EX-99 2 c53895_ex99.htm

Exhibit 99

News Announcement   For Immediate Release
 
For further information contact:    
Douglas Bruggeman   Joseph N. Jaffoni/David Collins
Chief Financial Officer   Jaffoni & Collins Incorporated
937/276-3931   212/835-8500 or rsc@jcir.com

REX STORES REPORTS FISCAL FIRST QUARTER
DILUTED EARNINGS PER SHARE OF $0.13

- Launches Strategic Review Process of its Retail Segment
and Related Real Estate Assets -

Dayton, Ohio (June 5, 2008) – REX Stores Corporation (NYSE:RSC) today announced financial results for the three month period ended April 30, 2008 (the first quarter of the Company’s 2008 fiscal year). REX also announced the launch of a strategic alternative review process of its retail segment. The Company expects to consider and evaluate a broad range of alternatives during this process, including opportunities to monetize its real estate portfolio. There is no assurance that any transaction will occur as a result of the strategic review process. The Company will host an investment community conference call and webcast this morning (details below) to review the results.

Net income in the quarter ended April 30, 2008 was $1.5 million, or $0.13 per diluted share, compared with net income of $7.5 million, or $0.64 per diluted share, in the same period of fiscal 2007. Per share results are based on 11,620,000 and 11,799,000 diluted weighted average shares outstanding for the quarters ended April 30, 2008 and April 30, 2007, respectively.

Net sales and revenue from continuing operations in the fiscal 2008 first quarter were $47.1 million compared with $48.9 million in the comparable period of fiscal 2007. Comparable store sales in the fiscal 2008 first quarter declined 0.3% compared to the fiscal 2007 first quarter. The Company reports sales performance quarterly and considers a store to be comparable after it has been open six full fiscal quarters. Comparable store sales figures do not include sales of extended service contracts.

For the quarter ended April 30, 2008, income from continuing operations, before provision for income taxes, minority interest and discontinued operations was $2.0 million, compared with income from continuing operations, before provision for income taxes, minority interest and discontinued operations of $9.3 million in the same period a year ago. In the fiscal 2008 first quarter, the Company generated $0.9 million of income from continuing operations before income taxes and minority interest from its retail segment, compared with $1.9 million in the comparable period of fiscal 2007.

-more-


REX Reports Fiscal 2008 First Quarter, 6/5/08  
page 2

In the fiscal 2008 first quarter, the Company generated $0.4 million of income from continuing operations before income taxes and minority interest from its alternative energy segment, compared with $1.7 million in the comparable period of fiscal 2007. In the fiscal 2008 first quarter, the Company generated income of $0.7 million from continuing operations before income taxes and minority interest from its corporate and other segment, compared with income of $5.7 million from continuing operations before income taxes and minority interest from its corporate and other segment in the comparable period of fiscal 2007.

REX recorded a total of $1.7 million of income from synthetic fuel limited partnership investments and equity in unconsolidated affiliates in the quarter ended April 30, 2008 of which approximately $0.7 million was income from synthetic fuel limited partnership investments. As of December 31, 2007 the tax credit program related to the synthetic fuel facilities was concluded and the facilities discontinued operation. In the fiscal 2007 first quarter, REX recorded approximately $7.8 million of income from these sources of which approximately $6.7 million was income from synthetic fuel limited partnership investments.

The Company’s financial results reflect the consolidation of its investments in two ethanol affiliates, Levelland Hockley County Ethanol, LLC (“Levelland Hockley”) as of September 30, 2006 and One Earth Energy LLC (“One Earth”) as of October 30, 2007. On February 20, 2008, REX (through a wholly-owned subsidiary) purchased a $5.0 million secured promissory note from Levelland Hockley. The note grants REX rights to convert the note into an additional equity ownership position. With the purchase of this note, REX has fulfilled all of its financing commitments for Levelland Hockley. In March 2008, the Levelland Hockley plant commenced production. During the fiscal 2008 first quarter, the Company recorded $0.5 million of non-cash income from interest rate derivative financial instruments held by its consolidated ethanol entities, Levelland Hockley and One Earth.

