 2017 2016
Store and facility closure costs$—
 $954
 $1,349
 $954
Impairments from disposals—
 595
 —
 1,980
Legal and professional fees related to the exploration of strategic alternatives and securities-related litigation—
 158
 34
 747
Employee severance—
 280
 1,317
 1,493
Indirect tax audit reserve—
 —
 2,595
 —
Write-off of capitalized software costs5,861
 —
 5,861
 —
Executive management transition costs—
 —
 —
 234
 $5,861
 $1,987
 $11,156
 $5,408

During the three months ended OctoberJuly 31, 2017,2022, we incurredrecognized 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$1.5 million gain related to the implementationtermination 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 costslease 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 three and nine months ended October 31, 2016, we incurred costs associated withsingle store and facility closures, impairments from disposals, legal and professional fees related to our securities-related litigation and severance and transition costs due to changes in the executive management team. The impairments from disposals included the write-off of leasehold improvements for one store we relocated prior to the end of the useful life of the leasehold improvements and incurred costs for a terminated store project prior to starting construction.location.

5.
4.     Finance Charges and Other Revenues
Finance charges and other revenues consisted of the following:
Three Months Ended 
 October 31,		 Nine Months Ended 
 October 31,		Three Months Ended
July 31,		Six Months Ended
July 31,
(in thousands)2017 2016 2017 2016(in thousands)2022202120222021
Interest income and fees$74,144
 $58,404
 $210,765
 $173,527
Interest income and fees$61,760 $65,003 $124,474 $132,682 
Insurance income7,125
 9,999
 27,107
 30,674
Insurance income5,087 6,371 9,659 10,889 
Other revenues95
 337
 267
 1,268
Other revenues273 224 544 433 
$81,364
 $68,740
 $238,139
 $205,469
Total finance charges and other revenuesTotal finance charges and other revenues$67,120 $71,598 $134,677 $144,004 
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 at the time we sell thethat are recognized when coverage is sold and we may receive retrospective commissions, which are additional commissionsincome paid by the insurance carrier if insurance claims are less than earned premiums.
During the three months ended OctoberJuly 31, 20172022 and 2016,2021, interest income and fees reflected provisions for uncollectible interest of $10.5$10.3 million and $11.0$7.4 million, andrespectively. The amounts included in interest income and fees related to TDR accounts of $4.8for the three months ended July 31, 2022 and 2021 were $3.8 million and $4.4$6.7 million, respectively. During the ninesix months ended OctoberJuly 31, 20172022 and 2016,2021, interest income and fees reflected provisions for uncollectible interest of $31.0$19.6 million and $31.2$14.9 million, andrespectively. The amounts included in interest income and fees related to TDR accounts of $14.0for the six months ended July 31, 2022 and 2021 were $7.9 million and $12.7$14.2 million, respectively.

CONN'S,

12
CONN’S, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



6.5.     Debt and CapitalFinancing Lease Obligations
Debt and capitalfinancing lease obligations consisted of the following:
(in thousands)July 31,
2022		January 31,
2022
Revolving Credit Facility$— $149,000 
2020-A VIE Asset-backed Class A Notes— 9,184 
2020-A VIE Asset-backed Class B Notes— 18,342 
2020-A VIE Asset-backed Class C Notes— 17,695 
2021-A VIE Asset-backed Class A Notes66,378 195,595 
2021-A VIE Asset-backed Class B Notes66,090 66,090 
2021-A VIE Asset-backed Class C Notes63,890 63,890 
2022-A VIE Asset-backed Class A Notes275,600 — 
2022-A VIE Asset-backed Class B Notes132,090 — 
Financing lease obligations5,666 6,115 
Total debt and financing lease obligations609,714 525,911 
Less:
Deferred debt issuance costs(6,393)(2,873)
Current maturities of long-term debt and financing lease obligations(909)(889)
Long-term debt and financing lease obligations$602,412 $522,149 
(in thousands)October 31,
2017		 January 31,
2017
Revolving credit facility$352,000
 $177,500
Senior Notes227,000
 227,000
2015 VIE Asset-backed Class A notes—
 12,166
2015 VIE Asset-backed Class B notes—
 165,900
2016-A VIE Asset-backed Class A notes—
 64,732
2016-A VIE Asset-backed Class B notes—
 70,510
2016-A VIE Asset-backed Class C notes—
 70,510
2016-B VIE Asset-backed Class A notes8,563
 256,513
2016-B VIE Asset-backed Class B notes111,960
 111,960
2017-A VIE Asset-backed Class A notes129,583
 —
2017-A VIE Asset-backed Class B notes106,270
 —
2017-A VIE Asset-backed Class C notes50,340
 —
2017 Warehouse Class A Notes56,874
 —
Capital lease obligations5,213
 2,393
Total debt and capital lease obligations1,047,803
 1,159,184
Less:   
Discount on debt(2,668) (3,089)
Deferred debt issuance costs(6,206) (10,853)
Current maturities of long-term debt and capital lease obligations(65,651) (849)
Long-term debt and capital lease obligations$973,278
 $1,144,393
Senior Notes. On July 1, 2014, we issued $250.0 million of the unsecured Senior Notes due July 2022 bearing interest at 7.25% (the "Senior Notes"), pursuant to an indenture dated July 1, 2014 (the "Indenture"), among Conn's, Inc., its subsidiary guarantors (the "Guarantors") and U.S. Bank National Association, as trustee. The effective interest rate of the Senior Notes after giving effect to the discount and issuance costs is 7.8%.
The Indenture restricts the Company's and certain of its subsidiaries' ability to: (i) incur indebtedness; (ii) pay dividends or make other distributions in respect of, or repurchase or redeem, our capital stock ("restricted payments"); (iii) prepay, redeem or repurchase debt that is junior in right of payment to the notes; (iv) make loans and certain investments; (v) sell assets; (vi) incur liens; (vii) enter into transactions with affiliates; and (viii) consolidate, merge or sell all or substantially all of our assets. These covenants are subject to a number of important exceptions and qualifications. Specifically, limitations on restricted payments are only effective if one or more of the following occurred: (1) a default were to exist under the Indenture, (2) we could not satisfy a debt incurrence test, and (3) the aggregate amount of restricted payments were to exceed an amount tied to consolidated net income. These limitations, however, are subject to two exceptions: (1) an exception that permits the payment of up to $375.0 million in restricted payments, and (2) an exception that permits restricted payments regardless of dollar amount so long as, after giving pro forma effect to the dividends and other restricted payments, we would have had a leverage ratio, as defined under the Indenture, of less than or equal to 2.50 to 1.0. As a result of these exceptions, as of October 31, 2017, $179.2 million would have been free from the distribution restriction. However, as a result of the revolving credit facility distribution restrictions, which are further described below, we were restricted from making a distribution as of October 31, 2017. 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.
CONN'S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Asset-backed Notes.During fiscal years 2018, 2017 and 2016, From time to time, we securitizedsecuritize customer accounts receivables by transferring the receivables to various bankruptcy-remote VIEs. In turn, the VIEs issuedissue 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 agreementsRSAs 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.1933. 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 at originationoutstanding as of July 31, 2022 consisted of the following:
(dollars in thousands)
Asset-Backed NotesOriginal Principal Amount
Original Net Proceeds (1)
Current Principal AmountIssuance DateMaturity DateContractual Interest Rate
Effective Interest Rate (2)
2021-A Class A Notes$247,830 $246,152 $66,378 11/23/20215/15/20261.05%3.15%
2021-A Class B Notes66,090 65,635 66,090 11/23/20215/15/20262.87%3.53%
2021-A Class C Notes63,890 63,450 63,890 11/23/20215/15/20264.59%5.21%
2022-A Class A Notes275,600 273,731 275,600 7/21/202212/15/20265.87%8.57%
2022-A Class B Notes132,090 129,050 132,090 7/21/202212/15/20269.52%10.40%
Total$785,500 $778,018 $604,048 
Asset-Backed Notes Original Principal Amount 
Net Proceeds(1)
 Issuance Date Maturity Date Contractual Interest Rate 
Effective Interest Rate(2)
2016-B Class A Notes 391,840
 380,033
 10/6/2016 10/15/2018 3.73% 5.47%
2016-B Class B Notes 111,960
 108,586
 10/6/2016 3/15/2019 7.34% 8.03%
2017-A Class A Notes 313,220
 304,451
 4/19/2017 7/15/2019 2.73% 4.96%
2017-A Class B Notes 106,270
 103,300
 4/19/2017 2/15/2020 5.11% 5.83%
2017-A Class C Notes 50,340
 48,919
 4/19/2017 10/15/2021 7.40% 7.91%
2017 Warehouse Class A Notes

 79,940
 78,777
 8/15/2017 8/15/2018 
1M CP + 4% (3)
 7.02%
Total $1,053,570
 $1,024,066
        
(1)(1)After giving effect to debt issuance costs and restricted cash held by the VIEs.
(2)For the nine months ended October 31, 2017, and inclusive of changes in timing of actual and expected cash flows.
(3)The rate on the 2017 Warehouse Class A Notes is defined as the one-month commercial paper rate, representing the purchaser's commercial paper cost, plus a 4% fixed margin.
On May 15, 2017, the Company completed the redemption of its Series 2015-A Class B Notes (collectively, the "2015-A Redeemed Notes") at an aggregate redemption price of $114.1 million (which was equal to the entire outstanding principal of, plus accrued interest on, the 2015-A Redeemed Notes). The net funds used to call the notes was $78.8 million, which is equal to the redemption price less adjustments of $35.3 million for funds held in reserve and collection accounts in accordance with the terms of the applicable indenture governing the 2015-A Redeemed Notes. The net funds used to call the 2015-A Redeemed Notes of $78.8 million was transferred from the Guarantors to the Non-Guarantor Subsidiary in exchange for the underlying securities held as collateral on the 2015-A Redeemed Notes with carrying value of $126.3 million as of April 30, 2017. In connection with the early redemption of the 2015-A Redeemed Notes, we wrote-off $2.1 million of debt issuance costs.

On August 15, 2017, affiliates of the Company closed on a $79.9 million financing under a receivables warehouse financing transaction entered into on August 8, 2017 (the "Warehouse Financing"). The net proceeds of the Warehouse Financing were used to prepay in full the Series 2016-A Class B Notes and Class C Notes (collectively, the "2016-A Redeemed Notes"), which had been issued by Conn’s Receivables Funding 2016-A, LLC under a securitization transaction entered into on March 17, 2016, that were still outstanding as of August 15, 2017.

On August 15, 2017, the Company completed the redemption of the 2016-A Redeemed Notes at an aggregate redemption price of $102.9 million (which was equal to the entire outstanding principal of, plus accrued interest and the call premiums on, the 2016-A Redeemed Notes). The net funds used to call the notes was $78.6 million, which is equal to the redemption price less adjustments of $24.3 million for funds held in reserve and collection accounts in accordance with the terms of the applicable indenture governing the 2016-A Redeemed Notes. The difference between the net proceeds of the Warehouse Financing and the carrying value of the
CONN'S,

13
CONN’S, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



2016-A Redeemed Notes at redemption was used to fund fees, expenses(2)For the six months ended July 31, 2022, and a reserve account related to the Warehouse facility. In connection with the early redemptioninclusive of the 2016-A Redeemed Notes, we wrote-off $0.5impact of changes in timing of actual and expected cash flows.
On July 21, 2022, the Company completed the issuance and sale of approximately $407.7 million in aggregate principal amount of asset-backed notes secured by the transferred customer accounts receivables and restricted cash held by a consolidated VIE, which resulted in net proceeds to us of approximately $402.8 million, net of debt issuance costs. 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 December 15, 2026 and consist of $275.6 million of 5.87% Asset Backed Fixed Rate Notes, Class A, Series 2022-A (the "Class A Notes"), approximately $132.1 million of 9.52% Asset Backed Fixed Rate Notes, Class B, Series 2022-A (the "Class B Notes"). Additionally, the Company issued approximately $63.1 million in aggregate principal amount of zero coupon Asset Backed Fixed Rate Notes, Class C, Series 2022-A (the "Class C Notes") which mature on December 15, 2026. The Class C Notes are currently being retained by the Company.

Revolving Credit Facility. On March 31, 2017, Conn's,29, 2021, Conn’s, Inc. and certain of its subsidiaries (the "Borrowers"“Borrowers”) entered into a Third Amendment (the "Third Amendment") to the ThirdFifth Amended and Restated Loan and Security Agreement dated as of October 30, 2015,(the “Fifth Amended and Restated Loan Agreement”), with certain lenders, which provides for a $750.0$650.0 million asset-based revolving credit facility (the "revolving credit facility"(as amended, the “Revolving Credit Facility”) under which credit availability is subject to a borrowing base. The revolving credit facility matures on October 30, 2019.base and a maturity date of March 29, 2025.
The Third Amendment,Fifth Amended and Restated Loan Agreement, among other things, (a) extendspermits borrowings under the maturity dateLetter of Credit Subline (as defined in the Fifth Amended and Restated Loan Agreement) that exceed the cap of $40 million to $100 million, solely at the discretion of the credit facility one year to October 30, 2019; (b) provideslenders for a reductionsuch amounts in excess of $40 million. The obligations under the aggregate commitments from $810 million to $750 million; (c) amends the minimum interest coverage ratio covenant to reduce the minimum interest coverage ratio to 1.10x asRevolving Credit Facility are secured by substantially all assets of the last dayCompany, excluding the assets of the fiscal quarter ending OctoberVIEs. As of July 31, 20172022, under our Revolving Credit Facility, we had immediately available borrowing capacity of $186.8 million, net of standby letters of credit issued of $22.3 million, and to 1.25x as of the last day of each fiscal quarter thereafter, beginning with the fiscal quarter ending January 31, 2018; (d) sets the applicable margin at 3.50% for LIBOR loans and 2.50% for Base Rate loans until the Company demonstrates an interest coverage ratio of equal to or greater than 1.10x for the fiscal quarter ending October 31, 2017, at which point the applicable margin will revert to being determined according to the existing pricing grid based on facility availability; (e) reduces the minimum cash recovery percentage on the contracts it owns and manages from 4.50% to 4.45% for the first nine months of each fiscal year, and from 4.25% to 4.20% for the last three months of each fiscal year; (f) amends the definition of “EBITDA” to, among other things, exclude the impact of non-cash asset write-offs relating to construction in process; (g) amends the definition of “Interest Expense�� to exclude certain non-interest expenses; (h) amends various definitions and other related provisions to clarify the Company’s ability to undertake permitted securitization transactions; (i) increases the number of equity curesadditional $441.0 million that may be exercised duringbecome available if the termbalance of the agreement from one time to two times,eligible customer receivables and increases the maximum amount of each such cure from $10 million to $20 million; and (j) modifies the calculations of “Tangible Net Worth” and “Interest Coverage Ratio” to deduct certain amounts attributable to the difference between a calculated loss reserve and the Company’s recorded loss reserve on its customer receivables.total eligible inventory balances increases.
Loans under the revolving credit facilityRevolving Credit Facility bear interest, at our option, at a rate equal toof LIBOR plus the applicable margin at 3.50% for LIBOR loans and 2.50% for base rate loans until the Company demonstrates an interest coverage ratio of equal to or greater than 1.10x for the fiscal quarter ending October 31, 2017, at which point the applicable margin will revert to being determined according to the existing pricing grid based on facility availability which specifies a margin ranging from 2.75%2.50% to 3.25% per annum (depending on quarterly average net availability under the borrowing base)a pricing grid determined by our total leverage ratio) or the alternate base rate plus a margin ranging from 1.75%1.50% to 2.25% per annum (depending on quarterly average net availability under the borrowing base)a pricing grid determined by our total leverage ratio). The alternate base rate is a rate per annum equal to the greatest of the prime rate, announced by Bank of America, N.A., the federal funds effective rate plus 0.5%, or LIBOR for a 30-day interest period plus 1.0%. We also pay an unused fee on the portion of the commitments that is available for future borrowings or letters of credit at a rate ranging from 0.25% to 0.75%0.50% per annum, depending on the average outstanding balance and letters of credit of the revolving credit facilityRevolving Credit Facility in the immediately preceding quarter. The weighted-average interest rate on borrowings outstanding and including unused line fees under the revolving credit facilityRevolving Credit Facility was 6.6%3.8% for the ninesix months ended OctoberJuly 31, 2017.2022.
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, 2017, we had immediately available borrowing capacity of $110.5 million under our revolving credit facility, net of standby letters of credit issued of $2.8 million. We also had $284.8 million that may become available under our revolving credit facility if we grow the balance of eligible customer receivables and our eligible inventory balances.
The revolving credit facilityRevolving 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 facilityRevolving 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 makepay dividends and make distributions to the Company and other obligors under the revolving credit facilityRevolving Credit Facility without restriction. As of OctoberJuly 31, 2017,2022, we were unable to repay the Senior Notes or make otherrestricted from making distributions in excess of $151.5 million as a result of the revolving credit facilityRevolving Credit Facility distribution and payment restrictions. The revolving credit facilityRevolving Credit Facility contains customary default provisions, which, if triggered, could result in acceleration of all amounts outstanding under the revolving credit facility.Revolving Credit Facility.
In connection with entering into the Third Amendment, we wrote-off $0.3 million of debt issuance costs for lenders that did not continue to participate. We also paid $2.8 million of debt issuance costs, recorded as other assets, which will be amortized ratably over the remaining term of the revolving credit facility along with the unamortized debt issuance costs remaining on the revolving credit facility.
CONN'S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Debt Covenants. We were in compliance with our debt covenants as amended, at OctoberJuly 31, 2017.2022. A summary of the significant financial covenants that govern our revolving credit facility, as amended,Revolving Credit Facility compared to our actual compliance status at OctoberJuly 31, 20172022 is presented below: 
 Actual 
Required
Minimum/
Maximum
Interest Coverage Ratio must equal or exceed minimum1.75:1.00 1.10:1.00
Leverage Ratio must not exceed maximum2.49:1.00 4.00:1.00
ABS Excluded Leverage Ratio must not exceed maximum1.71:1.00 2.00:1.00
Cash Recovery Percent must exceed stated amount4.80% 4.45%
Capital Expenditures, net, must not exceed maximum$1.0 million $75.0 million
ActualRequired Minimum/ Maximum
Interest Coverage Ratio for the quarter must equal or exceed minimum4.04:1.001.00:1.00
Interest Coverage Ratio for the trailing two quarters must equal or exceed minimum5.38:1.001.50:1.00
Leverage Ratio must not exceed maximum1.57:1.004.50:1.00
ABS Excluded Leverage Ratio must not exceed maximum0.57:1.002.50:1.00
Capital Expenditures, net, must not exceed maximum$49.5 million$100.0 million
All capitalized terms in the above table are defined byin the revolving credit facility, as amended,Revolving Credit Facility and may or may not agreematch directly to the financial statement captions in this document. The covenants are calculated quarterly, except for the Cash Recovery Percent, which is calculated monthly on a trailing three-month basis, and Capital Expenditures,capital expenditures, which is calculated for a period of four consecutive fiscal quarters, as of the end of each fiscal quarter.



