UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 9, 2008
REX STORES CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware | 001-09097 | 31-1095548 |
| (State or other jurisdiction | (Commission File No.) | (IRS Employer Identification No.) |
| of incorporation) | ||
| 2875 Needmore Road, Dayton, Ohio | 45414 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant's telephone number, including area code: (937) 276-3931
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| [ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition
On September 9, 2008, REX Stores Corporation issued a press release announcing financial results for the three month period ended July 31, 2008.
The press release is furnished as Exhibit 99 to this report.
Item 9.01. Financial Statements and Exhibits
(c) Exhibits. The following exhibits are furnished with this report:
99 Press Release dated September 9, 2008
SIGNATURES
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 hereunto duly authorized.
REX STORES CORPORATION
| Date: September 9, 2008 | By: /s/ DOUGLAS L. BRUGGEMAN | |||
| Name: | Douglas L. Bruggeman | |||
| Title: | Vice President - Finance, | |||
| Chief Financial Officer | ||||
| and Treasurer | ||||
| 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 $0.11
- Repurchased 706,461 Shares of Common Stock During the 2008 Fiscal
Second Quarter and 138,765 Shares in the Fiscal Third Quarter to Date -
Dayton, Ohio (September 9, 2008) – REX Stores Corporation (NYSE:RSC) today announced financial results for the three month period ended July 31, 2008 (the second quarter of the Company’s 2008 fiscal year). The Company will host a conference call and webcast this morning (details below) to review the results.
Fiscal Second Quarter and Six Month Income Statement Review
The table below summarizes net sales and revenue from REX’s retail and alternative energy segments and income from continuing operations before income taxes and minority interest for the three and six month periods ended July 31, 2008 and July 31, 2007.
| Three Months | Six Months | |||||||||||||||
| Ended | Ended | |||||||||||||||
| (in thousands) | July 31, | July 31, | ||||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||||
| Unaudited | ||||||||||||||||
| Net sales and revenue: | ||||||||||||||||
| Retail segment | $ | 42,513 | $ | 47,915 | $ | 88,174 | $ | 96,485 | ||||||||
| Alternative energy segment | 24,857 | - | 26,024 | - | ||||||||||||
| Total net sales and revenues | $ | 67,370 | $ | 47,915 | $ | 114,198 | $ | 96,485 | ||||||||
| Income from continuing operations before | ||||||||||||||||
| income taxes and minority interest | ||||||||||||||||
| Retail segment | $ | 774 | $ | 1,897 | $ | 1,635 | $ | 3,711 | ||||||||
| Alternative energy segment | 983 | 746 | 1,406 | 2,152 | ||||||||||||
| Corporate expense | (579 | ) | (865 | ) | (1,112 | ) | (1,476 | ) | ||||||||
| Interest expense | (100 | ) | (34 | ) | (221 | ) | (723 | ) | ||||||||
| Interest income | 478 | 1,213 | 1,140 | 1,839 | ||||||||||||
| Income from synthetic fuel investments | - | 3,406 | 670 | 10,139 | ||||||||||||
| Income from continuing operations before | ||||||||||||||||
| income taxes and minority interest | $ | 1,556 | $ | 6,363 | $ | 3,518 | $ | 15,642 | ||||||||
-more-
| REX Reports Fiscal 2008 Second Quarter, 9/9/08 | page 2 |
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.
Comparable store sales in the fiscal 2008 second quarter declined 3.9% compared to the fiscal 2007 second 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.
Net income in the quarter ended July 31, 2008 was $1.2 million, or $0.11 per diluted share compared with net income of $5.8 million, or $0.48 per diluted share, in the same period of fiscal 2007. During the fiscal 2008 second quarter, the Company recorded $1.0 million of non-cash pre-tax income from interest rate derivative financial instruments held by its consolidated ethanol entities, Levelland Hockley and One Earth. The fiscal 2008 second quarter net income reflects a $0.2 million gain on disposal of discontinued operations, net of tax, or $0.02 per diluted share, while the fiscal 2007 second quarter net income reflects a $2.5 million gain on disposal of discontinued operations, net of tax, or $0.21 per diluted share, as well as a $0.6 million loss from discontinued operations, net of tax, or $0.05 per diluted share. Per share results are based on 11,146,000 and 11,989,000 diluted weighted average shares outstanding for the quarters ended July 31, 2008 and July 31, 2007, respectively.
