Exhibit 99
[Rex Logo]
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 THIRD QUARTER
DILUTED EARNINGS PER SHARE OF $0.42
- REX PROVIDES UPDATE ON ETHANOL PROJECTS -
Dayton, Ohio (December 5, 2006) -- REX Stores Corporation (NYSE:RSC) today
announced financial results and comparable store sales for the three- and
nine-month periods ended October 31, 2006 (the Company's 2006 fiscal year).
Net sales in the fiscal 2006 third quarter were $85.2 million compared with
$91.8 million in the fiscal 2005 third quarter. Comparable store sales for the
three months ended October 31, 2006 declined 5.6%. 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 October 31, 2006, income from synthetic fuel limited
partnership investments was $5.9 million compared with $8.4 million in the
comparable year-ago period which included a $1.2 million gain related to the
sale by the Company of its interest in a synthetic fuel limited partnership.
Earlier in fiscal 2006 some of the synthetic fuel plants for which REX receives
income had temporarily ceased production as higher oil prices increased the
likelihood that Section 29/45K tax credits would be reduced or phased out. As of
the end of the fiscal third quarter of 2006, all synthetic fuel plants for which
REX receives income had returned to operation. Based upon recent oil price
reductions, the Company has reduced its estimate of Section 29/45K phase out
from 75% at the end of the second quarter to 40% at the end of the third
quarter.
During the fiscal 2006 third quarter, REX completed the sale of seven retail
store locations for a total of $6.8 million and recorded a $2.2 million pre-tax
gain related to the real estate sale of which $0.5 million was related to
continuing operations and $1.7 million ($1.1 million after-tax) was classified
as discontinued operations. Net income in the three months ended October 31,
2006 was $4.8 million, or $0.42 per diluted share, compared to net income of
$6.9 million, or $0.58 per diluted share, in the three months ended October 31,
2005. Per share results are based on 11,517,000 and 11,865,000 diluted weighted
average shares outstanding for the three-month periods ended October 31, 2006
and 2005, respectively.
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REX STORES REPORTS THIRD QUARTER RESULTS, 12/5/06 page 2
Net income in the nine-month period ended October 31, 2006 was $7.8 million, or
$0.67 per diluted share, compared with net income of $21.7 million, or $1.76 per
diluted share, in the nine-month period ended October 31, 2005. Per share
results are based on 11,608,000 and 12,353,000 diluted weighted average shares
outstanding for the nine-month periods ended October 31, 2006 and October 31,
2005, respectively. Net sales in the 2006 nine-month period were $251.5 million
compared to $259.6 million in the nine months ended October 31, 2005. Comparable
store sales in the first nine months of fiscal 2006 declined 0.7% compared to
the same year-ago period.
ETHANOL UPDATE
REX recently received notification that all conditions had been met for the
Company to fund its $16.0 million equity interest in Patriot Renewable Fuels LLC
("Patriot"). REX provided its funding on December 4, 2006. With funding obtained
Patriot has commenced construction of a 100 million gallon per year ethanol
production facility in Illinois.
As previously announced, during the third fiscal quarter REX funded $11.5
million for Levelland/Hockley County Ethanol, LLC ("Levelland/Hockley"), a 40
million gallon per year ethanol production facility in Texas. The $11.5 million
funding, along with REX's previously announced $5 million convertible secured
promissory note commitment (expected to be funded by December 31, 2006), enables
REX to secure a majority equity interest in the LLC that controls the facility.
REX has an agreement, subject to certain conditions, to fund up to an additional
$6.5 million in Levelland/Hockley to further increase its ownership. Effective
in the fiscal 2006 third quarter REX has consolidated Levelland/Hockley with its
financial statements.
REX also funded $5 million during the fiscal third quarter in Big River
Resources, LLC ("Big River") and has entered into an agreement to fund an
additional $15 million in exchange for a minority equity interest in the entity.
Through a holding company structure, Big River presently operates a 52 million
gallon dry-mill ethanol manufacturing facility in Iowa. Big River intends to
expand the plant to produce 80 million gallons per year and, through interests
in other entities, intends to develop additional ethanol production plants.
REX intends to fund $14 million in Millennium Ethanol, LLC ("Millennium") on or
before April 1, 2007, for a convertible note that provides the Company rights to
convert the note, with additional funds, into a minority ownership interest.
Millennium has commenced construction of a 100 million gallon per year ethanol
production facility in South Dakota.
In addition to the four ethanol commitments described above, REX has entered
into a contingent agreement to fund $24.9 million for One Earth Energy LLC, that
intends to construct a 100 million gallon per year ethanol production facility
in Illinois.
The Company will host a conference call and webcast today at 11:00 a.m. EST,
which are open to the general public. The conference call dial-in number is
212/346-6584; 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.
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REX STORES REPORTS THIRD QUARTER RESULTS, 12/5/06 page 3
Following its completion, a telephonic replay of the call can be accessed
through 12:30 p.m. EST on December 12, 2006 by dialing 800/633-8284 or
402/977-9140 (international callers). The access code for the audio replay is
21310853. Alternatively, a replay will be available on the Internet for 30 days
at WWW.REXTV.COM or WWW.EARNINGS.COM.
REX Stores Corporation is a leading specialty retailer of consumer electronic
products and appliances. As of October 31, 2006, the Company operated 207 retail
stores in 36 states under the trade name "REX." Over the past eight years, REX
has also been active in several synthetic fuel investments and the Company
currently has plans to participate in five proposed ethanol producing plants.