7.14
CONN’S, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

6.     Contingencies
Securities Class Action Litigation. We and two of our former executive officers are defendants in a consolidated securities class action lawsuit pending in the United States District Court for the Southern District of Texas (the “Court”), captioned In re Conn's Inc. SecuritiesDerivative Litigation Cause No. 14-CV-00548 (the “Consolidated Securities Action”). The Consolidated Securities Action started as three separate purported securities class action lawsuits filed between March 5, 2014 and May 5, 2014 in the Court that were consolidated into the Consolidated Securities Action on June 3, 2014. The plaintiffs in the Consolidated Securities Action allege that the defendants made false and misleading statements or failed to disclose material adverse facts about our business, operations, and prospects. They allege violations of sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder and seek to certify a class of all persons and entities that purchased or otherwise acquired Conn's common stock or call options, or sold or wrote Conn's put options between April 3, 2013 and December 9, 2014. The complaint does not specify the amount of damages sought.
On June 30, 2015, the Court held a hearing on the defendants' motion to dismiss plaintiffs' complaint. At the hearing, the Court dismissed Brian Taylor, a former executive officer, and certain other aspects of the complaint. The Court ordered the plaintiffs to further amend their complaint in accordance with its ruling, and the plaintiffs filed their Fourth Consolidated Amended Complaint on July 21, 2015. The remaining defendants filed a motion to dismiss on August 28, 2015. The defendant's motion to dismiss was fully briefed and the Court held a hearing on defendants' motion on March 25, 2016 and on May 5, 2016, the Court issued a ruling that dismissed 78 of 91 alleged misstatements. The parties have submitted their respective briefs in support of, and in opposition to, class certification, and also engaged in discovery pursuant to the Court’s scheduling order. In late June 2017, the Court granted the plaintiffs’ motion for class certification, and shortly thereafter, Defendants filed a petition for permission to appeal to the U.S. 5th Circuit Court of Appeals. The Fifth Circuit granted leave to appeal on August 21, 2017. We anticipate that the appellate court may issue its ruling in the first half of calendar year 2018. Trial is scheduled for October 2018.
We intend to vigorously defend against all of the claims in the Consolidated Securities Action against us. It is not possible at this time to predict the timing or outcome of any of this litigation, and we cannot reasonably estimate the possible loss or range of possible loss from these claims.
Derivative Litigation. On December 1, 2014, an alleged shareholder, purportedly on behalf of the Company, filed a shareholder derivative shareholder lawsuit in federal court 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,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 (former director), 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,Conn’s, Inc., Case No. 4:14-cv-03442 (S.D. Tex.) (the "Original Derivative Action""Hack Litigation"). 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.securities action (In re Conn's Inc. Sec. Litig., Cause No. 14-CV-00548 (S.D. Tex.)), which was settled in October 2018. 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, onConn’s. On February 25, 2015, an additional federal derivative action, captioned 95250 Canada LTEE, derivatively on behalfBehalf of Conn's,Conn’s, Inc. v. Wright et al., Cause No. 4:15-cv-00521 (S.D. Tex.), was filed, inasserting substantially similar claims against the Court, which has beensame defendants. It was consolidated with the OriginalHack Litigation (collectively, the "Federal Derivative Action.Actions").
CONN'S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The Court previously approved a stipulation among the parties to stay the action pending resolution of the motion to dismiss in the Consolidated Securities Action. The Consolidated Securities Action is scheduled for trial in October 2018. The parties have agreedreached a settlement in principle to continuefully resolve the stay.Federal Derivative Actions. Judge Ellison approved the settlement and entered a Final Order and Judgement dismissing the derivative action with prejudice on March 15, 2022 (the "Final Order"). Neither the Company nor any individual defendant admits any wrongdoing through the settlement agreement.
AnotherIn addition to the Federal Derivative Actions, a derivative action was filed in Texas state court on January 27, 2015, captioned as Richard A. Dohn v. Wright, et al., Cause No. 2015-04405, filed in the 281st Judicial District Court, Harris County, Texas. This action makes substantially similar allegations to the OriginalFederal Derivative ActionActions against the same defendants. On September 14, 2017,The parties agreed to stay this case during the Securities Litigation and Federal Derivative Actions. Counsel for Dohn attended the February 17, 2022 and March 15, 2022 settlement hearings in the Federal Derivative Actions and objected to the proposed settlement. Dohn has filed an appeal of the Final Order with the Fifth Circuit Court of Appeals, and on May 17, 2022, the court entered an agreed order extendingstaying the stay until March 16, 2018.case pending the outcome of that appeal.
On April 7, 2022, State Court Plaintiff and Objector Richard Dohn, filed an appeal of the Final Order with the Fifth Circuit Court of Appeals (Hack v. Wright, No. 22-20177 (5th Cir.)). Dohn's opening brief was filed on July 5, 2022. Plaintiffs' and Defendants' respective response briefs are due August 24, 2022.
Prior to filing his lawsuit, another alleged shareholder, Robert J. Casey II (“Casey”), submitted a demand under Delaware law, which our Board of Directors refused. On May 19, 2016, an alleged shareholder,Casey, purportedly on behalf of the Company, filed a second state court 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 Robert J. Casey, II, derivatively on behalf of Conn's,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 (former director), Douglas H. Martin, David Schofman, Scott L. Thompson (former director) and William E. Saunders Jr., and Conn's,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 OriginalFederal Derivative Action.Actions. The complaint does not specify the amount of damages sought. Pursuant toSince April 2018, this case has been abated pending the parties’ agreement, this action isresolution of related cases. In July 2021, the parties requested that the court extend the abatement pending further developments in the Federal Derivative Actions. The case currently stayed.remains abated.
NoneOther than Casey, 0ne of the plaintiffs in any of the other derivative actions made a demand on our Board of Directors prior to filing their respective lawsuits. The defendants in the 2 state court 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 thisunsettled litigation, and we cannot reasonably estimate the possible loss or range of possible loss from thesesuch 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. At this time, it is not possible to predict the timing or outcome of this investigation, or whether there will be a material loss, if any, resulting from this investigation.
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.

8.

15
CONN’S, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

7.     Variable Interest Entities
In fiscal years 2018, 2017 and 2016,From time to time, we securitizedsecuritize 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 agreementsRSAs 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.
CONN'S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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,Conn’s, Inc.):
(in thousands)October 31,
2017		 January 31,
2017
Assets:   
Restricted cash$71,099
 $110,698
Due from Conn's, Inc., net2,387
 7,368
Customer accounts receivable:   
Customer accounts receivable603,584
 884,367
Restructured accounts109,143
 131,470
Allowance for uncollectible accounts(109,759) (150,435)
Allowances for no-interest option credit programs(8,661) (15,912)
Deferred fees and origination costs(3,185) —
Total customer accounts receivable, net591,122
 849,490
Total assets$664,608
 $967,556
Liabilities:   
Accrued expenses$3,602
 $6,525
Other liabilities6,362
 6,691
Current maturities of long-term debt:   
2016-B Class A Notes8,563
  
2017-A Warehouse Class A Notes56,874
  
Deferred debt issuance costs(485)  
 64,952
 —
Long-term debt:   
2015 Class A Notes—
 12,166
2015 Class B Notes—
 165,900
2016-A Class A Notes—
 64,732
2016-A Class B Notes—
 70,510
2016-A Class C Notes—
 70,510
2016-B Class A Notes—
 256,513
2016-B Class B Notes111,960
 111,960
2017-A Class A Notes129,583
 —
2017-A Class B Notes106,270
 —
2017-A Class C Notes50,340
 —
 398,153
 752,291
Less: deferred debt issuance costs(2,143) (6,710)
Total long-term debt396,010
 745,581
Total liabilities$470,926
 $758,797
(in thousands)July 31,
2022		January 31,
2022
Assets:
Restricted cash$45,773 $29,872 
Due from Conn’s, Inc., net3,784 — 
Customer accounts receivable:
Customer accounts receivable788,671 463,411 
Restructured accounts27,552 29,621 
Allowance for uncollectible accounts(143,252)(97,560)
Allowance for no-interest option credit programs(16,495)(10,275)
Deferred fees and origination costs(9,021)(5,033)
Total customer accounts receivable, net647,455 380,164 
Total assets$697,012 $410,036 
Liabilities:
Accrued expenses$4,459 $2,638 
Other liabilities6,909 3,930 
Due to Conn’s, Inc., net— 12,755 
Long-term debt:
2020-A Class A Notes— 9,184 
2020-A Class B Notes— 18,342 
2020-A Class C Notes— 17,695 
2021-A Class A Notes66,378 195,595 
2021-A Class B Notes66,090 66,090 
2021-A Class C Notes63,890 63,890 
2022-A Class A Notes275,600 — 
2022-A Class B Notes132,090 — 
604,048 370,796 
Less: deferred debt issuance costs(6,393)(2,871)
Total debt597,655 367,925 
Total liabilities$609,023 $387,248 
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.

CONN'S,

16
CONN’S, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



9.8.Segment ReportingInformation
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 two2 operating segments: (i) retail and (ii) credit. Our operating segments complement one another. The retail segment operates primarily through our stores and website in the retail furniture and mattresses, home appliances, consumer electronics and home office products business.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. We believe our large, attractively merchandised retail stores and credit solutions offer a distinctive value proposition compared to other retailers that target our core customer demographic. The operating segments follow the same accounting policies used in our consolidated financial statements.Condensed Consolidated Financial Statements.
We evaluate a segment’s performance based upon operating income before taxes. Selling, general and administrative expenses include(“SG&A”) includes 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 estimatedcalculated using an annual rate of 2.5% times the average outstanding portfolio balance for each applicable period.
As of OctoberJuly 31, 2017,2022, we operated retail stores in 1415 states with no operations outside of the United States. No single customer accounts for more than 10% of our total revenues.
CONN'S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Financial information by segment is presented in the following tables:
 Three Months Ended July 31, 2022Three Months Ended July 31, 2021
(in thousands)RetailCreditTotalRetailCreditTotal
Revenues:
Furniture and mattress$86,320 $— $86,320 $109,259 $— $109,259 
Home appliance120,748 — 120,748 135,444 — 135,444 
Consumer electronics31,860 — 31,860 48,413 — 48,413 
Home office8,857 — 8,857 17,986 — 17,986 
Other7,664 — 7,664 9,143 — 9,143 
Product sales255,449 — 255,449 320,245 — 320,245 
Repair service agreement commissions21,615 — 21,615 23,700 — 23,700 
Service revenues2,448 — 2,448 2,840 — 2,840 
Total net sales279,512 — 279,512 346,785 — 346,785 
Finance charges and other revenues273 66,847 67,120 224 71,374 71,598 
Total revenues279,785 66,847 346,632 347,009 71,374 418,383 
Costs and expenses:
Cost of goods sold182,718 — 182,718 216,042 — 216,042 
Selling, general and administrative expense (1)
98,035 32,107 130,142 102,157 35,713 137,870 
Provision for bad debts409 26,817 27,226 142 10,120 10,262 
Charges and credits(1,484)— (1,484)— — — 
Total costs and expenses279,678 58,924 338,602 318,341 45,833 364,174 
Operating income107 7,923 8,030 28,668 25,541 54,209 
Interest expense— 6,808 6,808 — 6,088 6,088 
Income before income taxes$107 $1,115 $1,222 $28,668 $19,453 $48,121 
 Three Months Ended October 31, 2017 Three Months Ended October 31, 2016
(in thousands)Retail Credit Total Retail Credit Total
Revenues:           
Furniture and mattress$97,146
 $—
 $97,146
 $98,898
 $—
 $98,898
Home appliance83,837
 —
 83,837
 85,785
 —
 85,785
Consumer electronic58,062
 —
 58,062
 65,670
 —
 65,670
Home office20,295
 —
 20,295
 22,747
 —
 22,747
Other4,446
 —
 4,446
 4,956
 —
 4,956
Product sales263,786
 —
 263,786
 278,056
 —
 278,056
Repair service agreement commissions24,488
 —
 24,488
 26,354
 —
 26,354
Service revenues3,534
 —
 3,534
 3,623
 —
 3,623
Total net sales291,808
 —
 291,808
 308,033
 —
 308,033
Finance charges and other revenues95
 81,269
 81,364
 337
 68,403
 68,740
Total revenues291,903
 81,269
 373,172
 308,370
 68,403
 376,773
Costs and expenses: 
  
  
  
  
  
Cost of goods sold175,591
 —
 175,591
 192,374
 —
 192,374
Selling, general and administrative expenses (1)
80,676
 33,679
 114,355
 79,777
 34,680
 114,457
Provision for bad debts189
 56,323
 56,512
 286
 51,278
 51,564
Charges and credits5,861
 —
 5,861
 1,987
 —
 1,987
Total costs and expense262,317
 90,002
 352,319
 274,424
 85,958
 360,382
Operating income (loss)29,586
 (8,733) 20,853
 33,946
 (17,555) 16,391
Interest expense—
 18,095
 18,095
 —
 23,470
 23,470
Loss on extinguishment of debt—
 461
 461
 —
 —
 —
Income (loss) before income taxes$29,586
 $(27,289) $2,297
 $33,946
 $(41,025) $(7,079)

CONN'S,

17
CONN’S, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



Six Months Ended July 31, 2022Six Months Ended July 31, 2021
(in thousands)RetailCreditTotalRetailCreditTotal
Revenues:
Furniture and mattress$174,414 $— $174,414 $203,750 $— $203,750 
Home appliance230,476 — 230,476 248,705 — 248,705 
Consumer electronics65,464 — 65,464 86,451 — 86,451 
Home office19,046 — 19,046 32,507 — 32,507 
Other16,022 — 16,022 18,043 — 18,043 
Product sales505,422 — 505,422 589,456 — 589,456 
Repair service agreement commissions41,452 — 41,452 42,831 — 42,831 
Service revenues4,901 — 4,901 5,794 — 5,794 
Total net sales551,775 — 551,775 638,081 — 638,081 
Finance charges and other revenues544 134,133 134,677 433 143,571 144,004 
Total revenues552,319 134,133 686,452 638,514 143,571 782,085 
Costs and expenses:
Cost of goods sold361,100 — 361,100 400,921 — 400,921 
Selling, general and administrative expense (1)
194,065 68,860 262,925 193,050 70,869 263,919 
Provision (benefit) for bad debts588 41,368 41,956 160 (7,034)(6,874)
Charges and credits(1,484)— (1,484)— — — 
Total costs and expenses554,269 110,228 664,497 594,131 63,835 657,966 
Operating income (loss)(1,950)23,905 21,955 44,383 79,736 124,119 
Interest expense— 12,329 12,329 — 15,292 15,292 
Loss on extinguishment of debt— — — — 1,218 1,218 
Income (loss) before income taxes$(1,950)$11,576 $9,626 $44,383 $63,226 $107,609 
July 31, 2022July 31, 2021
(in thousands)RetailCreditTotalRetailCreditTotal
Total assets$676,303 $1,078,506 $1,754,809 $672,944 $1,036,003 $1,708,947 

 Nine Months Ended October 31, 2017 Nine Months Ended October 31, 2016
(in thousands)Retail Credit Total Retail Credit Total
Revenues:           
Furniture and mattress$286,886
 $—
 $286,886
 $309,766
 $—
 $309,766
Home appliance253,044
 —
 253,044
 275,048
 —
 275,048
Consumer electronic166,761
 —
 166,761
 197,270
 —
 197,270
Home office54,945
 —
 54,945
 66,921
 —
 66,921
Other13,105
 —
 13,105
 15,264
 —
 15,264
Product sales774,741
 —
 774,741
 864,269
 —
 864,269
Repair service agreement commissions72,703
 —
 72,703
 82,849
 —
 82,849
Service revenues10,062
 —
 10,062
 11,456
 —
 11,456
Total net sales857,506
 —
 857,506
 958,574
 —
 958,574
Finance charges and other revenues267
 237,872
 238,139
 1,268
 204,201
 205,469
Total revenues857,773
 237,872
 1,095,645
 959,842
 204,201
 1,164,043
Costs and expenses: 
  
  
  
  
  
Cost of goods sold519,847
 —
 519,847
 605,709
 —
 605,709
Selling, general and administrative expenses (1)
233,290
 99,234
 332,524
 244,598
 102,952
 347,550
Provision for bad debts584
 161,307
 161,891
 811
 169,167
 169,978
Charges and credits11,156
 —
 11,156
 5,408
 —
 5,408
Total costs and expense764,877
 260,541
 1,025,418
 856,526
 272,119
 1,128,645
Operating income (loss)92,896
 (22,669) 70,227
 103,316
 (67,918) 35,398
Interest expense—
 62,142
 62,142
 —
 73,504
 73,504
Loss on extinguishment of debt—
 2,907
 2,907
 —
 —
 —
Income (loss) before income taxes$92,896
 $(87,718) $5,178
 $103,316
 $(141,422) $(38,106)
(1)(1)For the three months ended October 31, 2017 and 2016, the amount of corporate overhead allocated to each segment reflected in selling, general and administrative expense was $7.3 million and $6.7 million, respectively. For the three months ended October 31, 2017 and 2016, the amount of reimbursement made to the retail segment by the credit segment was $9.3 million and $9.6 million, respectively. For the nine months ended October 31, 2017 and 2016, the amount of corporate overhead allocated to each segment reflected in selling, general and administrative expense was $21.5 million and $18.9 million, respectively. For the nine months ended October 31, 2017 and 2016, the amount of reimbursement made to the retail segment by the credit segment was $27.9 million and $29.0 million, respectively.
10.
Guarantor Financial Information
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 certain guarantor subsidiaries (the "Guarantors"). As of October 31, 2017 and January 31, 2017, the direct or indirect subsidiaries of Conn's, Inc. that were not Guarantors (the "Non-Guarantor Subsidiaries") were the VIEs and minor subsidiaries. There are no restrictions under the Indenture on the ability of any of the Guarantors to transfer funds to Conn's, Inc. in the form of dividends or distributions.
The following financial information presents the condensed consolidated balance sheet, statement of operations, and statement of cash flows for Conn's, Inc. (the issuer of the Senior Notes), the Guarantors, and the Non-Guarantor Subsidiaries, together with certain eliminations. Investments in subsidiaries are accounted for by the parent company using the equity method for purposes of this presentation. Results of operations of subsidiaries are therefore reflected in the parent company's investment accounts and operations. The consolidated financial information includes financial data for:
(i) Conn’s, Inc. (on a parent-only basis),
(ii) Guarantors,
CONN'S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(iii) Non-Guarantor Subsidiaries, and
(iv) the parent company and the subsidiaries on a consolidated basis at October 31, 2017 and January 31, 2017 (after the elimination of intercompany balances and transactions). Condensed consolidated net income (loss) is the same as condensed consolidated comprehensive income (loss) for the periods presented.
Condensed Consolidated Balance Sheet as of October 31, 2017:
(in thousands)Conn's, Inc. Guarantors Non-Guarantor Subsidiaries Eliminations Consolidated
Assets         
Current assets:         
Cash and cash equivalents$—
 $12,742
 $—
 $—
 $12,742
Restricted cash—
 —
 71,099
 —
 71,099
Customer accounts receivable, net of allowance—
 275,614
 360,086
 —
 635,700
Other accounts receivable—
 63,203
 —
 —
 63,203
Inventories—
 235,479
 —
 —
 235,479
Other current assets—
 18,865
 2,387
 (5,337) 15,915
Total current assets—
 605,903
 433,572
 (5,337) 1,034,138
Investment in and advances to subsidiaries682,391
 193,682
 —
 (876,073) —
Long-term portion of customer accounts receivable, net of allowance—
 385,629
 231,036
 —
 616,665
Property and equipment, net—
 144,747
 —
 —
 144,747
Deferred income taxes72,554
 —
 —
 —
 72,554
Other assets—
 6,285
 —
 —
 6,285
Total assets$754,945
 $1,336,246
 $664,608
 $(881,410) $1,874,389
Liabilities and Stockholders' Equity         
Current liabilities:         
Current maturities of capital lease obligations$—
 $699
 $64,952
 $—
 $65,651
Accounts payable—
 109,738
 —
 —
 109,738
Accrued expenses4,800
 59,463
 3,602
 (2,949) 64,916
Other current liabilities—
 21,342
 3,063
 (2,387) 22,018
Total current liabilities4,800
 191,242
 71,617
 (5,336) 262,323
Deferred rent—
 87,152
 —
 —
 87,152
Long-term debt and capital lease obligations220,754
 356,514
 396,010
 —
 973,278
Other long-term liabilities—
 18,946
 3,299
 —
 22,245
Total liabilities225,554
 653,854
 470,926
 (5,336) 1,344,998
Total stockholders' equity529,391
 682,391
 193,682
 (876,073) 529,391
Total liabilities and stockholders' equity$754,945
 $1,336,245
 $664,608
 $(881,409) $1,874,389
Deferred income taxes related to tax attributes of the Guarantors and Non-Guarantor Subsidiaries are reflected under Conn's, Inc.