| Select Segment Balance Sheet Data | |||||||||
| July 31, 2008 | Jan. 31, 2008 | July 31, 2007 | |||||||
| Assets: | |||||||||
| Retail | $ | 114,238 | $ | 120,711 | $ | 156,634 | |||
| Alternative energy | 217,994 | 167,070 | 104,613 | ||||||
| Corporate | 107,975 | 121,197 | 121,194 | ||||||
| Total assets | $ | 440,207 | $ | 408,978 | $ | 382,441 | |||
| Long- term debt and capital lease obligations: | |||||||||
| Retail | $ | - | $ | - | $ | - | |||
| Alternative energy | 49,877 | 22,072 | - | ||||||
| Corporate | 12,250 | 13,152 | 19,122 | ||||||
| Total long-term debt and capital lease obligations: | $ | 62,127 | $ | 35,224 | $ | 19,122 | |||
REX Stores’ Current Ethanol Production Interests
| REX’s | Production | ||||||||||||||
| Capital | REX’s | Nameplate | Estimated | ||||||||||||
| Investment | Ownership | Capacity (millions | Commencement | ||||||||||||
| Entity | ($ In millions) | Interest | of gallons) | of Production | |||||||||||
| Levelland Hockley County Ethanol, LLC (1) | $ | 16.5 | 56 | % | 40 | In Production | |||||||||
| Patriot Renewable Fuels, LLC | $ | 16.0 | 23 | % | 100 | September 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 | |||||||||
| (1) |
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. |
-more-
| REX Reports Fiscal 2008 Second Quarter, 9/9/08 | page 3 |
During the fiscal 2008 second quarter REX purchased approximately 706,461 shares of its common stock in open market transactions. Subsequent to the end of the fiscal 2008 second quarter, REX purchased approximately 138,675 shares of its common stock in open market transactions. The Company has approximately 370,464 authorized shares remaining available to purchase under the expanded August 2008 stock buy-back authorization. Reflecting all purchases to-date, REX presently has approximately 10,087,216 shares of common stock outstanding.
During the fiscal second quarter REX initiated a strategic review of its retail segment and engaged Brown, Gibbons, Lang & Company Securities, Inc. to assist it in identifying and evaluating a broad range of alternatives during the strategic review 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 a conference call and webcast today at 11:00 a.m. ET, which are open to the general public. The conference call dial-in number is 212/231-2902; 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. ET on September 16, 2008 by dialing 800/633-8284 or 402/977-9140 (international callers). The access code for the audio replay is 21392537. 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 July 31, 2008, the Company operated 110 retail stores in 33 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 Second Quarter, 9/9/08 | page 4 |
REX STORES CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statements Of Income
(In Thousands, Except Per Share Amounts)
Unaudited
| Three Months Ended | Six Months Ended | |||||||||||||||
| July 31, | July 31, | |||||||||||||||
| 2008 | 2007* | 2008 | 2007* | |||||||||||||
| Net sales and revenue | $ | 67,370 | $ | 47,915 | $ | 114,198 | $ | 96,485 | ||||||||
| Cost of sales (excluding retail segment depreciation) | 54,078 | 32,694 | 87,531 | 65,867 | ||||||||||||
| Gross profit | 13,292 | 15,221 | 26,667 | 30,618 | ||||||||||||
| Selling, general and administrative expenses | (13,192 | ) | (14,690 | ) | (27,524 | ) | (29,253 | ) | ||||||||
| Interest income | 519 | 1,976 | 1,373 | 3,269 | ||||||||||||
| Interest expense | (897 | ) | (34 | ) | (1,018 | ) | (108 | ) | ||||||||
| Loss on early termination of debt | - | - | - | (607 | ) | |||||||||||
| Gains on sale of real estate, net | - | 72 | - | 62 | ||||||||||||
| Equity in income of unconsolidated ethanol affiliates | 874 | 412 | 1,922 | 1,522 | ||||||||||||
| Income from synthetic fuel investments | - | 3,406 | 670 | 10,139 | ||||||||||||
| Unrealized and realized gains on derivative financial instruments, | ||||||||||||||||
| net | 960 | - | 1,428 | - | ||||||||||||
| Income from continuing operations before provision for | ||||||||||||||||
| income taxes, minority interest and discontinued operations | 1,556 | 6,363 | 3,518 | 15,642 | ||||||||||||
| Provision for income taxes | 468 | 2,563 | 994 | 6,168 | ||||||||||||
| Minority interest | (36 | ) | 54 | 187 | (41 | ) | ||||||||||
| Income from continuing operations | 1,052 | 3,854 | 2,711 | 9,433 | ||||||||||||