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 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, new regulatory restrictions or tax law changes
relating to the Company's synthetic fuel investments, the fluctuating amount of
quarterly payments received by the Company with respect to sales of its
partnership interest in a synthetic fuel investment, the potential for Section
29/45K tax credits to phase out based on the price of crude oil adjusted for
inflation, 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 and
the price volatility of corn, dried distiller grains, ethanol, gasoline and
natural gas.
-tables follow-
REX STORES REPORTS THIRD QUARTER RESULTS, 12/5/06 page 4
REX STORES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Three Months Ended Nine Months Ended
October 31 October 31
---------- ----------
2006 2005 2006 2005
---- ---- ---- ----
NET SALES AND REVENUE $ 85,215 $ 91,759 $ 251,495 $ 259,553
Cost of sales 62,702 66,380 182,722 186,132
------ ------ ------- -------
Gross profit 22,513 25,379 68,773 73,421
Selling, general and administrative expenses 23,284 24,102 68,485 69,578
------ ------ ------ ------
OPERATING (LOSS) INCOME (771) 1,277 288 3,843
INVESTMENT INCOME 341 23 920 155
INTEREST EXPENSE (562) (664) (1,549) (1,946)
GAIN ON SALE OF REAL ESTATE 462 253 2,197 253
INCOME FROM SYNTHETIC FUEL INVESTMENTS 5,865 8,433 8,650 24,813
------ ------ ------ ------
Income from continuing operations before provision
for income taxes and discontinued operations 5,335 9,322 10,506 27,118
PROVISION FOR INCOME TAXES 1,713 2,251 3,627 4,992
----- ----- ----- -----
Income from continuing operations 3,622 7,071 6,879 22,126
Income (loss) from discontinued operations, net of tax 103 (189) (168) (548)
Gain on disposal of discontinued operations, net of tax 1,090 -- 1,090 125
------ ------ ------ ------
NET INCOME $4,815 $6,882 $7,801 $21,703
====== ====== ====== =======
WEIGHTED AVERAGE SHARES
OUTSTANDING - BASIC 10,333 10,532 10,268 10,850
====== ====== ====== ======
Basic income per share from continuing operations $0.35 $0.67 $0.67 $2.04
Basic income (loss) per share from discontinued operations 0.01 (0.02) (0.02) (0.05)
Basic income per share on disposal of discontinued operations 0.11 -- 0.11 0.01
------ ------ ------ ------
BASIC NET INCOME PER SHARE $0.47 $0.65 $0.76 $2.00
===== ===== ===== =====
WEIGHTED AVERAGE SHARES
OUTSTANDING - DILUTED 11,517 11,865 11,608 12,353
====== ====== ====== ======
Diluted income per share from continuing operations $0.31 $0.60 $0.59 $1.79
Diluted income (loss) per share from discontinued operations 0.01 (0.02) (0.01) (0.04)
Diluted income per share on disposal of discontinued operations 0.10 -- 0.09 0.01
------ ------ ------ ------
DILUTED NET INCOME PER SHARE $0.42 $0.58 $0.67 $1.76
====== ====== ====== ======
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REX STORES REPORTS THIRD QUARTER RESULTS, 12/5/06 page 5
REX STORES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
October 31 January 31 October 31
2006 2006 2005
---- ---- ----
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 15,923 $ 21,363 $ 1,254
Accounts receivable, net 3,757 3,457 4,460
Synthetic fuel receivable 7,592 1,680 2,930
Merchandise inventory 116,065 97,371 135,220
Prepaid expenses and other 1,655 2,052 1,555
Future income tax benefits 9,588 9,361 10,929
--------- --------- --------
Total current assets 154,580 135,284 156,348
PROPERTY AND EQUIPMENT, NET 121,846 125,245 127,626
ASSETS HELD FOR SALE 1,497 1,497 1,669
OTHER ASSETS 7,919 760 823
FUTURE INCOME TAX BENEFITS 28,397 30,031 27,978
INVESTMENTS 5,000 -- --
RESTRICTED INVESTMENTS 2,384 2,318 2,300
--------- --------- --------
Total assets $ 321,623 $ 295,135 $316,744
========= ========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $2,354 $2,389 $2,958
Current portion of deferred income and deferred gain
on sale and leaseback 11,176 10,883 10,609
Accounts payable, trade 23,153 20,396 38,919
Accrued income taxes 1,587 541 418
Accrued payroll and related items 4,302 7,183 5,777
Other current liabilities 6,300 5,863 6,596
--------- --------- --------
Total current liabilities 48,872 47,255 65,277
--------- --------- --------
LONG-TERM LIABILITIES:
Long-term mortgage debt 21,454 21,462 27,774
Deferred income and deferred gain on sale
and leaseback 13,106 12,213 11,349
--------- --------- --------
Total long-term liabilities 34,560 33,675 39,123
--------- --------- --------
MINORITY INTEREST 12,119 -- --
--------- --------- --------
SHAREHOLDERS' EQUITY:
Common stock 295 294 293
Paid-in capital 138,700 135,775 134,985
Retained earnings 248,699 240,898 234,332
Treasury stock (161,622) (162,762) (157,266)
--------- --------- --------
Total shareholders' equity 226,072 214,205 212,344
--------- --------- --------
Total liabilities and shareholders' equity $ 321,623 $ 295,135 $316,744
========= ========= ========
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