CONN'S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Condensed Consolidated Balance Sheet as of January 31, 2017:
(in thousands)Conn's, Inc. Guarantors Non-Guarantor Subsidiaries Eliminations Consolidated
Assets         
Current assets:         
Cash and cash equivalents$—
 $23,566
 $—
 $—
 $23,566
Restricted cash—
 —
 110,698
 —
 110,698
Customer accounts receivable, net of allowance—
 173,054
 529,108
 —
 702,162
Other accounts receivable—
 69,286
 —
 —
 69,286
Inventories—
 164,856
 —
 —
 164,856
Other current assets—
 21,505
 7,368
 (11,768) 17,105
Total current assets—
 452,267
 647,174
 (11,768) 1,087,673
Investment in and advances to subsidiaries678,149
 220,107
 —
 (898,256) —
Long-term portion of customer accounts receivable, net of allowance—
 295,522
 320,382
 —
 615,904
Property and equipment, net—
 159,202
 —
 —
 159,202
Deferred income taxes71,442
 —
 —
 —
 71,442
Other assets—
 6,913
 —
 —
 6,913
Total assets$749,591
 $1,134,011
 $967,556
 $(910,024) $1,941,134
Liabilities and Stockholders' Equity         
Current liabilities:         
Current maturities of capital lease obligations$—
 $849
 $—
 $—
 $849
Accounts payable—
 101,612
 —
 —
 101,612
Accrued expenses686
 40,287
 6,525
 (4,399) 43,099
Other current liabilities—
 25,230
 3,961
 (7,370) 21,821
Total current liabilities686
 167,978
 10,486
 (11,769) 167,381
Deferred rent—
 87,957
 —
 —
 87,957
Long-term debt and capital lease obligations219,768
 179,044
 745,581
 —
 1,144,393
Other long-term liabilities—
 20,883
 2,730
 —
 23,613
Total liabilities220,454
 455,862
 758,797
 (11,769) 1,423,344
Total stockholders' equity529,137
 678,149
 208,759
 (898,255) 517,790
Total liabilities and stockholders' equity$749,591
 $1,134,011
 $967,556
 $(910,024) $1,941,134
Deferred income taxes related to tax attributes of the Guarantors and Non-Guarantor Subsidiaries are reflected under Conn's, Inc.

CONN'S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Condensed Consolidated Statement of Operations for the three months ended OctoberJuly 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 expenses—
 125,355
 7,178
 (18,178) 114,355
Provision for bad debts—
 44,454
 12,058
 —
 56,512
Charges and credits—
 5,861
 —
 —
 5,861
Total costs and expenses—
 351,261
 19,236
 (18,178) 352,319
Operating income—
 3,953
 16,900
 —
 20,853
Interest expense4,443
 4,979
 8,673
 —
 18,095
Loss on extinguishment of debt—
 —
 461
 —
 461
Income (loss) before income taxes(4,443) (1,026) 7,766
 —
 2,297
Provision (benefit) for income taxes(1,408) (324) 2,460
 —
 728
Net income (loss) before consolidation$(3,035) $(702) $5,306
 $—
 $1,569
Income (loss) from consolidated subsidiaries (after tax)$4,742
 $1,988
 $—
 $(6,730) $—
Consolidated net income (loss)$1,707
 $1,286
 $5,306
 $(6,730) $1,569
Condensed Consolidated Statement2022 and 2021, the amount of Operations forcorporate overhead allocated to each segment reflected in SG&A expense was $6.6 million and $9.8 million, respectively. For the three months ended OctoberJuly 31, 2016:
(in thousands)Conn's, Inc. Guarantors Non-Guarantor Subsidiaries Eliminations Consolidated
Revenues:         
Total net sales$—
 $308,033
 $—
 $—
 $308,033
Finance charges and other revenues—
 22,326
 46,414
 —
 68,740
Servicing fee revenue—
 15,073
 —
 (15,073) —
Total revenues—
 345,432
 46,414
 (15,073) 376,773
Costs and expenses: 
  
  
  
  
Cost of goods sold—
 192,374
 —
 —
 192,374
Selling, general and administrative expenses—
 114,457
 15,073
 (15,073) 114,457
Provision for bad debts—
 31,672
 19,892
 —
 51,564
Charges and credits—
 1,987
 —
 —
 1,987
Total costs and expenses—
 340,490
 34,965
 (15,073) 360,382
Operating income—
 4,942
 11,449
 —
 16,391
Interest expense4,447
 3,876
 15,147
 —
 23,470
Loss on extinguishment of debt—
 —
 —
 —
 —
Income (loss) before income taxes(4,447) 1,066
 (3,698) —
 (7,079)
Provision (benefit) for income taxes(2,051) 492
 (1,705) —
 (3,264)
Net income (loss) before consolidation$(2,396) $574
 $(1,993) $—
 $(3,815)
Income (loss) from consolidated subsidiaries (after tax)$(1,419) $(1,993) $—
 $3,412
 $—
Consolidated net income (loss)$(3,815) $(1,419) $(1,993) $3,412
 $(3,815)
CONN'S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Condensed Consolidated Statement2022 and 2021, the amount of Operations forreimbursement made to the nineretail segment by the credit segment was $6.6 million and $6.9 million, respectively. For the six months ended OctoberJuly 31, 2017:
(in thousands)Conn's, Inc. Guarantors Non-Guarantor Subsidiaries Eliminations Consolidated
Revenues:         
Total net sales$—
 $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 expenses—
 343,043
 35,491
 (46,010) 332,524
Provision for bad debts—
 64,438
 97,453
 —
 161,891
Charges and credits—
 11,156
 —
 —
 11,156
Total costs and expenses—
 938,484
 132,944
 (46,010) 1,025,418
Operating income—
 87,337
 (17,110) —
 70,227
Interest expense13,329
 7,501
 41,312
 —
 62,142
Loss on extinguishment of debt—
 349
 2,558
 —
 2,907
Income (loss) before income taxes(13,329) 79,487
 (60,980) —
 5,178
Provision (benefit) for income taxes(4,934) 29,420
 (22,570) —
 1,916
Net income (loss) before consolidation$(8,395) $50,067
 $(38,410) $—
 $3,262
Income (loss) from consolidated subsidiaries (after tax)$11,657
 $(38,410) $—
 $26,753
 $—
Consolidated net income (loss)$3,262
 $11,657
 $(38,410) $26,753
 $3,262
Condensed Consolidated Statement2022 and 2021, the amount of Operations forcorporate overhead allocated to each segment reflected in SG&A was $16.2 million and $18.8 million, respectively. For the ninesix months ended OctoberJuly 31, 2016:2022 and 2021, the amount of reimbursement made to the retail segment by the credit segment was $13.4 million and $14.2 million, respectively.

9. Stock Repurchases
(in thousands)Conn's, Inc. Guarantors Non-Guarantor Subsidiaries Eliminations Consolidated
Revenues:         
Total net sales$—
 $958,574
 $—
 $—
 $958,574
Finance charges and other revenues—
 85,560
 119,909
 —
 205,469
Servicing fee revenue—
 45,384
 —
 (45,384) —
Total revenues—
 1,089,518
 119,909
 (45,384) 1,164,043
Costs and expenses: 
  
  
  
  
Cost of goods sold—
 605,709
 —
 —
 605,709
Selling, general and administrative expenses—
 347,550
 45,384
 (45,384) 347,550
Provision for bad debts—
 88,084
 81,894
 —
 169,978
Charges and credits—
 5,408
 —
 —
 5,408
Total costs and expenses—
 1,046,751
 127,278
 (45,384) 1,128,645
Operating income—
 42,767
 (7,369) —
 35,398
Interest expense13,290
 10,496
 49,718
 —
 73,504
Income (loss) before income taxes(13,290) 32,271
 (57,087) —
 (38,106)
Provision (benefit) for income taxes(4,400) 10,685
 (18,903) —
 (12,618)
Net income (loss) before consolidation$(8,890) $21,586
 $(38,184) $—
 $(25,488)
Income (loss) from consolidated subsidiaries (after tax)$(16,598) $(38,184) $—
 $54,780
 $—
Consolidated net income (loss)$(25,488) $(16,598) $(38,184) $54,780
 $(25,488)


CONN'S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Condensed Consolidated StatementOn December 15, 2021, our Board of Cash Flows forDirectors approved a stock repurchase program pursuant to which we had the nineauthorization to repurchase up to $150.0 million of our outstanding common stock. The stock repurchase program expires on December 14, 2022. During the three months ended OctoberJuly 31, 2017:
(in thousands)Conn's, Inc. Guarantors Non-Guarantor Subsidiaries Eliminations Consolidated
Net cash provided by (used in) operating activities$(3,011) $(635,568) $721,316
 $—
 $82,737
Cash flows from investing activities:

 

 

 

   
Purchase of customer accounts receivables—
 —
 (544,833) 544,833
 —
Sale of customer accounts receivables—
 544,833
 —
 (544,833) —
Purchase of property and equipment—
 (11,995) —
 —
 (11,995)
Proceeds from sales of property—
 —
 —
 —
 —
Net cash provided by (used in) investing activities—
 532,838
 (544,833) —
 (11,995)
Cash flows from financing activities: 
  
  
  
  
Proceeds from issuance of asset-backed notes—
 —
 469,814
 —
 469,814
Payments on asset-backed notes—
 (78,780) (737,463) —
 (816,243)
Changes in restricted cash balances—
 —
 39,599
 —
 39,599
Borrowings from revolving credit facility—
 1,257,052
 —
 —
 1,257,052
Payments on revolving credit facility—
 (1,082,552) —
 —
 (1,082,552)
Borrowings from warehouse facility—
 —
 79,940
 —
 79,940
Payment of debt issuance costs and amendment fees—
 (2,865) (5,307) —
 (8,172)
Payments on warehouse facility—
 —
 (23,066) —
 (23,066)
Proceeds from stock issued under employee benefit plans3,011
 —
 —
 —
 3,011
Other—
 (949) —
 —
 (949)
Net cash provided by (used in) financing activities3,011
 91,906
 (176,483) —
 (81,566)
Net change in cash and cash equivalents—
 (10,824) —
 —
 (10,824)
Cash and cash equivalents, beginning of period—
 23,566
 —
 —
 23,566
Cash and cash equivalents, end of period$—
 $12,742
 $—
 $—
 $12,742


CONN'S, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Condensed Consolidated Statement2022 we did not repurchase any share of Cash Flows forour common stock. During the ninesix months ended OctoberJuly 31, 2016:2022, we repurchased 3,316,000 shares of our common stock at an average weighted cost per share of $20.57 for an aggregate amount of $68.2 million.

18
(in thousands)Conn's, Inc. Guarantors Non-Guarantor Subsidiaries Eliminations Consolidated
Net cash provided by (used in) operating activities$(13,544) $(606,570) $803,125
 $—
 $183,011
Cash flows from investing activities:  
   
   
   
   
Purchase of customer accounts receivables—
 —
 (1,038,226) 1,038,226
 —
Sale of customer accounts receivables—
 1,038,226
 —
 (1,038,226) —
Purchase of property and equipment—
 (41,804) —
 —
 (41,804)
Proceeds from sales of property—
 686
 —
 —
 686
Net change in intercompany12,719
     (12,719) —
Net cash provided by (used in) investing activities12,719
 997,108
 (1,038,226) (12,719) (41,118)
Cash flows from financing activities: 
  
  
  
  
Proceeds from issuance of asset-backed notes—
 —
 1,067,850
 —
 1,067,850
Payments on asset-backed notes—
 —
 (736,266) —
 (736,266)
Changes in restricted cash balances—
 —
 (87,900) —
 (87,900)
Borrowings from revolving credit facility—
 529,352
 —
 —
 529,352
Payments on revolving credit facility—
 (858,559) —
 —
 (858,559)
Payment of debt issuance costs and amendment fees—
 (1,192) (8,583) —
 (9,775)
Proceeds from stock issued under employee benefit plans824
 —
 —
 —
 824
Net change in intercompany—
 (12,719) —
 12,719
 —
Other1
 (609) —
 —
 (608)
Net cash provided by (used in) financing activities825
 (343,727) 235,101
 12,719
 (95,082)
Net change in cash and cash equivalents—
 46,811
 —
 —
 46,811
Cash and cash equivalents, beginning of period—
 12,254
 —
 —
 12,254
Cash and cash equivalents, end of period$—
 $59,065
 $—
 $—
 $59,065

Table of Contents

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  
ITEM 2.     MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  
Forward-Looking Statements
This report contains forward-looking statements within the meaning of the federal securities laws, including, but not limited to, the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Such forward-looking statements include information concerning our future financial performance, business strategy, plans, goals and objectives. Statements containing the words "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "project," "should,"“anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “should,” “predict,” “will,” “potential,” or the negative of such terms or other similar expressions are generally forward-looking in nature and not historical facts. Such forward-looking statements are based on our current expectations. We can give no assurance that such statements will prove to be correct, and actual results may differ materially. A wide variety of potential risks, uncertainties, and other factors could materially affect our ability to achieve the results either expressed or implied by our forward-looking statements including, but not limited to: general economic conditions impacting our customers or potential customers; our ability to execute periodic securitizations of future originated customer loans on favorable terms; our ability to continue existing customer financing programs or to offer new customer financing programs; changes in the delinquency status of our credit portfolio; unfavorable developments in ongoing litigation; increased regulatory oversight; higher than anticipated net charge-offs in the credit portfolio; the success of our planned opening of new stores; expansion of our e-commerce business; technological and market developments and sales trends for our major product offerings; our ability to manage effectively the selection of our major product offerings; our ability to protect against cyber-attacks or data security breaches and to protect the integrity and security of individually identifiable data of our customers and employees; our ability to fund our operations, capital expenditures, debt repayment and expansion from cash flows from operations, borrowings from our revolving credit facility, andRevolving Credit Facility, proceeds from accessing debt or equity markets; the effects of epidemics or pandemics, including the COVID-19 pandemic; and other risks detailed in Part I, Item 1A, Risk Factors, in our Annual Report on Form 10-K for the fiscal year ended January 31, 20172022 (the “2022 Form 10-K”) and other reports filed with the SEC. If one or more of these or other risks or uncertainties materialize (or the consequences of such a development changes), or should our underlying assumptions prove incorrect, actual outcomes may vary materially from those reflected in our forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We disclaim any intention or obligation to update publicly or revise such statements, whether as a result of new information, future events or otherwise, or to provide periodic updates or guidance. All forward-looking statements attributable to us, or to persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements.
The Company makes available in the investor relations section of its website at ir.conns.com updated monthly reports to the holders of its asset-backed notes. This information reflects the performance of the securitized portfolio only, in contrast to the financial statements contained herein, which reflect the performance of all of the Company'sCompany’s outstanding receivables, including those originated subsequent to those included in the securitized portfolio.  The website and the information contained on our website is not incorporated in this Quarterly Report on Form 10-Q or any other document filed with the SEC.
Overview
We encourage you to read this Management'sManagement’s Discussion and Analysis of Financial Condition and Results of Operations in conjunction with the accompanying consolidated financial statementsCondensed Consolidated Financial Statements and related notes. Our fiscal year ends on January 31. References to a fiscal year refer to the calendar year in which the fiscal year ends.

Executive Summary
Total revenues decreased to $373.2were $346.6 million for the three months ended OctoberJuly 31, 20172022 compared to $376.8$418.4 million for the three months ended OctoberJuly 31, 2016.2021, a decrease of $71.8 million or 17.1%. Retail revenues decreased to $291.9were $279.8 million for the three months ended OctoberJuly 31, 2017 from $308.42022 compared to $347.0 million for the three months ended OctoberJuly 31, 2016.2021, a decrease of $67.2 million or 19.4%. The decrease in total retail revenue for the three months ended July 31, 2022 was primarily driven by a decrease in same store sales of 7.0%,22.0%. The decrease in same store sales was primarily driven by a tightening of underwriting standards from our lease-to-own partners, the effect the benefits stimulus had on sales in the prior period and lower consumer demand in the current period.The decrease in same store sales was partially offset by new store growth. Sales for the three months ended October 31, 2017Credit revenues were impacted negatively by general softness in consumer spending. Credit revenue increased to $81.3$66.8 million for the three months ended OctoberJuly 31, 2017 from $68.42022 compared to $71.4 million for the three months ended OctoberJuly 31, 2016.2021, a decrease of $4.6 million or 6.4%. The increasedecrease in credit revenue resulted from increased originations of our higher-yielding direct loan product, which resulted in an increasewas primarily due to a 4.9% decrease in the portfolio yield rate to 19.8% from 15.0%, partially offset by a 3.7% decline in the average outstanding balance of the customer accounts receivable portfolio.portfolio as well as a decline in insurance commissions.
Retail gross margin for the three months ended OctoberJuly 31, 20172022 was 39.8%34.6%, an increasedecrease of 230310 basis points from the 37.5%37.7% reported infor the three months ended OctoberJuly 31, 2016.2021. The increaseyear-over-year decrease in retail gross margin was primarily due to improveddriven by increased product margins across allcosts as a result of higher freight, higher fuel costs and the deleveraging of fixed distribution costs. These increases were partially offset by an increase in RSA commissions and a more profitable product categories, favorable product mix and continued focus on increasing efficiencies.mix.

