[REX STORES 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 SECOND QUARTER
DILUTED EARNINGS PER SHARE OF $0.13
Dayton, Ohio (August 30, 2006) -- REX Stores Corporation (NYSE:RSC) today
announced financial results and comparable store sales for the three- and
six-month periods ended July 31, 2006 (the Company's 2006 fiscal year).
Net sales in the fiscal 2006 second quarter were $82.1 million compared with
$82.5 million in the fiscal 2005 second quarter. Comparable store sales for the
three months ended July 31, 2006 rose 3.5%. 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 July 31, 2006, income from synthetic fuel limited
partnership investments was $0.7 million compared with $10.4 million in the
comparable year-ago period. In the fiscal 2006 second quarter, Progress Energy
(NYSE:PGN), the purchaser of the Company's partnership interest in the Colona
synthetic fuel investments, ceased production at its synthetic fuel facilities
as higher oil prices increased the likelihood that Section 29/45K tax credits
would be reduced or phased out in 2006. Reflecting this announcement, the
Company does not expect future income from the sale of its synthetic fuel
interests to be comparable with the levels recorded in fiscal 2005. This could
change, should operations resume at plants that have ceased production or should
certain plants continue production.
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REX Stores Reports Second Quarter Results, 8/30/06 page 2
During the fiscal 2006 second quarter, REX recorded a $1.7 million pre-tax gain
from the sale of real estate. Net income in the three months ended July 31, 2006
was $1.5 million, or $0.13 per diluted share, compared to net income of $8.7
million, or $0.70 per diluted share, in the three months ended July 31, 2005.
Per share results are based on 11,575,000 and 12,437,000 diluted weighted
average shares outstanding for the three-month periods ended July 31, 2006 and
2005, respectively.
Net income in the six-month period ended July 31, 2006 was $3.0 million, or
$0.26 per diluted share, compared with net income of $14.8 million, or $1.18 per
diluted share, in the six-month period ended July 31, 2005. Per share results
are based on 11,607,000 and 12,602,000 diluted weighted average shares
outstanding for the six-month periods ended July 31, 2006 and July 31, 2005. Net
sales in the 2006 six-month period were $167.8 million compared to $169.9
million in the six months ended July 31, 2005. Comparable store sales in the
first six months of fiscal 2006 rose 2.0% compared to the same year-ago period.
As previously announced, REX recently entered into a contingent agreement to
invest an additional $11.5 million to $18.0 million in Levelland/Hockley County
Ethanol, LLC ("Levelland/Hockley") which plans to commence construction of a 40
million gallon ethanol production facility in Levelland, Texas by November 1,
2006. The additional investment, along with Rex's previously announced $5
million convertible secured promissory note commitment enables REX to secure a
majority ownership interest in Levelland/Hockley. In addition to
Levelland/Hockley, REX has entered into contingent agreements to invest in three
other ethanol plants with annual production capacity of 100 million gallons
each, with one of the plants presently under construction. The four investment
commitments to date could lead to REX investing over $80 million in ethanol
production facilities.
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
212/346-6521; 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.fulldisclosure.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 September 6, 2006 by dialing 800/633-8284 or
402/977-9140 (international callers). The access code for the audio replay is
21301839. Alternatively, a replay will be available on the Internet for 30 days
at www.rextv.com or www.earnings.com.
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REX Stores Corporation is a leading specialty retailer of consumer electronic
products and appliances. As of July 31, 2006, the Company operated 210 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 agreements to invest in four proposed ethanol producing plants.
