[REX GRAPHIC OMITTED]
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 2006 DILUTED EARNINGS
PER SHARE FROM CONTINUING OPERATIONS OF $0.98
- REX PROVIDES UPDATE ON ETHANOL PROJECTS -
Dayton, Ohio (March 28, 2007) -- REX Stores Corporation (NYSE:RSC) today
announced financial results and comparable store sales for the three- and
twelve-month periods ended January 31, 2007 (the Company's 2006 fiscal year).
Net income in the fiscal year ended January 31, 2007 was $11.4 million, or $0.98
per diluted share, compared with net income of $28.3 million, or $2.31 per
diluted share, in fiscal 2005. Per share results are based on 11,576,000 and
12,220,000 diluted weighted average shares outstanding for the fiscal years
ended January 31, 2007 and January 31, 2006, respectively. Net sales and revenue
in fiscal 2006 were $347.3 million compared with $374.5 million in fiscal 2005.
Comparable store sales in fiscal 2006 declined 5.0% compared to fiscal 2005.
Net sales and revenue in the fiscal 2006 fourth quarter were $104.4 million
compared with $123.5 million in the fiscal 2005 fourth quarter. Comparable store
sales for the quarter ended January 31, 2007 declined 13.7%. 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.
REX recorded a total of $4.1 million of income from synthetic fuel limited
partnership investments, investment income and equity in unconsolidated
affiliates in the quarter ended January 31, 2007 of which approximately $2.1
million was income from synthetic fuel limited partnership investments. In the
fiscal 2005 fourth quarter, REX recorded $5.9 million of income from these
sources of which $5.7 million was derived from synthetic fuel limited
partnership investments. For the 2006 calendar year the Company used an estimate
of Section 29/45K tax credit phase-outs of 40% for recognizing income from
synthetic fuel investments.
-more-
REX STORES REPORTS FISCAL 2006 RESULTS, 3/28/07 page 2
During fiscal 2006 the Company closed 25 stores, 14 of which were classified as
discontinued operations and the Company recorded a $0.4 million loss, net of
taxes, for discontinued operations in the fiscal 2006 fourth quarter ended
January 31, 2007.
For the quarter ended January 31, 2007, income from continuing operations, net
of taxes was $4.0 million, or $0.34 per diluted share compared with income from
continuing operations, net of taxes of $6.6 million, or $0.57 per diluted share
in the same period a year ago. Net income in the quarter ended January 31, 2007
was $3.6 million, or $0.30 per diluted share, compared to net income of $6.6
million, or $0.57 per diluted share, for the quarter ended January 31, 2006. Per
share results are based on 11,712,000 and 11,552,000 diluted weighted average
shares outstanding for the quarters ended January 31, 2007 and 2006,
respectively.
ETHANOL UPDATE
|X| In December 2006 REX funded its $16.0 million equity interest in
Patriot Renewable Fuels LLC ("Patriot"). Patriot has commenced
construction of a 100 million gallon per year ethanol production
facility in Illinois.
|X| In December 2006 REX funded a $5 million convertible secured
promissory note for Levelland/Hockley County Ethanol, LLC
("Levelland/Hockley"). The $5 million convertible secured promissory
note, if converted, along with REX's prior $11.5 million funding of
the facility will enable REX to secure a majority equity interest in
the LLC that controls the facility. Levelland/Hockley has commenced
construction on a 40 million gallon per year ethanol production
facility in Texas. Effective in the fiscal 2006 third quarter REX
consolidated Levelland/Hockley with its financial statements.
|X| In January 2007 REX funded an additional $5 million in Big River
Resources, LLC ("Big River") bringing its total funding in the LLC to
$10 million. REX has a commitment, subject to certain conditions, to
fund an additional $10 million in Big River in exchange for an
additional 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. In the fiscal 2006 fourth quarter REX recorded
approximately $0.5 million of income from equity in unconsolidated
affiliates related to its Big River interests.
|X| In December 2006, REX funded $14 million in Millennium Ethanol, LLC
("Millennium") 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.
-more-
REX STORES REPORTS FISCAL 2006 RESULTS, 3/28/07 page 3
|X| 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. EDT,
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.
Following its completion, a telephonic replay of the call can be accessed
through 12:30 p.m. EDT on April 4, 2007 by dialing 800/633-8284 or 402/977-9140
(international callers). The access code for the audio replay is 21332997.
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. Over the past eight years, REX has also been active in
several synthetic fuel investments and the Company currently has agreements to
participate in five ethanol entities. As of January 31, 2007, the Company
operated 193 retail stores in 35 states under the trade name "REX." In February
2007, the Company agreed to sell 94 of its current and former store locations
and to leaseback a minimum of 40 of the properties for an initial lease term
expiring January 31, 2010. The leases will contain renewal options for up to 15
additional years. Either party may terminate a lease after the first six months
of the initial lease term on 23 to 30 of the sites as selected by the Company.