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Selling, general and administrative expenses ("expense (“SG&A"&A”) for the three months ended OctoberJuly 31, 2017 were $114.42022 was $130.1 million a decrease of $0.1compared to $137.9 million or 0.1%, overfor the three months ended OctoberJuly 31, 2016.2021, a decrease of $7.7 million or 5.6%. The SG&A decrease in the retail segment was primarily due to a decline in variable costs and declines in advertising and labor costs as a result of cost saving initiatives. These decreases were partially offset by an increase in occupancy costs due to higher utility costs and new store growth. The SG&A decrease in the credit segment was primarily due to a decrease in compensationgeneral operating costs, partially offset by an increase in the corporate overhead allocation. The SG&A increase in the retail segment was primarily due to an increase in the corporate overhead allocation, an increase in occupancy costs due to additional stores opened in fiscal year 2018,including legal and $1.2 million of expenses incurred, net of estimated insurance proceeds, related to Hurricane Harvey, partially offset by a decrease in advertising and compensation expenses. The Company incurred a

total of $1.6 million of expenses, net of estimated insurance proceeds, related to Hurricane Harvey. The increase in the corporate overhead allocation made to each of the segments was driven by investments we are making in information technology, other personnel to support long-term performance improvement initiatives, and an increase in accrued incentive compensation.professional service fees.
Provision for bad debts for the three months ended October 31, 2017 was $56.5 million, an increase of $4.9 million from the comparable prior-year period. The most significant reasons for the increase in the provision for bad debts for the three months ended October 31, 2017 comparedincreased to the three months ended October 31, 2016 were
i.growth in the customer receivables portfolio in the three months ended October 31, 2017 compared to a decline in the three months ended October 31, 2016,
ii.higher net-charge offs in the three months ended October 31, 2017 compared to the three months ended October 31, 2016, and
iii.an increase in the qualitative reserve related to Hurricane Harvey of $1.1 million, partially offset by
iv.a decrease in our estimated TDR loss rate as a result of improvements in TDR delinquency rates.

Interest expense decreased to $18.1$27.2 million for the three months ended OctoberJuly 31, 2017, compared to $23.52022 from $10.3 million for the three months ended OctoberJuly 31, 2016,2021, an overall change of $16.9 million. The year-over-year increase was primarily reflectingdriven by a smaller decrease in the allowance for bad debts during the three months ended July 31, 2022 compared to the decrease for the three months ended July 31, 2021 and a year-over-year increase in net charge-offs of $4.9 million. The decrease in the allowance for bad debts during the three months ended July 31, 2022 was primarily driven by a decrease in the customer account receivable portfolio balance and an improvement in historical loss rates. During the three months ended July 31, 2021, the decrease was primarily driven by a decrease in the rate of delinquencies and re-ages, a decrease in the customer account receivable portfolio balance and an improvement in the forecasted unemployment rate that drove a $5.0 million decrease in the economic adjustment.
Interest expense was $6.8 million for the three months ended July 31, 2022 and $6.1 million for the three months ended July 31, 2021, an increase of $0.7 million or 11.8%. The increase was driven by a higher average balance of debt offset by a lower effective cost of borrowing and lower average outstanding balance of debt. Interest expense during the third quarter of fiscal year 2018 benefited from the early redemption of previously issued higher cost asset backed notes.interest rate.
Net income for the three months ended OctoberJuly 31, 20172022 was $1.6$2.1 million or $0.05 per share, which included certain pre-tax charges of $6.3 million or $0.13$0.09 per diluted share, relatedcompared to the write-offnet income 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, and the loss on extinguishment of debt related to the early redemption of our 2016-A Redeemed Notes. This compares to a net loss$37.0 million, or $1.22 per diluted share, for the three months ended OctoberJuly 31, 20162021.
How We Evaluate Our Operations
Senior management focuses on certain key indicators to monitor our performance including:
•Same store sales - Our management considers same store sales, which consists of $3.8 million, or $0.12 per diluted share,both brick and mortar and e-commerce sales, to be an important indicator of our performance because they reflect our attempts to leverage our SG&A costs, which include rent and other store expenses, and they have a direct impact on our total net sales, net income, cash and working capital. Same store sales is calculated by comparing the reported sales for all stores that were open during both comparative fiscal years, starting in the first period in which the store has been open for a full quarter. Sales from closed stores, if any, are removed from each period. Sales from relocated stores have been included net pre-tax chargesin each period if each such store was relocated within the same general geographic market. Sales from expanded stores have also been included in each period.
•Retail gross margin - Our management views retail gross margin as a key indicator of $2.0 million, or $0.04 per diluted share, related to legal and professional fees relatedour performance because it reflects our pricing power relative to the explorationprices we pay for our products. Retail gross margin is calculated by comparing retail total net sales to the cost of strategic alternativesgoods sold.
•60+ Day Delinquencies - Our management views customer account delinquencies as a key indicator of our performance because it reflects the quality of our credit portfolio, drives future credit performance and securities-related litigation, impairmentcredit offerings, and impacts the interest rates we pay on disposals, facility close costs,our asset-backed securitizations. Delinquencies are measured as the percentage of balances that are 60+ days past due.
•Net yield - Our management considers yield to be a key performance metric because it drives future credit decisions and executive management transition costs.credit offerings and directly impacts our net income.  Yield reflects the amount of interest we receive from our portfolio. 
Company Initiatives
In the third quarter of fiscal year 2018, we demonstrated the resiliency of our business model and the significant value we provide our customers as we quickly recovered from the impact of Hurricane Harvey. Despite the challenges caused by Hurricane Harvey, we maintained our focus on enhancing our credit platform to improve near-term results and to support the pursuit of the Company’s long-term growth objectives. Retail performance and margin remain strong, demonstrating our differentiated business model. We continue to see the benefit in our credit operations from the structural changes we are making to increase yield, reduce losses and improve overall credit performance. We delivered the following financial and operational results in the thirdsecond quarter of fiscal year 2018:2023 as compared to the prior fiscal year period (unless otherwise noted):
Achieved•Total consolidated revenue declined 17.1% to $346.6 million, due to a 19.4% decline in total net sales, and a 6.3% reduction in finance charges and other revenues;
•Same store sales decreased 22.0%;
•eCommerce sales increased 11.5% to a second consecutive quarter record of profitability, despite$19.3 million;
•Credit spread was 960 basis points, and fiscal year-to-date the unprecedented impactcredit spread was 1,060 basis points;
•Net earnings were $0.09 per diluted share, compared to net earnings of Hurricane Harvey;$1.22 per diluted share for the same period last fiscal year;
Successfully launched our direct loan program

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•Added two new standalone stores bringing the total number of stores at July 31, 2022 to 163 and added four store-within-a store locations with Belk, Inc.; and
•The Company completed an ABS transaction demonstrating the Company’s ability to access the capital markets even during turbulent market conditions resulting in allthe issuance and sale of our Oklahoma$407.7 million aggregate principal amount of Class A and Tennessee locationsClass B Notes, and issued and retained the Class C Notes in aggregate principal amount of $63.1 million.
Strategic Update
In response to challenging macroeconomic pressures, the Company has updated its near-term strategic priorities which contributedinclude:
•Reducing operating costs. The Company is conducting an extensive review and prioritization of its cost structure. The Company expects current initiatives, combined with prior actions, to our sixth consecutive quartergenerate cost savings of incremental yield improvement. Ourapproximately $12.0 - $16.0 million in the back half of this fiscal year.
•Lowering capital expenditures. The Company is delaying or eliminating several planned capital investments, including adjusting planned new store openings and distribution center expansions. As a result, Conn’s expects to reduce investments in capital expenditures for fiscal year 2023 by approximately $20.0 million compared to its prior expectation.
•Maintaining conservative credit underwriting. The Company is focused on maintaining conservative credit underwriting and remaining disciplined in its approach to credit collections. At July 31, 2022, the weighted average origination loan yield increased to 27.9% in the third quartercredit score of fiscal year 2018 from 24.7% in the third quarter of fiscal year 2017, an increase of over 300 basis points;
Reduced, year-over-year, the balance of accounts 60outstanding balances was 611, 60+ days past due balances as a percentage of the total customer receivables portfolio to 9.9% at October 31, 2017 fromcarrying value was 11.0% at October 31, 2016;
Increased retail gross margin for, and re-aged balances as percentages of the third quarter of fiscal year 2018 to 39.8%, an increase of over 230 basis points compared to the third quarter of fiscal year 2017 rate of 37.5%, driven primarily by improved product margins across all product categories, favorable product mix, and continued focus on increasing efficiencies;
Completed the early redemption of our 2016-A Redeemed Notes on August 15, 2017, which contributed to a $1.9 million reduction in interest expense in the third quarter of fiscal year 2018 compared to the second quarter of fiscal year 2018 and a $5.4 million reduction compared to the third quarter of fiscal year 2017; and
Increased sales financed with the lease-to-own product offered through Progressive Leasing, which we offer to our customers who do not qualify for our proprietary credit programs, to 5.7% in the third quarter of fiscal year 2018 from 3.8% in the second quarter of fiscal year 2018.

We believe that we are positioned to prudently execute our long-term growth strategy and reduce financial and operational risk while enhancing shareholder value. We continue to execute on the following strategic priorities for fiscal year 2018:

Implement our direct loan program offering to further enhance our yield;
Continue to refine and enhance our underwriting model and focus on our collection operations to reduce delinquency rates and future charge-offs to improve future credit segment performance;
Lower our cost of funds;
Optimize our mix of quality, branded products and reduce warehouse, delivery and transportation costs to increase our retail gross margin;
Maintain focus on cost control of our SG&A expenses; and
Open three new stores, all of whichtotal customer portfolio carrying value were successfully opened during the first half of fiscal year 2018.

16.1%.
Outlook
The broad appeal of the Conn's storeour value proposition to our geographically diverse core demographic and the historical unit economics of our business should provide the stability necessary to maintain and current retail real estate market conditions providegrow our business. We expect our brand recognition and long history in our core markets to give us ample room for continued expansion.the opportunity to further penetrate our existing footprint, particularly as we leverage existing marketing spend, logistics infrastructure, and service footprint. There are also many markets in the United StatesU.S. with demographic characteristics similar to those in our existing footprint, which provides substantial opportunities for future growth. We plan to continue to improve our operating results by leveraging our existing infrastructure and seeking to continually optimize the efficiency of our marketing, merchandising, sourcing, distribution and credit operations. As we expand in existing markets and penetrate new markets, we expect to increase our purchase volumes, achieve distribution efficiencies and strengthen our relationships with our key vendors. WeOver time, we also expect our increased store base and the resulting higher net sales to further leverage our existing corporate and regional infrastructure.


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Results of Operations 
The following tables present certain financial and other information, on a condensed consolidated basis: 
Consolidated:Three Months Ended 
 October 31,		 Nine Months Ended 
 October 31,		Consolidated:Three Months Ended
July 31,		Six Months Ended
July 31,
(in thousands)2017 2016 Change 2017 2016 Change(in thousands)20222021Change20222021Change
Revenues:           Revenues:
Total net sales$291,808
 $308,033
 $(16,225) $857,506
 $958,574
 $(101,068)Total net sales$279,512 $346,785 $(67,273)$551,775 $638,081 $(86,306)
Finance charges and other revenues81,364
 68,740
 12,624
 238,139
 205,469
 32,670
Finance charges and other revenues67,120 71,598 (4,478)134,677 144,004 (9,327)
Total revenues373,172
 376,773
 (3,601) 1,095,645
 1,164,043
 (68,398)Total revenues346,632 418,383 (71,751)686,452 782,085 (95,633)
Costs and expenses: 
  
  
      
Costs and expenses: 
Cost of goods sold175,591
 192,374
 (16,783) 519,847
 605,709
 (85,862)Cost of goods sold182,718 216,042 (33,324)361,100 400,921 (39,821)
Selling, general and administrative expenses114,355
 114,457
 (102) 332,524
 347,550
 (15,026)
Provision for bad debts56,512
 51,564
 4,948
 161,891
 169,978
 (8,087)
Selling, general and administrative expenseSelling, general and administrative expense130,142 137,870 (7,728)262,925 263,919 (994)
Provision (benefit) for bad debtsProvision (benefit) for bad debts27,226 10,262 16,964 41,956 (6,874)48,830 
Charges and credits5,861
 1,987
 3,874
 11,156
 5,408
 5,748
Charges and credits(1,484)— (1,484)(1,484)— (1,484)
Total costs and expenses352,319
 360,382
 (8,063) 1,025,418
 1,128,645
 (103,227)Total costs and expenses338,602 364,174 (25,572)664,497 657,966 6,531 
Operating income20,853
 16,391
 4,462
 70,227
 35,398
 34,829
Operating income8,030 54,209 (46,179)21,955 124,119 (102,164)
Interest expense18,095
 23,470
 (5,375) 62,142
 73,504
 (11,362)Interest expense6,808 6,088 720 12,329 15,292 (2,963)
Loss on extinguishment of debt461
 —
 461
 2,907
 —
 2,907
Loss on extinguishment of debt— — — — 1,218 (1,218)
Income (loss) before income taxes2,297
 (7,079) 9,376
 5,178
 (38,106) 43,284
Income before income taxesIncome before income taxes1,222 48,121 (46,899)9,626 107,609 (97,983)
Provision (benefit) for income taxes728
 (3,264) 3,992
 1,916
 (12,618) 14,534
Provision (benefit) for income taxes(907)11,117 (12,024)1,276 25,207 (23,931)
Net income (loss)$1,569
 $(3,815) $5,384
 $3,262
 $(25,488) $28,750
Net incomeNet income$2,129 $37,004 $(34,875)$8,350 $82,402 $(74,052)
Supplementary Operating Segment Information
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 and its 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. We believe our large, attractively merchandised retail stores and credit solutions offer a distinctive value proposition compared to other retailers that target our core customer demographic. The operating segments follow the same accounting policies used in our consolidated financial statements.Condensed Consolidated Financial Statements.
We evaluate a segment’s performance based upon operating income before taxes. Selling, general and administrative expenses include(loss). SG&A includes 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 estimatedcalculated using an annual rate of 2.5% multiplied by the average outstanding portfolio balance for each applicable period.

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The following table represents total revenues, costs and expenses, operating income (loss) and income (loss) before taxes attributable to these operating segments for the periods indicated:
Retail Segment:Three Months Ended
July 31,		Six Months Ended
July 31,
(dollars in thousands)20222021Change20222021Change
Revenues:
Product sales$255,449 $320,245 $(64,796)$505,422 $589,456 $(84,034)
Repair service agreement commissions21,615 23,700 (2,085)41,452 42,831 (1,379)
Service revenues2,448 2,840 (392)4,901 5,794 (893)
Total net sales279,512 346,785 (67,273)551,775 638,081 (86,306)
Finance charges and other273 224 49 544 433 111 
Total revenues279,785 347,009 (67,224)552,319 638,514 (86,195)
Costs and expenses:  
Cost of goods sold182,718 216,042 (33,324)361,100 400,921 (39,821)
Selling, general and administrative expense (1)
98,035 102,157 (4,122)194,065 193,050 1,015 
Provision for bad debts409 142 267 588 160 428 
Charges and credits(1,484)— (1,484)(1,484)— (1,484)
Total costs and expenses279,678 318,341 (38,663)554,269 594,131 (39,862)
Operating (loss) income$107 $28,668 $(28,561)$(1,950)$44,383 $(46,333)
Number of stores:
Beginning of period161 152 158 146 
Opened2 3 5 9 
End of period (2)
163 155 163 155 

Credit Segment:Three Months Ended
July 31,		Six Months Ended
July 31,
(in thousands)20222021Change20222021Change
Revenues:
Finance charges and other revenues$66,847 $71,374 $(4,527)$134,133 $143,571 $(9,438)
Costs and expenses:   
Selling, general and administrative expense (1)
32,107 35,713 (3,606)68,860 70,869 (2,009)
Provision for bad debts26,817 10,120 16,697 41,368 (7,034)48,402 
Total costs and expenses58,924 45,833 13,091 110,228 63,835 46,393 
Operating income7,923 25,541 (17,618)23,905 79,736 (55,831)
Interest expense6,808 6,088 720 12,329 15,292 (2,963)
Loss on extinguishment of debt— — — — 1,218 (1,218)
Income before income taxes$1,115 $19,453 $(18,338)$11,576 $63,226 $(51,650)
(1)For the three months ended July 31, 2022 and 2021, the amount of overhead allocated to each segment reflected in SG&A was $6.6 million and $9.8 million, respectively. For the three months ended July 31, 2022 and 2021, the amount of reimbursement made to the retail segment by the credit segment was $6.6 million and $6.9 million, respectively. For the six months ended July 31, 2022 and 2021, the amount of corporate overhead allocated to each segment reflected in SG&A was $16.2 million and $18.8 million, respectively. For the six months ended July 31, 2022 and 2021, the amount of reimbursement made to the retail segment by the credit segment was $13.4 million and $14.2 million, respectively.
(2)Does not include four store-within-a-store locations with Belk, Inc. opened during the three and six months ended July 31, 2022.

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Retail Segment:Three Months Ended 
 October 31,		 Nine Months Ended 
 October 31,
(in thousands)2017 2016 Change 2017 2016 Change
Revenues:










Product sales$263,786
 $278,056
 $(14,270) $774,741
 $864,269
 $(89,528)
Repair service agreement commissions24,488
 26,354
 (1,866) 72,703
 82,849
 (10,146)
Service revenues3,534
 3,623
 (89) 10,062
 11,456
 (1,394)
Total net sales291,808
 308,033
 (16,225) 857,506
 958,574
 (101,068)
Other revenues95
 337
 (242) 267
 1,268
 (1,001)
Total revenues291,903
 308,370
 (16,467) 857,773
 959,842
 (102,069)
Costs and expenses: 
  
    
  
  
Cost of goods sold175,591
 192,374
 (16,783) 519,847
 605,709
 (85,862)
Selling, general and administrative expenses (1)
80,676
 79,777
 899
 233,290
 244,598
 (11,308)
Provision for bad debts189
 286
 (97) 584
 811
 (227)
Charges and credits5,861
 1,987
 3,874
 11,156
 5,408
 5,748
Total costs and expenses262,317
 274,424
 (12,107) 764,877
 856,526
 (91,649)
Operating income$29,586
 $33,946
 $(4,360) $92,896
 $103,316
 $(10,420)
Number of stores:           
Beginning of period116
 112
   113
 103
  
Open—
 1
   3
 10
  
Closed—
 —
   —
 —
  
End of period116
 113
   116
 113
  
Credit Segment:Three Months Ended 
 October 31,		 Nine Months Ended 
 October 31,
(in thousands)2017 2016 Change 2017 2016 Change
Revenues -           
Finance charges and other revenues$81,269
 $68,403
 $12,866
 $237,872
 $204,201
 $33,671
Costs and expenses: 
  
  
  
  
  
Selling, general and administrative expenses (1)
33,679
 34,680
 (1,001) 99,234
 102,952
 (3,718)
Provision for bad debts56,323
 51,278
 5,045
 161,307
 169,167
 (7,860)
Total cost and expenses90,002
 85,958
 4,044
 260,541
 272,119
 (11,578)
Operating loss(8,733) (17,555) 8,822
 (22,669) (67,918) 45,249
Interest expense18,095
 23,470
 (5,375) 62,142
 73,504
 (11,362)
Loss on extinguishment of debt461
 —
 461
 2,907
 —
 2,907
Loss before income taxes$(27,289) $(41,025) $13,736
 $(87,718) $(141,422) $53,704

(1)For the three months ended October 31, 2017 and 2016, the amount of corporate overhead allocated to each segment reflected in selling, general and administrative expense was $7.3 million and $6.7 million, respectively. For the three months ended October 31, 2017 and 2016, the amount of reimbursement made to the retail segment by the credit segment was $9.3 million and $9.6 million, respectively. For the nine months ended October 31, 2017 and 2016, the amount of corporate overhead allocated to each segment reflected in selling, general and administrative expense was $21.5 million and $18.9 million, respectively. For the nine months ended October 31, 2017 and 2016, the amount of reimbursement made to the retail segment by the credit segment was $27.9 million and $29.0 million, respectively.