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REX Stores Reports Second Quarter Results, 8/30/06 page 3
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 Second Quarter Results, 8/30/06 page 4
REX STORES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Six Months Ended
July 31 July 31
------- -------
2006 2005 2006 2005
---- ---- ---- ----
NET SALES $ 82,113 $ 82,515 $ 167,802 $ 169,939
COSTS AND EXPENSES:
Cost of merchandise sold 59,543 57,968 121,241 121,311
------ ------ ------- -------
Gross profit 22,570 24,547 46,561 48,628
Selling, general and administrative expenses 22,361 23,730 45,554 46,037
------ ------ ------ ------
Operating income 209 817 1,007 2,591
INVESTMENT INCOME 287 58 579 132
INTEREST EXPENSE (497) (695) (999) (1,294)
GAIN ON SALE OF REAL ESTATE 1,735 - 1,735 -
INCOME FROM SYNTHETIC FUEL INVESTMENTS 722 10,398 2,785 16,380
--- ------ ----- ------
Income from continuing operations before provision
for income taxes and discontinued operations 2,456 10,578 5,107 17,809
PROVISION FOR INCOME TAXES 892 1,652 1,892 2,746
--- ----- ----- -----
Income from continuing operations 1,564 8,926 3,215 15,063
Loss from discontinued operations, net of tax (67) (205) (229) (367)
Gain on disposal of discontinued operations, net of tax - - - 125
------ ------ ------ -------
Net Income $1,497 $8,721 $2,986 $14,821
====== ====== ====== =======
WEIGHTED AVERAGE SHARES
OUTSTANDING - BASIC 10,323 10,871 10,235 11,011
====== ====== ====== ======
Basic income per share from continuing operations $0.15 $0.82 $0.31 $1.37
Basic loss per share from discontinued operations - (0.02) (0.02) (0.03)
Basic income per share on disposal of discontinued operations - - - 0.01
------ ------ ------ -------
BASIC NET INCOME PER SHARE $0.15 $0.80 $0.29 $1.35
===== ===== ===== =====
WEIGHTED AVERAGE SHARES
OUTSTANDING - DILUTED 11,575 12,437 11,607 12,602
====== ====== ====== ======
Diluted income per share from continuing operations $0.13 $0.72 $0.28 $1.20
Diluted loss per share from discontinued operations - (0.02) (0.02) (0.03)
Diluted income per share on disposal of discontinued operations - - - 0.01
------ ------ ------ -------
DILUTED NET INCOME PER SHARE $0.13 $0.70 $0.26 $1.18
===== ===== ===== =====
-more-
REX Stores Reports Second Quarter Results, 8/30/06 page 5
REX STORES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
July 31, January 31, July 31,
2006 2006 2005
---- ---- ----
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 5,481 $ 20,096 $ 1,744
Accounts receivable, net 4,149 3,457 3,458
Synthetic fuel receivable 3,171 1,680 786
Note receivable 5,595 -- --
Merchandise inventory 123,349 97,371 133,759
Prepaid expenses and other 2,226 2,052 2,807
Future income tax benefits 9,354 9,361 10,929
--------- --------- ---------
Total current assets 153,325 134,017 153,483
PROPERTY AND EQUIPMENT, NET 121,994 125,245 128,700
ASSETS HELD FOR SALE 2,822 1,497 1,669
OTHER ASSETS 707 760 915
FUTURE INCOME TAX BENEFITS 29,228 30,031 27,978
RESTRICTED INVESTMENTS 2,367 2,318 2,290
--------- --------- ---------
Total assets $ 310,443 $ 293,868 $ 315,035
========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $ -- $ -- $ 4,031
Current portion of long-term debt 2,476 2,389 2,919
Current portion of deferred income and deferred gain
on sale and leaseback 11,425 10,883 9,920
Accounts payable, trade 31,557 19,129 35,599
Accrued income taxes 597 541 --
Accrued payroll and related items 4,230 7,183 5,093
Other current liabilities 6,469 5,863 6,623
--------- --------- ---------
Total current liabilities 56,754 45,988 64,185
--------- --------- ---------
LONG-TERM LIABILITIES:
Long-term mortgage debt 20,117 21,462 28,490
Deferred income 12,812 12,213 11,387
--------- --------- ---------
Total long-term liabilities 32,929 33,675 39,877
--------- --------- ---------
SHAREHOLDERS' EQUITY:
Common stock 295 294 293
Paid-in capital 138,238 135,775 135,496
Retained earnings 243,884 240,898 227,450
Treasury stock (161,657) (162,762) (152,266)
--------- --------- ---------
Total shareholders' equity 220,760 214,205 210,973
--------- --------- ---------
Total liabilities and shareholders' equity $ 310,443 $ 293,868 $ 315,035
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