The transaction is expected to close in late April 2007. Subsequent to the end
of the 2006 fiscal year, the Company closed 29 stores resulting in a current
store count of 164 stores.
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 FISCAL 2006 RESULTS, 3/28/07 page 4
REX STORES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
THREE MONTHS ENDED TWELVE MONTHS ENDED
JANUARY 31 JANUARY 31
---------- ----------
2007 2006 2007 2006
---- ---- ---- ----
NET SALES AND REVENUE $ 104,441 $ 123,508 $ 347,334 $ 374,451
Cost of sales 77,488 91,042 254,003 270,956
------ ------ ------- -------
Gross profit 26,953 32,466 93,331 103,495
Selling, general and administrative expenses 24,969 28,700 91,031 95,783
INVESTMENT INCOME 1,454 153 2,374 308
INTEREST EXPENSE (344) (599) (1,893) (2,546)
EQUITY IN UNCONSOLIDATED AFFILIATES 498 - 498 -
GAIN ON SALE OF REAL ESTATE - - 2,197 253
INCOME FROM SYNTHETIC FUEL INVESTMENTS 2,114 5,702 10,764 30,515
----- ----- ------ ------
Income from continuing operations before provision
for income taxes 5,706 9,022 16,240 36,242
PROVISION FOR INCOME TAXES 1,725 2,408 5,375 7,428
----- ----- ----- -----
Income from continuing operations 3,981 6,614 10,865 28,814
Loss from discontinued operations, net of tax (431) (130) (620) (754)
Gain on disposal of discontinued operations, net of tax - 82 1,106 209
------ ------ ------- ------
NET INCOME $3,550 $6,566 $11,351 $28,269
====== ====== ======= =======
WEIGHTED AVERAGE SHARES
OUTSTANDING - BASIC 10,360 10,208 10,291 10,688
====== ====== ====== ======
Basic income per share from continuing operations $0.38 $0.64 $1.06 $2.69
Basic loss per share from discontinued operations (0.04) (0.01) (0.06) (0.07)
Basic income per share on disposal of discontinued operations
- 0.01 0.10 0.02
----- ----- ----- -----
BASIC NET INCOME PER SHARE $0.34 $0.64 $1.10 $2.64
===== ===== ===== =====
WEIGHTED AVERAGE SHARES
OUTSTANDING - DILUTED 11,712 11,552 11,576 12,220
====== ====== ====== ======
Diluted income per share from continuing operations $0.34 $0.57 $0.94 $2.36
Diluted loss per share from discontinued operations (0.04) (0.01) (0.05) (0.06)
Diluted income per share on disposal of discontinued operations
- 0.01 0.09 0.01
------ ------ ------ ------
DILUTED NET INCOME PER SHARE $ 0.30 $ 0.57 $ 0.98 $ 2.31
====== ====== ====== ======
-table follows
REX STORES REPORTS FISCAL 2006 RESULTS, 3/28/07 page 5
REX STORES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
January 31, January 31,
2007 2006
---- ----
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 43,008 $ 21,363
Accounts receivable, net 1,975 3,457
Synthetic fuel receivable 8,838 1,790
Merchandise inventory 70,078 97,371
Prepaid expenses and other 2,529 2,052
Future income tax benefits 9,192 9,361
--------- ---------
Total current assets 135,620 135,394
PROPERTY AND EQUIPMENT, NET 122,769 125,245
ASSETS HELD FOR SALE 2,009 1,497
OTHER ASSETS 4,138 760
GOODWILL 1,322 --
FUTURE INCOME TAX BENEFITS 26,245 30,031
INVESTMENTS 40,699 --
RESTRICTED INVESTMENTS 2,406 2,318
--------- ---------
Total assets $ 335,208 $ 295,245
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $2,678 $2,389
Current portion of deferred income and deferred gain
on sale and leaseback 11,473 10,883
Accounts payable, trade 23,254 20,396
Accrued income taxes 593 541
Accrued payroll and related items 4,528 7,183
Other current liabilities 5,389 5,973
--------- ---------
Total current liabilities 47,915 47,365
--------- ---------
LONG-TERM LIABILITIES:
Long-term mortgage debt 31,236 21,462
Deferred income and deferred gain on sale
and leaseback 13,825 12,213
--------- ---------
Total long-term liabilities 45,061 33,675
--------- ---------
MINORITY INTEREST 11,443 --
--------- ---------
SHAREHOLDERS' EQUITY:
Common stock 295 294
Paid-in capital 139,337 135,775
Retained earnings 252,249 240,898
Treasury stock (161,092) (162,762)
--------- ---------
Total shareholders' equity 230,789 --
--------- ---------
214,205
Total liabilities and shareholders' equity $335,208 $ 295,245
======== =========
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