Three months ended OctoberJuly 31, 20172022 compared to three months ended OctoberJuly 31, 20162021
Revenues
Revenues. The following table provides an analysis of retail net sales by product category in each period, including repair service agreement (“RSA”) commissions and service revenues, expressed both in dollar amounts and as a percent of total net sales:
 Three Months Ended July 31,%Same Store
(dollars in thousands)2022% of Total2021% of TotalChangeChange% Change
Furniture and mattress$86,320 30.9 %$109,259 31.5 %$(22,939)(21.0)%(24.6)%
Home appliance120,748 43.2 135,444 39.1 (14,696)(10.9)(13.1)
Consumer electronics31,860 11.4 48,413 14.0 (16,553)(34.2)(36.2)
Home office8,857 3.2 17,986 5.2 (9,129)(50.8)(50.1)
Other7,664 2.7 9,143 2.6 (1,479)(16.2)(16.9)
Product sales255,449 91.4 320,245 92.4 (64,796)(20.2)(22.7)
Repair service agreement commissions (1)
21,615 7.7 23,700 6.8 (2,085)(8.8)(15.3)
Service revenues2,448 0.9 2,840 0.8 (392)(13.8) 
Total net sales$279,512 100.0 %$346,785 100.0 %$(67,273)(19.4)%(22.0)%
 Three Months Ended October 31,   % Same store
(dollars in thousands)2017 % of Total 2016 % of Total Change Change % change
Furniture and mattress$97,146
 33.3% $98,898
 32.1% $(1,752) (1.8)% (6.1)%
Home appliance83,837
 28.7
 85,785
 27.8
 (1,948) (2.3) (3.3)
Consumer electronic58,062
 19.9
 65,670
 21.3
 (7,608) (11.6) (10.7)
Home office20,295
 7.0
 22,747
 7.5
 (2,452) (10.8) (8.1)
Other4,446
 1.5
 4,956
 1.6
 (510) (10.3) (11.1)
Product sales263,786
 90.4
 278,056
 90.3
 (14,270) (5.1) (6.6)
Repair service agreement commissions24,488
 8.4
 26,354
 8.5
 (1,866) (7.1) (10.1)
Service revenues3,534
 1.2
 3,623
 1.2
 (89) (2.5)  
Total net sales$291,808
 100.0% $308,033
 100.0% $(16,225) (5.3)% (7.0)%
(1) The total change in sales of RSA commissions includes retrospective commissions, which are not reflected in the change in same store sales.
SalesThe decrease in total net sales for the three months ended OctoberJuly 31, 2017 were impacted negatively2022 was primarily driven by general softnessa decrease in consumer spending. The following provides a summary of the same store sales performance of 22.0%. The decrease in same store sales was primarily driven by a tightening of underwriting standards from our product categories duringlease-to-own partners, the third quarter of fiscal year 2018 compared toeffect the third quarter of fiscal year 2017:
•Furniture unit volume decreased 12.5%,benefits stimulus had on sales in the prior period and lower demand in the current period. The decrease in same store sales was partially offset by a 9.3% increase in average selling price;
Mattress unit volume decreased 15.1%, partially offset by a 4.5% increase in average selling price;
Home appliance unit volume decreased 5.0%, partially offset by a 1.8% increase in average selling price;
Consumer electronic unit volume decreased 11.9%, partially offset by a 1.5% increase in average sales price; and
Home office unit volume decreased 20.4%, partially offset by a 15.5% increase in average selling price.new store growth.
The following table provides the change of the components of finance charges and other revenues:
Three Months Ended 
 October 31,		  Three Months Ended
July 31,
(in thousands)2017 2016 Change(in thousands)20222021Change
Interest income and fees$74,144
 $58,404
 $15,740
Interest income and fees$61,760 $65,003 $(3,243)
Insurance income7,125
 9,999
 (2,874)Insurance income5,087 6,371 (1,284)
Other revenues95
 337
 (242)Other revenues273 224 49 
Finance charges and other revenues$81,364
 $68,740
 $12,624
Finance charges and other revenues$67,120 $71,598 $(4,478)
The increasedecrease in interest incomefinance charges and feesother revenues was primarily due to a yield rate of 19.8% during the third quarter of fiscal year 2018, 480 basis points higher than the third quarter of fiscal year 2017, partially offset by a decline of 3.7%4.9% decrease in the average outstanding balance of the customer accounts receivable portfolio. Insurance income is comprised of sales commissions from third-party insurance companies at the time we sell the coverage, and we may receive retrospective commissions, which are additional commissions paid by the insurance carrier if insurance claims are less than earned premiums. Insurance income decreased over the prior year period primarily due to the decrease in retrospective commissionsportfolio as well as a result of higher claim volumes related to Hurricane Harvey.

decline in insurance commissions.
The following table provides key portfolio performance information: 
Three Months Ended
July 31,
(dollars in thousands)20222021Change
Interest income and fees$61,760 $65,003 $(3,243)
Net charge-offs(36,074)(31,184)(4,890)
Interest expense(6,808)(6,088)(720)
Net portfolio income$18,878 $27,731 $(8,853)
Average outstanding portfolio balance$1,051,952 $1,105,936 $(53,984)
Interest income and fee yield (annualized)23.3 %23.3 %
Net charge-off % (annualized)13.7 %11.3 %

24
 Three Months Ended 
 October 31,		  
(dollars in thousands)2017 2016 Change
Interest income and fees$74,144
 $58,404
 $15,740
Net charge-offs(56,519) (50,216) (6,303)
Interest expense(18,095) (23,470) 5,375
Net portfolio income$(470) $(15,282) $14,812
Average portfolio balance$1,485,683
 $1,542,767
 $(57,084)
Interest income and fee yield (annualized)19.8% 15.0%  
Net charge-off % (annualized)15.2% 13.0%  
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Retail Gross Margin
Three Months Ended 
 October 31,		  Three Months Ended
July 31,
(dollars in thousands)2017 2016 Change(dollars in thousands)20222021Change
Total net sales$291,808
 $308,033
 $(16,225)
Retail total net salesRetail total net sales$279,512 $346,785 $(67,273)
Cost of goods sold$175,591
 $192,374
 $(16,783)Cost of goods sold182,718 216,042 (33,324)
Retail gross margin39.8% 37.5%  
Retail gross margin$96,794 $130,743 $(33,949)
Retail gross margin percentageRetail gross margin percentage34.6 %37.7 %
The increasedecrease in retail gross margin was primarily due to improveddriven by increased product margins across allcosts as a result of higher freight, higher fuel costs and the deleveraging of fixed distribution costs. These increases were partially offset by an increase in RSA commissions and a more profitable product categories, favorable product mix and continued focus on increasing efficiencies.mix.
Selling, General and Administrative ExpensesExpense
Three Months Ended 
 October 31,		  Three Months Ended
July 31,
(dollars in thousands)2017 2016 Change(dollars in thousands)20222021Change
Selling, general and administrative expenses:     
Retail segment$80,676
 $79,777
 $899
Retail segment$98,035 $102,157 $(4,122)
Credit segment33,679
 34,680
 (1,001)Credit segment32,107 35,713 (3,606)
Selling, general and administrative expenses - Consolidated$114,355
 $114,457
 $(102)
Selling, general and administrative expenses as a percent of total revenues30.6% 30.4%  
Selling, general and administrative expense - ConsolidatedSelling, general and administrative expense - Consolidated$130,142 $137,870 $(7,728)
Selling, general and administrative expense as a percent of total revenuesSelling, general and administrative expense as a percent of total revenues37.5 %33.0 % 
The SG&A increasedecrease in the retail segment was primarily due to an increasea decline in the corporate overhead allocation,variable costs and declines in advertising and labor costs as a result of cost saving initiatives. These decreases were partially offset by an increase in occupancy costs due to additional stores opened in fiscal year 2018,higher utilities costs and $1.2 million of expenses incurred, net of estimated insurance proceeds, related to Hurricane Harvey, partially offset by a decrease in advertising expense. The increase in retail SG&A as well as the decrease in retail revenue resulted in an increase in SG&A as a percent of retail segment revenues of 170 basis points for the third quarter of fiscal year 2018 as compared to the third quarter of fiscal year 2017. The SG&A decrease in the credit segment was primarily due to a decrease in compensation costs, partially offset by an increase in the corporate overhead allocation. new store growth.
As a percent of average total customer portfolio balance (annualized), SG&A for the credit segment was 12.2% for the three months ended July 31, 2022 as compared to 12.9% for the three months ended July 31, 2021. The SG&A decrease in the third quarter of fiscal year 2018 increased 10 basis points comparedcredit segment was primarily due to the third quarter of fiscal year 2017. The increasea decrease in the corporate overhead allocation made to each of the segments was driven by investments we are making in information technology, other personnel to support long-term performance improvement initiatives,general operating costs, including legal and an increase in accrued incentive compensation.

professional service fees.
Provision for Bad Debts
Three Months Ended
July 31,
(dollars in thousands)20222021Change
Retail segment$409 $142 $267 
Credit segment26,817 10,120 16,697 
Provision for bad debts - Consolidated$27,226 $10,262 $16,964 
Provision for bad debts - Credit segment, as a percent of average outstanding portfolio balance (annualized)10.2 %3.7 % 

25
 Three Months Ended 
 October 31,		  
(dollars in thousands)2017 2016 Change
Provision for bad debts:     
Retail segment$189
 $286
 $(97)
Credit segment56,323
 51,278
 5,045
Provision for bad debts - Consolidated$56,512
 $51,564
 $4,948
Provision for bad debts - Credit segment, as a percent of average portfolio balance (annualized)15.2% 13.3%  
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The provision for bad debts increased by $4.9to $27.2 million for the three months ended OctoberJuly 31, 20172022 from $10.3 million for the three months ended July 31, 2021, an overall change of $16.9 million. The year-over-year increase was primarily driven by a smaller decrease in the allowance for bad debts during the three months ended July 31, 2022 compared to the three months ended OctoberJuly 31, 2016.2021 and a year-over-year increase in net charge-offs of $4.9 million. The most significant reasonsdecrease in the allowance for this increase were:bad debts during the three months ended July 31, 2022 was primarily driven by a decrease in the customer account receivable portfolio balance and an improvement in historical loss rates. During the three months ended July 31, 2021, the decrease was primarily driven by a decrease in the rate of delinquencies and re-ages, a decrease in the customer account receivable portfolio and an improvement in the forecasted unemployment rate that drove a $5.0 million decrease in the economic adjustment.
i.growth in the customer receivables portfolio in the three months ended October 31, 2017 compared to a decline in the three months ended October 31, 2016;
ii.higher net-charge offs in the three months ended October 31, 2017 compared to the three months ended October 31, 2016; and
iii.an increase in the qualitative reserve related to Hurricane Harvey of $1.1 million; partially offset by
iv.a decrease in our estimated TDR loss rate as a result of improvements in TDR delinquency rates.
Charges and Credits
 Three Months Ended 
 October 31,		  
(in thousands)2017 2016 Change
Store and Facility closure costs$—
 $954
 $(954)
Impairments from disposals—
 595
 (595)
Legal and professional fees related to securities-related litigation—
 158
 (158)
Employee severance—
 280
 (280)
Write-off of capitalized software costs5,861
 —
 5,861
 $5,861
 $1,987
 $3,874
During the three months ended OctoberJuly 31, 2017,2022, we incurredrecognized 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$1.5 million gain related to the implementationtermination of a new point of sale system that began in fiscal year 2013. Duringlease.
Interest Expense
Interest expense was $6.8 million for the three months ended OctoberJuly 31, 2016, we incurred charges associated with store2022 and facility closures, impairments from disposals, legal and professional fees related to our securities-related litigation, and charges$6.1 million for severance. The impairments from disposals included the write-off of leasehold improvements for one store we relocated prior to the end of its useful life and incurred costs for terminated store projects prior to starting construction.
Interest Expense
For the three months ended OctoberJuly 31, 2017, net interest expense decreased2021, an increase of $0.7 million or 11.8%. The increase was driven by $5.4 million from the prior year comparative period, primarily reflectinga higher average balance of debt offset by a lower weighted average cost of borrowing and a lower average outstanding balance of debt.
Loss on Extinguishment of Debt
During the three months ended October 31, 2017, we wrote off $0.5 million of debt issuance costs related to the early retirement of our 2016-A Redeemed Notes.


effective interest rate.
Provision for Income Taxes
Three Months Ended 
 October 31,		  Three Months Ended
July 31,
(dollars in thousands)2017 2016 Change(dollars in thousands)20222021Change
Provision (benefit) for income taxes$728
 $(3,264) $3,992
Provision (benefit) for income taxes$(907)$11,117 $(12,024)
Effective tax rate31.7% 46.1%  
Effective tax rate(74.2)%23.1 % 
The decrease in the income tax rateexpense for the three months ended OctoberJuly 31, 20172022 compared to the three months ended OctoberJuly 31, 20162021 was primarily due todriven by a $46.9 million decrease in pre-tax earnings at the statutory rate due to discrete items, partially offset by an increase in the rate due to state income taxes.of 21%.

NineSix months ended OctoberJuly 31, 20172022 compared to Ninesix months ended OctoberJuly 31, 20162021
Revenues
Revenues. The following table provides an analysis of retail net sales by product category in each period, including repair service agreement (“RSA”) commissions and service revenues, expressed both in dollar amounts and as a percent of total net sales:
 Six Months Ended July 31,%Same Store
(dollars in thousands)2022% of Total2021% of TotalChangeChange% Change
Furniture and mattress$174,414 31.6 %$203,750 31.9 %$(29,336)(14.4)%(25.5)%
Home appliance230,476 41.7 248,705 39.0 (18,229)(7.3)(9.7)
Consumer electronics65,464 11.9 86,451 13.5 (20,987)(24.3)(26.3)
Home office19,046 3.5 32,507 5.1 (13,461)(41.4)(41.5)
Other16,022 2.9 18,043 2.8 (2,021)(11.2)(12.5)
Product sales505,422 91.6 589,456 92.3 (84,034)(14.3)(16.9)
Repair service agreement commissions (1)
41,452 7.5 42,831 6.7 (1,379)(3.2)(11.3)
Service revenues4,901 0.9 5,794 1.0 (893)(15.4)
Total net sales$551,775 100.0 %$638,081 100.0 %$(86,306)(13.5)%(16.4)%
 Nine Months Ended October 31,   % Same store
(dollars in thousands)2017 % of Total 2016 % of Total Change Change % change
Furniture and mattress$286,886
 33.5% $309,766
 32.3% $(22,880) (7.4)% (11.0)%
Home appliance253,044
 29.5
 275,048
 28.7
 (22,004) (8.0) (9.7)
Consumer electronic166,761
 19.4
 197,270
 20.6
 (30,509) (15.5) (16.0)
Home office54,945
 6.4
 66,921
 7.0
 (11,976) (17.9) (17.6)
Other13,105
 1.6
 15,264
 1.6
 (2,159) (14.1) (16.2)
Product sales774,741
 90.4
 864,269
 90.2
 (89,528) (10.4) (12.4)
Repair service agreement commissions72,703
 8.5
 82,849
 8.6
 (10,146) (12.2) (13.9)
Service revenues10,062
 1.1
 11,456
 1.2
 (1,394) (12.2)  
Total net sales$857,506
 100.0% $958,574
 100.0% $(101,068) (10.5)% (12.5)%
(1) The total change in sales of RSA commissions includes retrospective commissions, which are not reflected in the change in same store sales.
The decrease in total net sales for the six months ended July 31, 2022 was primarily driven by a decrease in same store sales of 16.4%. The decrease in same store sales was impacted by underwriting changes made during fiscal year 2017, one less business day in fiscal year 2018 versus the leap year in fiscal year 2017, and general softness in consumer spending. The following provides a summary of the same store sales performance of our product categories during the nine months ended October 31, 2017 compared to the nine months ended October 31, 2016:
Furniture unit volume decreased 20.7%, partially offsetprimarily driven by a 11.4% increasetightening of underwriting standards from our lease-to-own partners, the effect the benefits stimulus had on sales in average selling price;the prior period and lower demand in the current period.
Mattress unit volume decreased 17.4%, partially offset by a 10.2% increase in average selling price;