The table below summarizes the Company’s current ethanol production interests:

   

    REX’s

   

   

   

    Production

   

   
Capital REX’s Nameplate Estimated
Investment Ownership Capacity Commencement
Entity ($ In millions) Interest (millions of of Production

 

 

 

 

 

 

 gallons)

 

 
Levelland Hockley County Ethanol, LL     $16.5     56%     40     In Production
Patriot Renewable Fuels, LLC     $16.0     23%     100     Summer 2008
One Earth Energy, LLC     $50.8     74%     100     Early 2009
Big River Resources, LLC-W. Burlington                 92     In Production
Big River Resources, LLC-Galva     $20.0     10%     100     Summer 2009

The fiscal 2007 first quarter net income also reflected a $2.9 million gain on disposal of discontinued operations, net of tax, or $0.24 per diluted share.

Subsequent to the end of the fiscal 2008 first quarter, REX purchased approximately 73,600 shares of its common stock in open market transactions. The Company has approximately 142,000 authorized shares remaining available to purchase under the expanded June 2007 stock buy-back authorization.

-more-


REX Reports Fiscal 2008 First Quarter, 6/5/08  
page 3

The Company will host a conference call and webcast today at 11:00 a.m. EDT, which are open to the general public. The conference call dial-in number is 212/231-2904; please call ten minutes in advance to ensure that you are connected prior to the presentation. Interested parties may also access the call live via the Investor Relations page of the Company’s website, www.rextv.com, or at www.earnings.com; please allow 15 minutes to register, download and install any necessary software. Following its completion, a telephonic replay of the call can be accessed through 1:00 p.m. EDT on June 12, 2008 by dialing 800/633-8284 or 402/977-9140 (international callers). The access code for the audio replay is 21384743. Alternatively, a replay will be available on the Internet for 30 days at www.rextv.com or www.earnings.com.

REX has interests in four ethanol entities and is a specialty retailer of consumer electronic products and appliances. As of April 30, 2008, the Company operated 111 retail stores in 34 states under the trade name “REX.”

This news announcement contains or may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements can be identified by use of forward-looking terminology such as “may,” “expect,” “believe,” “estimate,” “anticipate” or “continue” or the negative thereof or other variations thereon or comparable terminology. Readers are cautioned that there are risks and uncertainties that could cause actual events or results to differ materially from those referred to in such forward-looking statements. These risks and uncertainties include the risk factors set forth from time to time in the Company’s filings with the Securities and Exchange Commission and include among other things: the highly competitive nature of the consumer electronics retailing industry, changes in the national or regional economies, weather, the effects of terrorism or acts of war on consumer spending patterns, the availability of certain products, technological changes, changes in real estate market conditions, the fluctuating amount of quarterly payments received by the Company with respect to sales of its partnership interest in its synthetic fuel investments, and the uncertain amount of synthetic fuel production and resulting income received from time to time from the Company’s synthetic fuel investments. As it relates to ethanol investments, risks and uncertainties include among other things: the uncertainty of constructing plants on time and on budget, the price volatility of corn, sorghum, dried distiller grains, ethanol, gasoline and natural gas, and the plants operating efficiently and according to forecasts and projections.