| Loss from discontinued operations, net of tax | (41 | ) | (587 | ) | (173 | ) | (1,510 | ) | ||||||||
| Gain on disposal of discontinued operations, net of tax | 195 | 2,543 | 194 | 5,421 | ||||||||||||
| Net income | $ | 1,206 | $ | 5,810 | $ | 2,732 | $ | 13,344 | ||||||||
| Weighted average shares outstanding – basic | 10,510 | 10,625 | 10,618 | 10,548 | ||||||||||||
| Basic income per share from continuing operations | $ | 0.10 | $ | 0.36 | $ | 0.26 | $ | 0.90 | ||||||||
| Basic loss per share from discontinued operations | - | (0.05 | ) | (0.02 | ) | (0.14 | ) | |||||||||
| Basic income per share on disposal of discontinued operations | 0.01 | 0.24 | 0.02 | 0.51 | ||||||||||||
| Basic net income per share | $ | 0.11 | $ | 0.55 | $ | 0.26 | $ | 1.27 | ||||||||
| Weighted average shares outstanding – diluted | 11,146 | 11,989 | 11,396 | 11,911 | ||||||||||||
| Diluted income per share from continuing operations | $ | 0.09 | $ | 0.32 | $ | 0.24 | $ | 0.79 | ||||||||
| Diluted loss per share from discontinued operations | - | (0.05 | ) | (0.02 | ) | (0.13 | ) | |||||||||
| Diluted income per share on disposal of discontinued operations | 0.02 | 0.21 | 0.02 | 0.46 | ||||||||||||
| Diluted net income per share | $ | 0.11 | $ | 0.48 | $ | 0.24 | $ | 1.12 | ||||||||
| * |
Amounts differ from those previously reported as a result of certain stores being reclassified into discontinued operations. |
- balance sheet follows -
| REX Reports Fiscal 2008 Second Quarter, 9/9/08 | page 5 |
REX STORES CORPORATION AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(in thousands)
Unaudited
| July 31, | January 31, | July 31, | ||||||||||
| 2008 | 2008 | 2007 | ||||||||||
| Assets | ||||||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | $ | 79,608 | $ | 127,716 | $ | 90,293 | ||||||
| Restricted cash | 2,774 | - | - | |||||||||
| Accounts receivable, net | 3,509 | 1,877 | 3,128 | |||||||||
| Synthetic fuel receivable | - | 573 | 3,851 | |||||||||
| Inventory, net | 59,457 | 49,933 | 84,256 | |||||||||
| Prepaid expenses and other | 2,432 | 2,492 | 2,932 | |||||||||
| Deferred taxes | 10,312 | 10,599 | 6,562 | |||||||||
| Total current assets | 158,092 | 193,190 | 191,022 | |||||||||
| Property and equipment, net | 202,193 | 136,505 | 78,575 | |||||||||
| Assets held for sale, net | 92 | - | 1,064 | |||||||||
| Other assets | 13,578 | 14,803 | 23,595 | |||||||||
| Goodwill | 1,322 | 1,322 | 1,322 | |||||||||
| Deferred taxes | 21,929 | 21,929 | 23,533 | |||||||||
| Equity method investments | 40,505 | 38,748 | 28,212 | |||||||||
| Investments in debt instruments | - | - | 32,675 | |||||||||
| Restricted investments | 2,496 | 2,481 | 2,443 | |||||||||
| Total assets | $ | 440,207 | $ | 408,978 | $ | 382,441 | ||||||
| Liabilities and shareholders’ equity | ||||||||||||
| Current liabilities: | ||||||||||||
| Current portion of long-term debt and capital lease obligations | $ | 6,609 | $ | 4,101 | $ | 2,183 | ||||||
| Accounts payable, trade | 49,688 | 27,253 | 42,923 | |||||||||
| Deferred income | 13,144 | 14,448 | 15,085 | |||||||||
| Deferred gain on sale and leaseback | 1,389 | 1,436 | 2,068 | |||||||||
| Other current liabilities | 7,140 | 13,617 | 9,381 | |||||||||
| Total current liabilities | 77,970 | 60,855 | 71,640 | |||||||||
| Long-term liabilities: | ||||||||||||
| Long-term debt and capital lease obligations | 62,127 | 35,224 | 19,122 | |||||||||
| Deferred income | 15,173 | 17,172 | 17,653 | |||||||||
| Deferred gain on sale and leaseback | 3,746 | 4,493 | 6,163 | |||||||||
| Derivative financial instruments | 839 | 2,601 | - | |||||||||
| Other | 1,152 | 4,313 | 940 | |||||||||
| Total long-term liabilities | 83,037 | 63,803 | 43,878 | |||||||||
| Minority interest in consolidated subsidiaries | 27,539 | 27,729 | 11,764 | |||||||||
| Shareholders’ equity: | ||||||||||||
| Common stock | 299 | 298 | 298 | |||||||||
| Paid-in capital | 142,584 | 141,357 | 143,214 | |||||||||
| Retained earnings | 288,361 | 285,629 | 265,106 | |||||||||
| Treasury stock | (179,583 | ) | (170,693 | ) | (163,176 | ) | ||||||
| Accumulated other comprehensive income, net of tax | - | - | 9,717 | |||||||||
| Total shareholders' equity | 251,661 | 256,591 | 255,159 | |||||||||
| Total liabilities and shareholders' equity | $ | 440,207 | $ | 408,978 | $ | 382,441 |
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