Home appliance unit volume decreased 9.0% and average selling price decreased 0.8%;26
Consumer electronic unit volume decreased 16.5%, partially offset by a 0.6% increase in average selling price; and
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Home office unit volume decreased 21.0%, partially offset by a 4.3% increase in average selling price.
The following table provides the change of the components of finance charges and other revenues:
Nine Months Ended 
 October 31,		  Six Months Ended
July 31,
(in thousands)2017 2016 Change(in thousands)20222021Change
Interest income and fees$210,765
 $173,527
 $37,238
Interest income and fees$124,474 $132,682 $(8,208)
Insurance income27,107
 30,674
 (3,567)Insurance income9,659 10,889 (1,230)
Other revenues267
 1,268
 (1,001)Other revenues544 433 111 
Finance charges and other revenues$238,139
 $205,469
 $32,670
Finance charges and other revenues$134,677 $144,004 $(9,327)
The increasedecrease in interest incomefinance charges and feesother revenues was primarily due to a yield rate of 18.9% during the nine months ended October 31, 2017, 400 basis points higher than the nine months ended October 31, 2016, partially offset by a decline of 3.6%5.9% decrease in the average outstanding balance of the customer accounts receivable portfolio. Interest incomeportfolio and fees for the nine months ended October 31, 2016 included the negative impact of adjustments of $8.2 million as a result of changesdecline in estimates for allowances for no-interest option credit programs and deferred interest. Excluding the impact of changes in estimates, the yield rate increased 320 basis points from the nine months ended October 31, 2016. Insurance income is comprised of sales commissions from third-party insurance companies at the time we sell the coverage, and we may receive retrospective commissions, which are additional commissions paid by the insurance carrier if insurance claims are less than earned premiums. Insurance income decreased over the prior year period primarily due to the decrease in retrospective commissions as a result of higher claim volumes related to Hurricane Harvey.commissions.
The following table provides key portfolio performance information: 
Nine Months Ended 
 October 31,		  Six Months Ended
July 31,
(dollars in thousands)2017 2016 Change(dollars in thousands)20222021Change
Interest income and fees$210,765
 $173,527
 $37,238
Interest income and fees$124,474 $132,682 $(8,208)
Net charge-offs(170,393) (159,204) (11,189)Net charge-offs(68,535)(76,123)7,588 
Interest expense(62,142) (73,504) 11,362
Interest expense(12,329)(15,292)2,963 
Net portfolio income$(21,770) $(59,181) $37,411
Net portfolio income$43,610 $41,267 $2,343 
Average portfolio balance$1,493,292
 $1,548,966
 $(55,674)
Average outstanding portfolio balanceAverage outstanding portfolio balance$1,074,901 $1,142,080 $(67,179)
Interest income and fee yield (annualized)18.9% 14.9%  Interest income and fee yield (annualized)23.4 %23.4 %
Net charge-off % (annualized)15.2% 13.7%  Net charge-off % (annualized)12.8 %13.3 %
Retail Gross Margin
Nine Months Ended 
 October 31,		  Six Months Ended
July 31,
(dollars in thousands)2017 2016 Change(dollars in thousands)20222021Change
Total net sales$857,506
 $958,574
 $(101,068)
Retail total net salesRetail total net sales$551,775 $638,081 $(86,306)
Cost of goods sold$519,847
 $605,709
 $(85,862)Cost of goods sold361,100 400,921 (39,821)
Retail gross margin39.4% 36.8%  
Retail gross margin$190,675 $237,160 $(46,485)
Retail gross margin percentageRetail gross margin percentage34.6 %37.2 %
The increasedecrease in retail gross margin was primarily due to improveddriven by increased product margins across all product categories, favorable product mixcosts as a result of higher freight, higher fuel costs and continued focus on increasing efficiencies.the deleveraging of fixed distribution costs. These increases were partially offset by an increase in RSA commissions.
Selling, General and Administrative ExpensesExpense
Nine Months Ended 
 October 31,		  Six Months Ended
July 31,
(dollars in thousands)2017 2016 Change(dollars in thousands)20222021Change
Selling, general and administrative expenses:     
Retail segment$233,290
 $244,598
 $(11,308)Retail segment$194,065 $193,050 $1,015 
Credit segment99,234
 102,952
 (3,718)Credit segment68,860 70,869 (2,009)
Selling, general and administrative expenses - Consolidated$332,524
 $347,550
 $(15,026)
Selling, general and administrative expenses as a percent of total revenues30.3% 29.9%  
Selling, general and administrative expense - ConsolidatedSelling, general and administrative expense - Consolidated$262,925 $263,919 $(994)
Selling, general and administrative expense as a percent of total revenuesSelling, general and administrative expense as a percent of total revenues38.3 %33.7 % 
The SG&A decreaseincrease in the retail segment was primarily due to a decrease in compensation, advertising, delivery,higher occupancy costs associated with new store growth and transportation costs,higher general operating costs. The increase was partially offset by an increasedeclines in the corporate overhead allocation, an increase in occupancy costs due to additional stores opened in fiscal year 2018,advertising and $1.2 million of expenses incurred, net of estimated insurance proceeds, related to Hurricane Harvey. The decrease in retail revenue resulted in an increase in SG&A as a percent of retail segment revenues of 170 basis points for the nine months ended October 31, 2017 as compared to the nine months ended October 31, 2016. The SG&A decrease in the credit segment was primarily due to a decrease in compensation costs, partially offset by an increase in the corporate overhead allocation. labor costs.
As a percent of average total customer portfolio balance (annualized), SG&A for the credit segment inwas 12.8% for the ninesix months ended OctoberJuly 31, 2017 remained the same2022 as compared to 12.4% for the ninesix months ended OctoberJuly 31, 2016.2021. The SG&A decrease in the credit segment was primarily due to a decline in labor costs. The increase in the corporate

overhead allocation made to eachSG&A as a percent of the segmentsaverage customer portfolio balance was driven by investments we are makingdue to a year-over-year decline in information technology, other personnel to support long-term performance improvement initiatives, and an increase in accrued incentive compensation.the portfolio balance.


27
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Provision for Bad Debts
Nine Months Ended 
 October 31,		  Six Months Ended
July 31,
(dollars in thousands)2017 2016 Change(dollars in thousands)20222021Change
Provision for bad debts:     
Retail segment$584
 $811
 $(227)Retail segment$588 $160 $428 
Credit segment161,307
 169,167
 (7,860)Credit segment41,368 (7,034)48,402 
Provision for bad debts - Consolidated$161,891
 $169,978
 $(8,087)Provision for bad debts - Consolidated$41,956 $(6,874)$48,830 
Provision for bad debts - Credit segment, as a percent of average portfolio balance (annualized)14.4% 14.6%  
Provision for bad debts - Credit segment, as a percent of average outstanding portfolio balance (annualized)Provision for bad debts - Credit segment, as a percent of average outstanding portfolio balance (annualized)7.7 %(1.2)% 
The provision for bad debts decreased by $8.1increased to $42.0 million for the ninesix months ended OctoberJuly 31, 20172022 from $6.9 million benefit for the six months ended July 31, 2021, an overall change of $48.9 million. The year-over-year increase was primarily driven by a smaller decrease in the allowance for bad debts during the six months ended July 31, 2022 compared to the ninedecrease for the six months ended OctoberJuly 31, 2016.2021. This is partially offset by a year-over-year decrease in net charge-offs of $7.6 million. The most significant reasonsdecrease in the allowance for thisbad debts during the six months ended July 31, 2022 was primarily driven by a decrease were:in the customer accounts receivable portfolio balance and a decrease in loss rates. During the six months ended July 31, 2021, the decrease was primarily driven by a decrease in the customer accounts receivable portfolio balance, an improvement in the forecasted unemployment rate that drove a $25.0 million decrease in the economic adjustment and a decline in the estimated loss rates driven by a decline in delinquencies.
i.a decrease in our estimated non-TDR loss rate as a result of the inclusion of first payment default rates as a factor in our allowance for bad debts estimate;
ii.changes in estimates of $5.0 million reflected as an increase to provision for bad debts for the nine months ended October 31, 2016 related to sales tax recovery on previously charged-off accounts;
iii.a decrease in our estimated TDR loss rate as a result of improvements in TDR delinquency rates; and
iv.a larger decrease in the customer receivables portfolio in the nine months ended October 31, 2017 compared to the nine months ended October 31, 2016; partially offset by
v.higher net-charge offs in the nine months ended October 31, 2017 compared to the nine months ended October 31, 2016; and
vi.an increase in the qualitative reserve related to Hurricane Harvey of $1.1 million.
Charges and Credits
 Nine Months Ended 
 October 31,		  
(in thousands)2017 2016 Change
Store and facility closure costs$1,349
 $954
 $395
Impairments from disposals—
 1,980
 (1,980)
Legal and professional fees related to the exploration of strategic alternatives and securities-related litigation34
 747
 (713)
Employee severance1,317
 1,493
 (176)
Write-off of software capitalized costs

5,861
 —
 5,861
Indirect tax audit reserve2,595
 —
 2,595
Executive management transition costs—
 234
 (234)
 $11,156
 $5,408
 $5,748
During the ninesix months ended OctoberJuly 31, 2017,2022, we incurred exit costs associated with reducing the square footage ofrecognized a distribution center, charges for severance due to changes in our executive management team, an increase to 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$1.5 million gain related to the implementationtermination of a new point of sale system that began in fiscal year 2013. During the nine months ended October 31, 2016, we had costs associated with store and facility closures, impairments from disposals of two real estate assets, legal and professional fees related to our securities-related litigation, charges for severance and transition costs due to changes in the executive management team. The impairments from disposals included the write-off of leasehold improvements for one store.

lease.
Interest Expense
ForInterest expense was $12.3 million for the ninesix months ended OctoberJuly 31, 2017, net interest expense decreased2022 and $15.3 million for the six months ended July 31, 2021, a decrease of $3.0 million or 19.6%. The decrease was driven by $11.4 million from the prior year comparative period, primarily reflecting a lower weightedeffective interest rate offset by a higher average cost of borrowing and a lower average outstanding balance of debt.
Loss on Extinguishment of Debt
Duringdebt during the nine months ended October 31, 2017, we wrote-off $2.9 million of debt issuance costs related to an amendment to our revolving credit facility for lenders that did not continue to participate, the early retirement of our 2015-A Redeemed Notes, and the early retirement of our 2016-A Redeemed Notes.current period.
Provision for Income Taxes
Nine Months Ended 
 October 31,		  Six Months Ended
July 31,
(dollars in thousands)2017 2016 Change(dollars in thousands)20222021Change
Provision (benefit) for income taxes$1,916
 $(12,618) $14,534
Provision (benefit) for income taxes$1,276 $25,207 $(23,931)
Effective tax rate37.0% 33.1%  
Effective tax rate13.3 %23.4 % 
The increasedecrease in the income tax rateexpense for the ninesix months ended OctoberJuly 31, 20172022 compared to the ninesix months ended OctoberJuly 31, 20162021 was primarily due to an increasedriven by a $98.0 million decrease in pre-tax earnings at the statutory rate due to state income taxes.of 21%.

Customer Accounts Receivable Portfolio
We provide in-house financing to individual consumers on a short- and medium-term basis (contractual terms generally range from 12 to 36 months) for the purchase of durable products for the home. A significant portion of our customer credit portfolio is due from customers that are considered higher-risk, subprime borrowers. Our financing is executed using contracts that require fixed monthly payments over fixed terms. We maintain a secured interest in the product financed. If a payment is delayed, missed or paid only in part, the account becomes delinquent. Our collection personnel attempt to contact a customer once their account becomes delinquent. Our loan contracts generally provide forreflect an interest at the maximum rate allowed by the respective regulations in the states in which we operate, which generally rangeof between 18% and 30%36%. During the third quarter of fiscal 2017, weWe have implemented our new direct consumer loan program across all Texas, locations. During the first quarter of fiscal year 2018, we implemented our new direct loan program in all Louisiana, locations. During the third quarter of fiscal year 2018, we implemented our new direct loan program in all Tennessee and Oklahoma locations. The states of Texas, Louisiana, Tennessee and Oklahoma representrepresented approximately 78%69% of our third quarter of fiscal year 2018 originations which under our previous offerings had aduring the six months ended July 31, 2022, with maximum equivalent interest rate of approximately 21%, compared to an interest raterates of up to 32% in Oklahoma, up to 30% under our new direct loan programs.in Texas and Tennessee, and up to 36% in Louisiana. In states where regulations do not generally limit the interest rate charged, we increased our rates inloan contracts generally reflect an interest rate between 29.99% and 35.99%. These states represented 14% of our originations during the third quarter of fiscal year 2017 to 29.99%.six months ended July 31, 2022.
We offer 12- and 18-month cash-option,qualified customers a 12-month no-interest option finance programs.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.

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We regularly extend or "re-age"“re-age” a portion of our delinquent customer accounts as a part of our normal collection procedures to protect our investment. Generally, extensions are granted to customers who have experienced a financial difficulty (such as the temporary loss of employment), which is subsequently resolved, and when the customer indicates a willingness and ability to resume making monthly payments. These re-ages involve modifying the payment terms to defer a portion of the cash payments currently required of the debtor to help the debtor improve his or her financial condition and eventually be able to pay the account balance. 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. We may also charge the customer an extension fee, which approximates the interest owed for the time period the contract was past due. As partOur re-age programs consist of our re-age program, we have straight extension programsextensions and two payment update programs,updates, which also include unilateral extensions to customers who make two full payments in three calendar months in certain states. Re-ages are not granted to debtors who demonstrate a lack of intent or ability to service the obligation or have reached our limits for account re-aging. The re-aged receivable balance as of October 31, 2017 includes $71.8 million in first time re-ages related to customers within FEMA-designated Hurricane Harvey disaster areas. To a much lesser extent, we may provide the customer the ability to re-age their obligation by refinancing the account, which typically does not change the interest rate or the total principal amount due from the customer but does reduce the monthly contractual payments and extends the term. Under these options, as with extensions, the customer must resolve the reason for delinquency and show a willingness and ability to resume making contractual monthly payments.


The following tables present, for comparison purposes, information about our managed portfolio (information reflects on a combined basis the securitized receivables transferred to the VIEs and receivables not transferred to the VIEs): 
As of July 31,
20222021
Weighted average credit score of outstanding balances (1)
611 608 
Average outstanding customer balance$2,508 $2,414 
Balances 60+ days past due as a percentage of total customer portfolio carrying value (2)(3)(4)
11.0 %7.2 %
Re-aged balance as a percentage of total customer portfolio carrying value (2)(3)(5)
16.1 %20.4 %
Carrying value of account balances re-aged more than six months (in thousands) (3)
$35,808 $70,058 
Allowance for bad debts and uncollectible interest as a percentage of total customer accounts receivable portfolio balance17.2 %18.3 %
Percent of total customer accounts receivable portfolio balance represented by no-interest option receivables34.0 %29.8 %
 As of October 31,

2017 2016
Weighted average credit score of outstanding balances(1)
589
 591
Average outstanding customer balance$2,405
 $2,354
Balances 60+ days past due as a percentage of total customer portfolio balance(2)(3)
9.9% 11.0%
Re-aged balance as a percentage of total customer portfolio balance(2)(4)
23.8% 16.0%
Account balances re-aged more than six months (in thousands)$80,516
 $73,385
Allowance for bad debts as a percentage of total customer portfolio balance13.6% 13.3%
Percent of total customer portfolio balance represented by no-interest option receivables22.3% 28.3%
Three Months Ended
July 31,		Six Months Ended
July 31,
2022202120222021
Total applications processed257,381 336,438 525,085 634,344 
Weighted average origination credit score of sales financed (1)
620 614 620 615 
Percent of total applications approved and utilized23.5 %22.5 %21.8 %22.2 %
Average income of credit customer at origination$50,800 $47,700 $50,500 $48,100 
Percent of retail sales paid for by:  
In-house financing, including down payments received52.1 %50.9 %51.0 %49.9 %
Third-party financing18.9 %17.5 %18.4 %17.2 %
Third-party lease-to-own option6.8 %11.5 %7.1 %11.9 %
77.8 %79.9 %76.5 %79.0 %
(1)Credit scores exclude non-scored accounts.

Three Months Ended 
 October 31,
Nine Months Ended 
 October 31,

2017 2016 2017 2016
Total applications processed321,373
 326,131
 909,287
 975,363
Weighted average origination credit score of sales financed(1)
611
 610
 609
 610
Percent of total applications approved and utilized29.1% 32.7% 31.1% 35.1%
Average down payment2.9% 3.1% 3.2% 3.4%
Average income of credit customer at origination$43,500
 $42,200
 $42,700
 $41,400
Percent of retail sales paid for by: 
  
  
  
In-house financing, including down payments received72.0% 72.3% 71.7% 69.8%
Third-party financing15.1% 16.4% 15.8% 15.4%
Third-party lease-to-own option5.7% 5.2% 5.7% 5.1%

92.8% 93.9% 93.2% 90.3%
(2)Accounts that become delinquent after being re-aged are included in both the delinquency and re-aged amounts.
(1)Credit scores exclude non-scored accounts.
(2)Accounts that become delinquent after being re-aged are included in both the delinquency and re-aged amounts.
(3)The balance of 60+ days past due as
(3)Carrying value reflects the total customer accounts receivable portfolio balance, net of deferred fees and origination costs, the allowance for no-interest option credit programs and the allowance for uncollectible interest.
(4)Increase was primarily due to a percentage of total customer portfolio balance as of October 31, 2017 reflects the impact of first time re-ages related to customers within FEMA-designated Hurricane Harvey disaster areas.
(4)The re-aged balance as a percentage of total customer portfolio as of October 31, 2017 includes $71.8 million in first time re-ages related to customers within FEMA-designated Hurricane Harvey disaster areas.
The decrease in the weighted average credit score of outstanding balances from October 31, 2016 to October 31, 2017 wascash collections driven by us moving originationthe impact of long-term equal-payment, no-interest programsstimulus benefits in prior year.
(5)Decrease was primarily due to a third-party, partially offset by underwriting changes made duringthe change in the unilateral re-age policy that occurred in the second quarter of fiscal year 2017. The2021 and the tightening of underwriting changes were made to reduce credit risk, specifically related to new customers, while identifying opportunities to increase originations to certain existing customers.standards that occurred in fiscal year 2021 and fiscal year 2022.
Our customer portfolio balance and related allowance for uncollectible accounts are segregated between customer accounts receivable and restructured accounts. Customer accounts receivable include all accounts for which the payment term has not

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been cumulatively extended over three months or refinanced. Restructured accounts includesinclude all accounts for which payment term has been re-aged in excess of three months or refinanced.
For customer accounts receivable (excluding restructured accounts), the allowance for uncollectible accounts as a percentage of the outstandingtotal customer accounts receivable portfolio balance rose from 11.0%decreased to 15.0% as of OctoberJuly 31, 2016 to 11.1%2022 from 15.5% as of OctoberJuly 31, 2017.2021. The decrease was primarily related to a decrease in loss rates.
The percentage of the carrying value of non-restructured accounts greater than 60 days past due decreased 110increased 430 basis points comparedover the prior year period to October 31, 2016 to 8.2%9.6% as of OctoberJuly 31, 2017. We expect delinquency levels2022 from 5.3% as of July 31, 2021. The increase was primarily due to continue to decline over time. The decreaselower payment rates and the impact of stimulus benefits in delinquency and changes in expectations for customer performance and cash recoveries on charged-off accounts are reflected in our projection models.the prior period.
For restructured accounts, the allowance for uncollectible accounts as a percentage of the portfolio balance was 37.0%43.0% as of OctoberJuly 31, 20162022 as compared to 36.7%37.8% as of OctoberJuly 31, 2017.2021. This 30 basis point decreaseincrease reflects the impact of improvedhigher delinquency rates partially offset by an increase in charge-offs in the current period compared to a year ago.

and loss rates on restructured accounts.
The percent of bad debt charge-offs, net of recoveries, to average outstanding portfolio balance was 13.0%13.7% for the three months ended OctoberJuly 31, 20162022 compared to 15.2%11.3% for the three months ended OctoberJuly 31, 2017. The2021. This increase wasis primarily duerelated to the accelerationimpact of charge-offs related to bankruptcy and legal settlement accounts duringstimulus benefits in the third quarter of the current year.prior period.
As of OctoberJuly 31, 20172022 and 2016,2021, balances under no-interest programs included within customer receivables were $331.6$354.1 million and $434.5$329.6 million, respectively. DuringThis increase is due to a shift in the underwriting strategy that occurred in the first quarter of fiscal year 2017 we shifted our 18- and 24-month equal-payment, no-interest programs to a third-party and reduced the availability of cash-option, no-interest programs to higher risk customers. In the third quarter of fiscal year 2017 we began to issue 18 month cash-option, no-interest program. As a result, a decline in the proportion of accounts financed under no-interest programs is likely to result in an increase in the overall yield recognized.2022.