-tables follow-


REX Reports Fiscal 2008 First Quarter, 6/5/08  
page 4

REX STORES CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statements Of Income
(In Thousands, Except Per Share Amounts)
Unaudited

    Three Months Ended
    April 30,
    2008   2007*
Net sales and revenue   $ 47,101     $ 48,888  
Cost of sales (excluding retail segment depreciation)     33,653       33,410  
Gross profit     13,448       15,478  
Selling, general and administrative expenses     (14,405 )     (14,629 )
Interest income     857       1,293  
Interest expense     (121 )     (74 )
Loss on early termination of debt     -       (598 )
Losses on sale of real estate, net     -       (10 )
Equity in income of unconsolidated ethanol affiliates     1,048       1,110  
Income from synthetic fuel investments     670       6,733  
Unrealized gain on derivative financial instruments     472       -  
Income from continuing operations before provision for                
   income taxes, minority interest and discontinued operations     1,969       9,303  
Provision for income taxes     (522 )     (3,589 )
Minority interest     217       (95 )
Income from continuing operations     1,664       5,619  
Loss from discontinued operations, net of tax     (138 )     (961 )
Gains on disposal of discontinued operations, net of tax     -       2,876  
Net income   $ 1,526     $ 7,534  
 
Weighted average shares outstanding - basic     10,729       10,468  
 
Basic income per share from continuing operations     0.15       0.54  
Basic loss per share from discontinued operations     (0.01 )     (0.09 )
Basic income per share on disposal of discontinued operations     -       0.27  
Basic net income per share   $ 0.14     $ 0.72  
 
Weighted average shares outstanding – diluted     11,620       11,799  
 
Diluted income per share from continuing operations     0.14       0.48  
Diluted loss per share from discontinued operations     (0.01 )     (0.08 )
Diluted income per share on disposal of discontinued operations     -       0.24  
Diluted net income per share   $ 0.13     $ 0.64  

*    Amounts differ from those previously reported as a result of certain stores being reclassified into discontinued operations.
 

- balance sheet follows -


REX Reports Fiscal 2008 First Quarter, 6/5/08  
page 5

REX STORES CORPORATION AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(in thousands)
Unaudited

    April 30,   January 31,   April 30,
    2008   2008   2007
Assets                        
Current assets:                        
   Cash and cash equivalents   $ 106,301     $ 127,716     $ 105,355  
   Accounts receivable, net     3,025       1,877       3,439  
   Synthetic fuel receivable     -       573       5,485  
   Inventory, net     56,800       49,933       90,427  
   Prepaid expenses and other     2,204       2,492       1,428  
   Deferred taxes     10,399       10,599       7,288  
       Total current assets     178,729       193,190       213,422  
Property and equipment, net     168,359       136,505       74,426  
Assets held for sale, net     -       -       1,676  
Other assets     14,098       14,803       13,590  
Goodwill     1,322       1,322       1,322  
Deferred taxes     21,929       21,929       26,290  
Equity method investments     39,509       38,748       27,936  
Investments in debt instruments     -       -       14,000  
Restricted investments     2,491       2,481       2,425  
   Total assets   $ 426,437     $ 408,978     $ 375,087  
Liabilities and shareholders' equity:                        
Current liabilities:                        
   Current portion of long-term debt and capital lease                        
     obligations   $ 5,352     $ 4,101     $ 2,013  
 Accounts payable, trade     39,409       27,253       45,461  
   Deferred income     13,708       14,448       15,322  
   Deferred gain on sale and leaseback     1,436       1,436       5,420  
   Other current liabilities     5,928       13,617       8,606  
       Total current liabilities     65,833       60,855       76,822  
Long-term liabilities:                        
   Long-term debt and capital lease obligations     45,276       35,224       20,627  
   Deferred income     16,282       17,172       18,677  
   Deferred gain on sale and leaseback     4,132       4,493       6,748  
   Derivative financial instruments     2,129       2,601       -  
   Other     6,485       4,313       940  
       Total long-term liabilities     74,304       63,803       46,992  
Minority interest in consolidated subsidiaries     27,512       27,729       11,618  
Shareholders’ equity:                        
   Common stock     298       298       295  
   Paid-in capital     141,867       141,357       140,264  
   Retained earnings     287,155       285,629       259,496  
   Treasury stock     (170,532 )     (170,693 )     (160,400 )
   Total shareholders' equity     258,788       256,591       239,655  
       Total liabilities and shareholders’ equity   $ 426,437     $ 408,978     $ 375,087  

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