Liquidity and Capital Resources
We require liquidity and capital resources to finance our operations and future growth as we add new stores to our operations, which in turn requires additional working capital for increased customer receivables and inventory. We generally finance our operations through a combination of cash flow generated from operations, the use of our revolving credit facility,Revolving Credit Facility, and through periodic securitizations of originated customer receivables. We plan to execute periodic securitizations of future originated customer receivables.
We believe, based on our current projections, that we have sufficient sources of liquidity to fund our operations, store expansion and renovation activities, and capital expenditures for at least the next 12 months.
Operating cash flows. For the ninesix months ended OctoberJuly 31, 2017,2022, net cash provided by operating activities was $82.7$62.8 million compared to $183.0$176.9 million for the ninesix months ended OctoberJuly 31, 2016.2021. The decrease in net cash provided by operating activities was primarily driven by an increaselower cash collections compared to prior year due to lower payment rates, normal fluctuation in cash used for working capital primarily used to purchase inventory related to seasonal sales activity,accrued expenses and a decrease in cash used for accounts payable, a decrease in the amount of tenant improvement allowances received, partially offset by a decrease in cash used to fund customer receivables, and an increase in net income when adjusted for non-cash activity.activity in comparison to the prior year period.
Investing cash flows.  For the ninesix months ended OctoberJuly 31, 2017,2022, net cash used in investing activities was $12.0$35.1 million compared to $41.1$19.2 million for the ninesix months ended OctoberJuly 31, 2016.2021. The changecash used during the six months ended July 31, 2022 was primarily for investments in new stores and technology investments, including the resultacquisition of lower capital expenditures due to fewer new store openings ina lease-to-own technology platform. The cash used during the ninesix months ended OctoberJuly 31, 2017 compared to the comparable prior year period. 2021 was primarily for investments in new stores.
Financing cash flows.  For the ninesix months ended OctoberJuly 31, 2017,2022, net cash used inprovided by financing activities was $81.6$4.8 million compared to net cash used in financing activities of $95.1$178.3 million for the ninesix months ended OctoberJuly 31, 2016.2021. During the nine monthsperiod ended OctoberJuly 31, 2017,2022, we issued the 2017-A2022-A Class A and Class B VIE issued asset-backedasset backed notes and 2017-A warehouse financing transaction resultedresulting in net proceeds to us of approximately $456.7$273.7 million and $78.8$129.1 million, respectively, net of transaction costs, respectively. The proceeds were used to pay down the balance of the Company's Revolving Credit Facility and restricted cash.for other general corporate purposes. During the period ended July 31, 2021, we issued 2020-A Class C VIE asset backed notes resulting in net proceeds to us of approximately $62.5 million, net of transaction costs. The proceeds from the 2017-A2020-A VIE asset-backed notes were used to partially pay down the entire balance on our revolving credit facility and for other general corporate purposes. The proceeds fromof the 2017-A warehouse financing transaction were used to pay down the entire balance on our 2016-A asset-backed notes.Company's Revolving Credit Facility. Cash collections from the securitized receivables were used to make payments on the asset-backed notes of approximately $816.2$174.4 million during the ninesix months ended OctoberJuly 31, 20172022 compared to $736.3approximately $261.4 million in the comparable prior year period. During the nineperiod ended July 31, 2022, net payments under the Revolving Credit Facility were $149.0 million compared to net borrowings of $167.0 million during the comparable prior year period. During the six months ended OctoberJuly 31, 2016,2021, we retired the 2016-A and 2016-B VIE issued asset-backed notes resulting in net proceedsremaining $141.2 million aggregate principal amount of our Senior Notes outstanding.
Stock Repurchase Program. On December 14, 2021, our Board of Directors approved a stock repurchase program pursuant to us of approximately $1.0 billion, net of transaction costs and restricted cash held bywhich we had the 2016-A VIE, which were usedauthorization to pay down the balance on our revolving credit facility and for other general corporate purposes.
Senior Notes. On July 1, 2014, we issued $250.0repurchase up to $150 million of our outstanding common stock. The stock repurchase program expires on December 14, 2022. No shares were repurchased for the unsecured Senior Notes duethree months ended July 31, 2022. For the six months ended July 31, 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 ratewe settled the repurchase 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 all3,462,848 shares of our assets. These covenants are subject to a numbercommon stock at an average weighted cost per share 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$20.70 for an aggregate amount of restricted payments were to exceed an amount tied to consolidated net income. These limitations, however, are subject to two exceptions: (1) an exception that permits the payment$71.7 million.

30
Table of up to $375.0 million in restricted payments, and (2) an exception that permits restricted payments regardless of dollar amount so long as, after giving pro forma effect to the dividends and other restricted payments, we would have had a leverage ratio, as defined under the Indenture, of less than or equal to 2.50 to 1.0. As a result of these exceptions, as of October 31, 2017, $179.2 million would have been free from the distribution restriction. However, as a result of the revolving credit facility distribution restrictions, which are further described below, we were restricted from making a distribution as of October 31, 2017. During any time when the Senior Notes are ratedContents

investment grade by either of Moody's Investors Service, Inc. or Standard & Poor's Ratings Services and no default (as defined in the Indenture) has occurred and is continuing, many of such covenants will be suspended and we will cease to be subject to such covenants during such period.
Events of default under the Indenture include customary events, such as a cross-acceleration provision in the event that we fail to make payment of other indebtedness prior to the expiration of any applicable grace period or upon acceleration of indebtedness prior to its stated maturity date in an amount exceeding $25.0 million, as well as in the event a judgment is entered against us in excess of $25.0 million that is not discharged, bonded or insured.
Asset-backed Notes. During fiscal years 2018, 2017 and 2016,From time to time, we securitizedsecuritize customer accounts receivables by transferring the receivables to various bankruptcy-remote VIEs. In turn, the VIEs issuedissue 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 agreementsRSAs 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.1933. 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 at originationoutstanding as of July 31, 2022 consisted of the following:
(dollars in thousands)
Asset-Backed NotesOriginal Principal Amount
Original Net Proceeds (1)
Current Principal AmountIssuance DateMaturity DateContractual Interest Rate
Effective Interest Rate (2)
2021-A Class A Notes$247,830 $246,152 $66,378 11/23/20215/15/20261.05%3.15%
2021-A Class B Notes66,090 65,635 66,090 11/23/20215/15/20262.87%3.53%
2021-A Class C Notes63,890 63,450 63,890 11/23/20215/15/20264.59%5.21%
2022-A Class A Notes275,600 273,731 275,600 7/21/202212/15/20265.87%8.57%
2022-A Class B Notes132,090 129,050 132,090 7/21/202212/15/20269.52%10.40%
Total$785,500 $778,018 $604,048 
Asset-Backed Notes Original Principal Amount 
Net Proceeds(1)
 Issuance Date Maturity Date Contractual Interest Rate 
Effective Interest Rate(2)
2016-B Class A Notes 391,840
 380,033
 10/6/2016 10/15/2018 3.73% 5.47%
2016-B Class B Notes 111,960
 108,586
 10/6/2016 3/15/2019 7.34% 8.03%
2017-A Class A Notes 313,220
 304,451
 4/19/2017 7/15/2019 2.73% 4.96%
2017-A Class B Notes 106,270
 103,300
 4/19/2017 2/15/2020 5.11% 5.83%
2017-A Class C Notes 50,340
 48,919
 4/19/2017 10/15/2021 7.40% 7.91%
2017 Warehouse Class A Notes
 79,940
 78,777
 8/15/2017 8/15/2018 
1M CP + 4% (3)
 7.02%
Total $1,053,570
 $1,024,066
        
(1)After giving effect to debt issuance costs.
(1)After giving effect to debt issuance costs and restricted cash held by the VIEs.
(2)For the nine months ended October 31, 2017, and inclusive of changes in timing of actual and expected cash flows.
(3)The rate on the 2017 Warehouse Class A Notes is defined as the one-month commercial paper rate, representing the purchaser's commercial paper cost, plus a 4% fixed margin.
(2)For the six months ended July 31, 2022, and inclusive of the impact of changes in timing of actual and expected cash flows.
On May 15, 2017,July 21, 2022, the Company completed the redemptionissuance and sale of its Series 2015-A Class B Notes (collectively,approximately $407.7 million in aggregate principal amount of asset-backed notes secured by the "2015-A Redeemed Notes") at an aggregate redemption pricetransferred customer accounts receivables and restricted cash held by a consolidated VIE, which resulted in net proceeds to us of $114.1approximately 402.8 million, (which was equal to the entire outstanding principal of, plus accrued interest on, the 2015-A Redeemed Notes). The net funds used to call the notes was $78.8 million, which is equal to the redemption price less adjustments of $35.3 million for funds held in reserve and collection accounts in accordance with the terms of the applicable indenture governing the 2015-A Redeemed Notes. The net funds used to call the 2015-A Redeemed Notes of $78.8 million was transferred from the Guarantors to the Non-Guarantor Subsidiary in exchange for the underlying securities held as collateral on the 2015-A Redeemed Notes with carrying value of $126.3 million as of April 30, 2017. In connection with the early redemption of the 2015-A Redeemed Notes, we wrote-off $2.1 million of debt issuance costs.

On August 15, 2017, affiliates of Net proceeds from the Company closed on a $79.9 million financing under a receivables warehouse financing transaction entered into on August 8, 2017 (the "Warehouse Financing"). The net proceeds of the Warehouse Financingoffering were used to prepay in fullrepay indebtedness under the Company’s Revolving Credit Facility, as defined below, and for other general corporate purposes. The asset-backed notes mature on December 15, 2026 and consist of $275.6 million of 5.87% Asset Backed Fixed Rate Notes, Class A, Series 2016-A2022-A, approximately $132.1 million of 9.52% Asset Backed Fixed Rate Notes, Class B, Series 2022-A. Additionally, the Company issued approximately $63.1 million in aggregate principal amount of zero coupon Asset Backed Fixed Rate Notes, andClass C, Series 2022-A (the "Class C Notes") which mature on December 15, 2026. The Class C Notes (collectively,are currently being retained by the "2016-A Redeemed Notes"), which hadCompany.

been issued by Conn’s Receivables Funding 2016-A, LLC under a securitization transaction entered into on March 17, 2016, that were still outstanding as of August 15, 2017.

On August 15, 2017, the Company completed the redemption of the 2016-A Redeemed Notes at an aggregate redemption price of $102.9 million (which was equal to the entire outstanding principal of, plus accrued interest and the call premiums on, the 2016-A Redeemed Notes). The net funds used to call the notes was $78.6 million, which is equal to the redemption price less adjustments of $24.3 million for funds held in reserve and collection accounts in accordance with the terms of the applicable indenture governing the 2016-A Redeemed Notes. The difference between the net proceeds of the Warehouse Financing and the carrying value of the 2016-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 2016-A Redeemed Notes, we wrote-off $0.5 million of debt issuance costs.

Revolving Credit Facility. On March 31, 2017, Conn's,29, 2021, Conn’s, Inc. and certain of its subsidiaries (the "Borrowers"“Borrowers”) entered into a Third Amendment (the "Third Amendment") to the ThirdFifth Amended and Restated Loan and Security Agreement dated as of October 30, 2015,(the “Fifth Amended and Restated Loan Agreement”), with certain lenders, which provides for a $750.0$650.0 million asset-based revolving credit facility (the "revolving credit facility"(as amended, the “Revolving Credit Facility”) under which credit availability is subject to a borrowing base. The revolving credit facility matures on October 30, 2019.base and a maturity date of March 29, 2025.
The Third Amendment,Fifth Amended and Restated Loan Agreement, among other things, (a) extendspermits borrowings under the maturity dateLetter of Credit Subline (as defined in the Fifth Amended and Restated Loan Agreement) that exceed the cap of $40 million to $100 million, solely at the discretion of the credit facility one year to October 30, 2019; (b) provideslenders for a reductionsuch amounts in excess of $40 million. The obligations under the aggregate commitments from $810 million to $750 million; (c) amends the minimum interest coverage ratio covenant to reduce the minimum interest coverage ratio to 1.10x asRevolving Credit Facility are secured by substantially all assets of the last dayCompany, excluding the assets of the fiscal quarter ending OctoberVIEs. As of July 31, 20172022, under our Revolving Credit Facility, we had immediately available borrowing capacity of $186.8 million, net of standby letters of credit issued of $22.3 million and to 1.25x as of the last day of each fiscal quarter thereafter, beginning with the fiscal quarter ending January 31, 2018; (d) sets the applicable margin at 3.50% for LIBOR loans and 2.50% for Base Rate loans until the Company demonstrates an interest coverage ratio of equal to or greater than 1.10x for the fiscal quarter ending October 31, 2017, at which point the applicable margin will revert to being determined according to the existing pricing grid based on facility availability; (e) reduces the minimum cash recovery percentage on the contracts it owns and manages from 4.50% to 4.45% for the first nine months of each fiscal year, and from 4.25% to 4.20% for the last three months of each fiscal year; (f) amends the definition of “EBITDA” to, among other things, exclude the impact of non-cash asset write-offs relating to construction in process; (g) amends the definition of “Interest Expense” to exclude certain non-interest expenses; (h) amends various definitions and other related provisions to clarify the Company’s ability to undertake permitted securitization transactions; (i) increases the number of equity curesadditional $441.0 million that may be exercised duringbecome available if the termbalance of the agreement from one time to two times,eligible customer receivables and increases the maximum amount of each such cure from $10 million to $20 million; and (j) modifies the calculations of “Tangible Net Worth” and “Interest Coverage Ratio” to deduct certain amounts attributable to the difference between a calculated loss reserve and the Company’s recorded loss reserve on its customer receivables.total eligible inventory balances increases.
Loans under the revolving credit facilityRevolving Credit Facility bear interest, at our option, at a rate equal toof LIBOR plus the applicable margin at 3.50% for LIBOR loans and 2.50% for base rate loans until the Company demonstrates an interest coverage ratio of equal to or greater than 1.10x for the fiscal quarter ending October 31, 2017, at which point the applicable margin will revert to being determined according to the existing pricing grid based on facility availability which specifies a margin ranging from 2.75%2.50% to 3.25% per annum (depending on quarterly average net availability under the borrowing base)a pricing grid determined by our total leverage ratio) or the alternate base rate plus a margin

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ranging from 1.75%1.50% to 2.25% per annum (depending on quarterly average net availability under the borrowing base)a pricing grid determined by our total leverage ratio). The alternate base rate is a rate per annum equal to the greatest of the prime rate, announced by Bank of America, N.A., the federal funds effective rate plus 0.5%, or LIBOR for a 30-day interest period plus 1.0%. We also pay an unused fee on the portion of the commitments that is available for future borrowings or letters of credit at a rate ranging from 0.25% to 0.75%0.50% per annum, depending on the average outstanding balance and letters of credit of the revolving credit facilityRevolving Credit Facility in the immediately preceding quarter. The weighted-average interest rate on borrowings outstanding and including unused line fees under the revolving credit facilityRevolving Credit Facility was 6.6%3.8% for the ninesix months ended OctoberJuly 31, 2017.2022.
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, 2017, we had immediately available borrowing capacity of $110.5 million under our revolving credit facility, net of standby letters of credit issued of $2.8 million. We also had $284.8 million that may become available under our revolving credit facility if we grow the balance of eligible customer receivables and our eligible inventory balances.
The revolving credit facilityRevolving 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 facilityRevolving 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 makepay dividends and make distributions to the Company and other obligors under the revolving credit facilityRevolving Credit Facility without restriction. As of OctoberJuly 31, 2017,2022, we were unable to repay the Senior Notes or make otherrestricted from making distributions in excess of $151.5 million as a result of the revolving credit facilityRevolving Credit Facility distribution and payment restrictions. The revolving credit facilityRevolving Credit Facility contains customary default provisions, which, if triggered, could result in acceleration of all amounts outstanding under the revolving credit facility.Revolving Credit Facility.

In connection with entering into the Third Amendment, we wrote-off $0.3 million of debt issuance costs for lenders that did not continue to participate. We also paid $2.8 million of debt issuance costs, recorded as other assets, which will be amortized ratably over the remaining term of the revolving credit facility along with the unamortized debt issuance costs remaining on the revolving credit facility.
Debt Covenants. We were in compliance with our debt covenants as amended, at OctoberJuly 31, 2017.2022. A summary of the significant financial covenants that govern our revolving credit facility, as amended,Revolving Credit Facility compared to our actual compliance status at OctoberJuly 31, 20172022 is presented below:
 Actual Required
Minimum/
Maximum
Interest Coverage Ratio must equal or exceed minimum1.75:1.00 1.10:1.00
Leverage Ratio must not exceed maximum2.49:1.00 4.00:1.00
ABS Excluded Leverage Ratio must not exceed maximum1.71:1.00 2.00:1.00
Cash Recovery Percent must exceed stated amount4.80% 4.45%
Capital Expenditures, net, must not exceed maximum$1.0 million $75.0 million
ActualRequired Minimum/ Maximum
Interest Coverage Ratio for the quarter must equal or exceed minimum4.04:1.001.00:1.00
Interest Coverage Ratio for the trailing two quarters must equal or exceed minimum5.38:1.001.50:1.00
Leverage Ratio must not exceed maximum1.57:1.004.50:1.00
ABS Excluded Leverage Ratio must not exceed maximum0.57:1.002.50:1.00
Capital Expenditures, net, must not exceed maximum$49.5 million$100.0 million
All capitalized terms in the above table are defined by the revolving credit facility, as amended,Revolving Credit Facility and may or may not agreematch directly to the financial statement captions in this document. The covenants are calculated quarterly, except for the Cash Recovery Percent, which is calculated monthly on a trailing three-month basis, and Capital Expenditures,capital expenditures, which is calculated for a period of four consecutive fiscal quarters, as of the end of each fiscal quarter.
Capital expenditures.  Expenditures.  We lease the majority of our stores under operating leases and our plans for future store locations include primarilyanticipate operating leases, but do not exclude store ownership. Our capital expenditures for future new store projects should primarily be for our tenant improvements to the property leased (including any new distribution centers and cross-dock facilities), the cost of which is estimated to be between $1.3$1.5 million and $1.5$2.5 million per store (before tenant improvement allowances), and for our existing store remodels, estimated to range between $0.5 million and $1.0 million per store remodel, depending on store size.. In the event we purchase existing properties, our capital expenditures will depend on the particular property and whether it is improved when purchased. We are continuously reviewing new relationships and funding sources and alternatives for new stores, which may include "sale-leaseback"“sale-leaseback” or direct "purchase-lease"“purchase-lease” programs, as well as other funding sources for our purchase and construction of those projects. If we do not purchase the real property for new stores, our direct cash needs should include only our capital expenditures for tenant improvements to leased properties and our remodel programs for existing stores. We have opened threetwo new standalone stores and four new store-within-a-store locations with Belk, Inc. during fiscal year 2018. We do notthe six months ended July 31, 2022 and currently plan to open any additional stores during fiscal year 2018.a total of 10 to 12 standalone locations and 15 to 20 store-within-a-store locations. Our anticipated capital expenditures for the remainder of fiscal year 20182023 are between $13.0$37.5 million and $17.0 million.$47.5 million, which includes expenditures for new stores we plan to open in fiscal year 2023.
Cash Flow
We periodically evaluate our liquidity requirements, capital needs and availability of resources in view of inventory levels, expansion plans, debt service requirements and other operating cash needs. To meet our short- and long-term liquidity requirements, including payment of operating expenses, funding of capital expenditures and repayment of debt, we rely primarily on cash from operations. As of OctoberJuly 31, 2017,2022, beyond cash generated from operations, we had (i) immediately available borrowing capacity of $110.5$186.8 million under our revolving credit facility,Revolving Credit Facility and (ii) $284.8 million that may become available under our revolving credit facility if we grow the balance of eligible customer receivables and our total eligible inventory balances and (iii) $12.7$24.3 million of cash on hand. However, we have, in the past, sought to raise additional capital.
We expect that, for the next 12 months, cash generated from operations, proceeds from potential accounts receivable securitizations and our revolving credit facilityRevolving Credit Facility will be sufficient to provide us the ability to fund our operations, provide the increased working capital necessary to support our strategy and fund planned capital expenditures discussed above in Capital expendituresExpenditures.

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We may repurchase or otherwise retire our debt and take other steps to reduce our debt or otherwise improve our financial position. These actions could include open market debt repurchases, negotiated repurchases, other retirements of outstanding debt and opportunistic refinancing of debt. The amount of debt that may be repurchased or otherwise retired, if any, will depend on market conditions, the Company’s cash position, compliance with debt covenantcovenants and restrictions and other considerations.

Off-Balance Sheet Liabilities and Other Contractual Obligations
We do not have any off-balance sheet arrangements as defined by Item 303(a)(4) of Regulation S-K. The following table presents a summary of our minimum contractual commitments and obligations as of OctoberJuly 31, 2017:2022: 
  Payments due by period
(in thousands)TotalLess Than 1
Year		1-3
Years		3-5
Years
More Than
5 Years
Debt, including estimated interest payments (1):
     
Revolving Credit Facility (1)
$— $— $— $— $— 
2021-A Class A Notes (2)
69,021 697 1,394 66,930 — 
2021-A Class B Notes (2)
73,283 1,897 3,794 67,592 — 
2021-A Class C Notes (2)
75,010 2,933 5,865 66,212 — 
2022-A Class A Notes (2)
346,427 16,178 32,355 297,894 — 
2022-A Class B Notes (2)
187,144 12,575 25,150 149,419 — 
Financing lease obligations7,278 1,198 2,120 1,161 2,799 
Operating leases:     
Real estate618,180 90,350 179,956 138,500 209,374 
Equipment52 23 28 1 — 
Contractual commitments (3)
99,579 95,917 3,629 33 — 
Total$1,475,974 $221,768 $254,291 $787,742 $212,173 
(1)Estimated interest payments are based on the outstanding balance as of July 31, 2022 and the interest rate in effect at that time.
(2)The payments due by period for the asset-backed notes were based on their respective maturity dates at their respective fixed annual interest rate. Actual principal and interest payments on the asset-backed notes will reflect actual proceeds from the securitized customer accounts receivables.
(3)Contractual commitments primarily include commitments to purchase inventory of $78.4 million.

Issuer and Guarantor Subsidiary Summarized Financial Information
Conn’s, Inc. is a holding company with no independent assets or operations other than its investments in its subsidiaries. As of July 31, 2022 and January 31, 2022, 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 that governs the asset-backed notes on the ability of any of the Guarantors to transfer funds to Conn’s, Inc. in the form of dividends or distributions.

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   Payments due by period
(in thousands)Total 
Less Than 1
Year
 
1-3
Years
 
3-5
Years
 
More Than
5 Years
Debt, including estimated interest payments(1):
         
Revolving credit facility(1)
$385,394
 $16,720
 $368,674
 $—
 $—
Senior Notes(2)
304,464
 16,458
 32,915
 255,091
 

2016B Class A Notes(2)
8,868
 8,868
 

 

 

2016B Class B Notes(2)
123,217
 8,218
 114,999
 

 

2017A Class A Notes(2)
135,611
 3,538
 132,073
 

 

2017A Class B Notes(2)
118,722
 5,430
 113,292
 

 

2017A Class C Notes(2)
65,088
 3,725
 7,450
 53,913
 

2017 Warehouse Class A Notes(1)



59,353
 59,353
      
Capital lease obligations7,668
 1,281
 1,540
 826
 4,021
Operating leases: 
  
  
  
  
Real estate434,072
 58,571
 116,284
 109,474
 149,743
Equipment1,521
 1,003
 505
 13
 —
Contractual commitments(3)
111,704
 107,030
 4,575
 99
 —
Total$1,755,682
 $290,195
 $892,307
 $419,416
 $153,764
The following tables present on a combined basis for the Issuer and the Guarantor Subsidiaries, a summarized Balance Sheet as of July 31, 2022 and January 31, 2022, and a summarized Statement of Operations on a consolidated basis for the six months ended July 31, 2022. The information presented below excludes eliminations necessary to arrive at the information on a consolidated basis. Investments in subsidiaries are accounted for by the parent company using the equity method for purposes of this presentation. Amounts provided do not represent our total consolidated amounts, as of July 31, 2022 and January 31, 2022, and for the six months ended July 31, 2022:
(in thousands)July 31,
2022		January 31,
2022
Assets
Cash, cash equivalents and restricted cash$26,339 $9,765 
Customer accounts receivable123,078 243,527 
Inventories262,952 246,826 
Net due from non-guarantor subsidiary— 14,903 
Other current assets72,479 78,556 
Total current assets484,848 593,577 
Long-term portion of customer accounts receivable62,418 264,527 
Property and equipment, net210,814 192,763 
Right of use assets, net252,653 256,267 
Other assets50,849 52,199 
Total assets$1,061,582 $1,359,333 
Liabilities
Current portion of debt$909 $889 
Lease liability operating - current57,940 54,534 
Net due to non-guarantor subsidiary347 — 
Other liabilities178,793 200,326 
Total current liabilities237,989 255,749 
Lease liability operating - non current321,104 330,439 
Long-term debt4,757 154,224 
Other long-term liabilities25,841 26,889 
Total liabilities$589,691 $767,301 
(1)Estimated interest payments are based on the outstanding balance as of OctoberSix Months Ended
July 31, 2017
Net sales and the interest rate in effect at that time.finances charges
$646,313 
(2)Servicing fee revenue from non-guarantor subsidiaryThe payments due by period for the Senior Notes, and asset-backed notes were based on their respective maturity dates at their respective fixed annual interest rate. Actual principal and interest payments will be provided based on the proceeds from the securitized customer accounts receivables.
21,332 
(3)Total revenuesContractual commitments primarily includes commitments to purchase inventory of $100.7 million, with the remaining commitments for advertising667,645
Total costs and other services. The timing of the payments is subject to change based upon actual receipt and the terms of payment with the vendor.expenses656,236
Net income$11,409

Critical Accounting Policies and Estimates
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United StatesGAAP requires us to make estimates that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Certain accounting policies are considered "critical“critical accounting policies"policies” because they are particularly dependent on estimates made by us about matters that are inherently uncertain and could have a material impact to our consolidated financial statements.Condensed Consolidated Financial Statements. We base our estimates on historical experience and on other assumptions that we believe are reasonable. As a result, actual results could differ because of the use of estimates. TheOther than with respect to the additional policy below, the description of critical accounting policies is included in our Annual Report on2022 Form 10-K, forfiled with the fiscal year ended January 31, 2017.SEC on March 29, 2022.

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Recent Accounting Pronouncements
The information related to recent accounting pronouncements as set forth in Note 1, Summary of Significant Accounting Policies, of the Condensed Consolidated Financial Statements in Part I, Item 1, of this quarterly report on Form 10-Q is incorporated herein by reference.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
LoansITEM 3.      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The market risk inherent in our financial instruments represents the potential loss arising from adverse changes in interest rates. We have not been materially impacted by fluctuations in foreign currency exchange rates, as substantially all of our business is transacted in, and is expected to continue to be transacted in, U.S. dollars or U.S. dollar-based currencies. Our asset-backed notes bear interest at a fixed rate and would not be affected by interest rate changes.
During the six months ended July 31, 2022, loans under the revolving credit facility bearRevolving Credit Facility bore interest, at our option, at a rate equal to LIBOR plus the applicable margin at 3.50% for LIBOR loans and 2.50% for base rate loans until the Company demonstrates an interest coverage ratio of equal to or greater than 1.10x for the fiscal quarter ending October 31, 2017, at which point the applicable margin will revert to being determined according to the existing pricing grid based on facility availability which specifies a margin ranging from 2.75%2.50% to 3.25% per annum (depending on quarterly average net availability under the borrowing base) or thea pricing grid determined by our total leverage ratio). The alternate base rate plus a margin ranging

from 1.75%1.50% to 2.25% per annum (depending on quarterly average net availability under the borrowing base)a pricing grid determined by our total leverage ratio). The alternate base rate is a rate per annum equal to the greatest of the prime rate, announced by Bank of America, N.A., the federal funds effective rate plus 0.5%, or LIBOR for a 30-day interest period plus 1.0%. We also pay an unused fee on the portion of the commitments that is available for future borrowing 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 on the Revolving Credit Facility in the immediately preceding quarter. Accordingly, changes in our quarterly average net availability under the borrowing basetotal leverage ratio and LIBOR or the alternate base rate will affect the interest rate on, and therefore our costs under, the revolving credit facility.Revolving Credit Facility. As of OctoberJuly 31, 2017, the2022, there was no outstanding balance outstanding under our revolving credit facility was $352.0 million.Revolving Credit Facility. A 100 basis point increase in interest rates on the revolving credit facilityRevolving Credit Facility would increasenot change our borrowing costs by $3.5 million over a 12-month period, based on the outstanding balance outstanding as of Octoberat July 31, 2017.2022.
For additional information regarding quantitative and qualitative market risks, as updated by the preceding paragraphs, see Item 7A, "Quantitative and Qualitative Disclosures about Market Risk," of our Annual Report on Form 10-K for the fiscal year ended January 31, 2017. 
ITEM 4.  CONTROLS AND PROCEDURES 
ITEM 4.      CONTROLS AND PROCEDURES 
Based on management'smanagement’s evaluation (with the participation of our Chief Executive Officer ("CEO"(“CEO”) and our Chief Financial Officer ("CFO"(“CFO”)), as of the end of the period covered by this report, our CEO and CFO have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"“Exchange Act”)), are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
For the quarter ended OctoberJuly 31, 2017,2022, there have been no changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934)Act) that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II.OTHER INFORMATION 
PART II.     OTHER INFORMATION 

ITEM 1.  LEGAL PROCEEDINGS 
ITEM 1.      LEGAL PROCEEDINGS 
The information set forth in Note 7, 6, Contingencies, of the Condensed Consolidated Financial Statements in Part I, Item 1, of this quarterly report on Form 10-Q is incorporated herein by reference. 

ITEM 1A.
RISK FACTORS
ITEM 1A.    RISK FACTORS
As of the date of the filing, there have been no material changes to the risk factors previously disclosed in Part I, Item 1A, of our Annual Report on2022 Form 10-K for the year ended January 31, 2017.10-K.


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ITEM 2.     UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table presents information with respect to purchases of Conn's common stock by Conn's or its affiliates during the three months ended July 31, 2022.
ITEM 2.PeriodUNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Total Number of Shares Purchased (in thousands) (1)
Average Price Paid per Share (2)
Total Number of Shares Purchased as Part of Publicly Announced Program (in thousands) (1)
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (in millions) (1)
May 1 - 31—$— —$23.0 
June 1 -30—$— —$23.0 
July 1 -31—$— —$23.0 
     Total——
None.

(1) On December 15, 2021, our Board of Directors approved a stock repurchase program pursuant to which we had the authorization to repurchase up to $150 million of our outstanding common stock. The stock repurchase program expires on December 14, 2022.
(2) Average price paid per share excludes costs associated with the repurchases.

ITEM 3.DEFAULTS UPON SENIOR SECURITIES 
ITEM 3.     DEFAULTS UPON SENIOR SECURITIES 
None. 

ITEM 4.MINE SAFETY DISCLOSURES 
ITEM 4.     MINE SAFETY DISCLOSURE 
Not applicable.

ITEM 5.  OTHER INFORMATION
ITEM 5.      OTHER INFORMATION
None.

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ITEM 6.     EXHIBITS 
The exhibits filed as part of this report are as follows (exhibits incorporated by reference are set forth with the name of the registrant, the type of report and registration number or last date of the period for which it was filed, and the exhibit number in such filing):
ITEM 6.Exhibit
Number		EXHIBITS 
The exhibits required pursuant to Item 6 of Form 10-Q are listed in the Exhibit Index filed herewith, which Exhibit Index is incorporated herein by reference.

EXHIBIT INDEX
Description of Document
Exhibit
Number
3.1		Description of Document
3.1
Certificate of Incorporation of Conn's,Conn’s, Inc. (incorporated herein by reference to Exhibit 3.1 to Conn's,Conn’s, Inc. registration statement on Form S-1 (File No. 333-109046) as filed with the Securities and Exchange Commission on September 23, 2003)
3.1.1
Certificate of Amendment to the Certificate of Incorporation of Conn's,Conn’s, Inc. dated June 3, 2004 (incorporated herein by reference to Exhibit 3.1.1 to Form 10-Q for the quarterly period ended April 30, 2004 (File No. 000-50421) as filed with the Securities and Exchange Commission on June 7, 2004)
3.1.2
Certificate of Amendment to the Certificate of Incorporation of Conn's,Conn’s, Inc. dated May 30, 2012 (incorporated herein by reference to Exhibit 3.1.2 to Form 10-Q for the quarterly period ended April 30, 2012 (File No. 001-34956) as filed with the Securities and Exchange Commission on June 5, 2012)
3.1.3
Certificate of Correction to the Certificate of Amendment to Conn's,Conn’s, Inc. Certificate of Incorporation (incorporated herein by reference to Exhibit 3.1.3 to Form 10-K for the annual period ended January 31, 2014 (File No. 001-34956) as filed with the Securities and Exchange Commission on March 27, 2014)
3.1.4
Certificate of Amendment to the Certificate of Incorporation of Conn's,Conn’s, Inc. as filed on May 29, 2014 (incorporated herein by reference to Exhibit 3.1.4 to Conn’s, Inc. Form 10-Q for the quarterly period ended April 30, 2014 (File No. 001-34956) as filed with the Securities and Exchange Commission on June 2, 2014)
3.2
Third Amended and Restated Bylaws of Conn's,Conn’s, Inc. effective as of December 3, 20137, 2020 (incorporated herein by reference to Exhibitexhibit 3.2 to Form 10-Q for the quarterly period ended October 31, 20132020 (File No. 001-34956) as filed with the Securities and Exchange Commission on December 6, 2013)4, 2020)
3.34.1
CertificateBase Indenture, dated as of Designations of Series A Junior Participating Preferred Stock of Conn's, Inc.July 21, 2022, by and between the Issuer and the Trustee (incorporated by herein by reference to Exhibit 3.14.1 to Conn’s, Inc. Form 8-K (File No. 001-34956) filed with the Securities and Exchange Commission on October 6, 2014)August 9, 2022)
3.44.2
CertificateSeries 2022-A Supplement to the Base Indenture, dated as of Elimination of Certificate of Designations of Series A Junior Participating Preferred Stock of Conn’s Inc., dated September 10, 2015July 21, 2022, by and between the Issuer and the Trustee (incorporated by herein by reference to Exhibit 3.14.2 to Conn’s, Inc. Form 8-K (File No. 001-34956) as filed with the Securities and Exchange Commission on September 11, 2015)
4.1
Indenture, dated as of February 24, 2017, as amended and made effective as of August 8, 2017 by and among Conn’s Receivables Warehouse, LLC, Conn Appliances, Inc., Wells Fargo Bank, National Association, Conn’s Receivables Warehouse Trust, and Credit Suisse AG, New York Branch (incorporated herein by reference to Exhibit 4.1 to Form 8-K (File No. 001-34956) as filed with the Securities and Exchange Commission on August 14, 2017)9, 2022)

10.1
NoteFirst Receivables Purchase Agreement, dated February 24, 2017, as amended and made effective as of August 8, 2017,July 21, 2022, by and among Conn’s Receivables Warehouse, LLC, Conn Appliances Receivables Funding, LLC, Conn Appliances, Inc.,between the conduits from time to time party thereto, Credit Suisse AG, Cayman Islands BranchSeller and Credit Suisse AG, New York Branchthe Depositor (incorporated by herein by reference to Exhibit 1.110.1 to Conn’s, Inc. Form 8-K (File No. 001-34956) as filed with the Securities and Exchange Commission on August 14, 2017)9, 2022)
10.2
SecondSecond Receivables Purchase Agreement, dated February 24, 2017, as amendedJuly 21, 2022, by and made effective as of August 8, 2017, among Conn’sbetween the Depositor and the Receivables Warehouse, LLC, Conn Appliances Receivables Funding, LLC, Conn Credit I, L.P., and Conn’s Receivables Warehouse Trust (incorporated by herein by reference to Exhibit 10.110.2 to Conn’s, Inc. Form 8-K (File No. 001-34956) as filed with the Securities and Exchange Commission on August 14, 2017)9, 2022)
10.3
ServicingPurchase and Sale Agreement, dated as of February 24, 2017, as amendedJuly 21, 2022, by and made effective as of August 8, 2017, among Conn’s Receivables Warehouse, LLC, Conn’s Receivables Warehouse Trust, Conn Appliances, Inc.between the Depositor and Wells Fargo Bank, National Associationthe Issuer (incorporated by herein by reference to Exhibit 10.210.3 to Conn’s, Inc. Form 8-K (File No. 001-34956) as filed with the Securities and Exchange Commission on August 14, 2017)9, 2022)
11.110.4
Statement re: computationServicing Agreement dated as of earnings per shareJuly 21, 2022, by and among the Issuer, the Receivables Trust, the Servicer and the Trustee (incorporated by herein reference to Note 1Exhibit 10.4 to Conn’s, Inc. Form 8-K (File No. 001-34956) filed with the condensed consolidated financial statements included in this Form 10-Q)Securities and Exchange Commission on August 9, 2022)
31.1
Rule 13a-14(a)/15d-14(a) Certification (Chief Executive Officer) (filed herewith)
31.2
Rule 13a-14(d)/15d-14(d) Certification (Chief Financial Officer) (filed herewith)
32.1
Section 1350 Certification (Chief Executive Officer and Chief Financial Officer) (furnished herewith)
101101*The following financial information from our Quarterly Report on Form 10-Q for the thirdsecond quarter of fiscal year 2018,2023, filed with the SEC on December 7, 2017,August 30, 2022, formatted in Inline Extensible Business Reporting Language (XBRL)(iXBRL): (i) the consolidated balance sheetsCondensed Consolidated Balance Sheets at OctoberJuly 31, 20172022 and January 31, 2017,2022, (ii) the consolidated statementsCondensed Consolidated Statements of operationsOperations for the three and ninesix months ended OctoberJuly 31, 20172022 and 2016,2021, (iii) the consolidated statementsCondensed Consolidated Statements of cash flowsShareholders Equity for the nineperiods ended July 31, 2022 and 2021, (iv) the Condensed Consolidated Statements of Cash Flows for the six months ended OctoberJuly 31, 20172022 and 20162021 and (iv)(v) the notes to consolidated financial statementsthe Condensed Consolidated Financial Statements.
104*Cover Page Interactive Data File (embedded within the Inline XBRL Document and included in Exhibit 101)


*Filed herewith

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SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. 
CONN’S, INC.
CONN'S, INC.Date:August 30, 2022
Date:By:December 7, 2017/s/ George L. Bchara
George L. Bchara
By:/s/ Lee A. Wright
Lee A. Wright
Executive Vice President and Chief Financial Officer
(Principal Financial Officer and duly authorized to sign this report on behalf of the registrant)


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