FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (Mark One) (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 31, 2002 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to -------- --------- Commission File Number 0-13283 REX Stores Corporation (Exact name of registrant as specified in its charter) Delaware 31-1095548 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 2875 Needmore Road, Dayton, Ohio 45414 (Address of principal executive offices) (Zip Code) (937) 276-3931 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes (X) No ( ) At the close of business on September 12, 2002, the registrant had 12,239,590 shares of Common Stock, par value $.01 per share, outstanding.
REX STORES CORPORATION AND SUBSIDIARIES INDEX Page ---- PART I. FINANCIAL INFORMATION Item 1. Consolidated Condensed Financial Statements Consolidated Condensed Balance Sheets........................ 3 Consolidated Condensed Statements of Income.................. 5 Consolidated Condensed Statements of Shareholders' Equity.... 7 Consolidated Condensed Statements of Cash Flows.............. 8 Notes to Consolidated Condensed Financial Statements......... 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................................. 13 Item 3. Quantitative and Qualitative Disclosure About Market Risk...... 17 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K............................... 18 2
PART I. FINANCIAL INFORMATION Item 1. Financial Statements REX STORES CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS A S S E T S July 31 January 31 July 31 2002 2002 2001 (In Thousands) Unaudited Unaudited ASSETS: Cash and cash equivalents $ 10,039 $ 39,441 $ 2,822 Accounts receivable, net 548 1,120 1,605 Synthetic fuel receivable 3,327 1,545 1,125 Merchandise inventory 138,860 101,017 160,235 Prepaid expenses and other 3,073 2,554 3,752 Future income tax benefits 12,614 12,614 9,837 -------- -------- -------- Total current assets 168,461 158,291 179,376 PROPERTY AND EQUIPMENT, NET 136,940 139,496 134,118 FUTURE INCOME TAX BENEFITS 7,320 7,320 9,523 RESTRICTED INVESTMENTS 2,232 2,222 2,200 -------- -------- -------- Total assets $314,953 $307,329 $325,217 ======== ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Notes payable $ 65 $ 66 $ 9,448 Current portion of long-term debt 4,783 5,012 5,272 Current portion of deferred income and deferred gain on sale and leaseback 11,096 11,790 11,477 Accounts payable, trade 41,138 32,619 52,223 Accrued income taxes 2,847 1,373 - Accrued payroll 4,914 5,856 4,706 3
Liabilities and Shareholders' Equity (Continued) Other current liabilities 9,454 9,319 9,246 -------- -------- -------- Total current liabilities 74,297 66,035 92,372 -------- -------- -------- LONG-TERM LIABILITIES: Long-term mortgage debt 67,723 77,203 84,744 Deferred income 14,069 15,173 15,525 Deferred gain on sale and leaseback 646 945 1,716 -------- -------- -------- Total long-term liabilities 82,438 93,321 101,985 -------- -------- -------- SHAREHOLDERS' EQUITY: Common stock 277 274 263 Paid-in capital 119,026 116,701 107,250 Retained earnings 144,283 134,708 119,374 Treasury stock (105,368) (103,710) (96,027) -------- -------- -------- Total shareholders' equity 158,218 147,973 130,860 -------- -------- -------- Total liabilities and shareholders' equity $314,953 $307,329 $325,217 ======== ======== ======== The accompanying notes are an integral part of these unaudited consolidated statements. 4
REX STORES CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME UNAUDITED Three Months Ended Six Months Ended July 31 July 31 2002 2001 2002 2001 (In Thousands, Except Per Share Amounts) NET SALES $93,070 $100,542 $186,606 $205,331 COSTS AND EXPENSES: Cost of merchandise sold 63,740 70,967 130,022 146,481 Selling, general and administrative expenses 26,012 26,940 51,017 53,265 ------- -------- -------- -------- Total costs and expenses 89,752 97,907 181,039 199,746 ------- -------- -------- -------- INCOME FROM OPERATIONS 3,318 2,635 5,567 5,585 INVESTMENT INCOME 133 31 283 94 INTEREST EXPENSE (1,267) (2,261) (2,602) (4,227) INCOME FROM LIMITED PARTNERSHIPS 5,004 4,754 9,640 7,849 ------- -------- -------- -------- Income before provision for income taxes 7,188 5,159 12,888 9,301 PROVISION FOR INCOME TAXES 1,797 1,289 3,222 2,326 ------- -------- -------- -------- Income before extraordinary item 5,391 3,870 9,666 6,975 Extraordinary loss from early extinguishment of debt, net of tax - - 91 - NET INCOME $ 5,391 $ 3,870 $ 9,575 $ 6,975 ======= ======== ======== ======== WEIGHTED AVERAGE SHARES OUTSTANDING-BASIC 12,522 11,462 12,411 11,690 5
Consolidated Statements of Income (Continued) Basic Net Income Per Share Before Extraordinary Item 0.43 0.34 0.78 0.60 Extraordinary Item - - (0.01) - ======= ======== ======== ======== BASIC NET INCOME PER SHARE $ 0.43 $ 0.34 $ 0.77 $ 0.60 ======= ======== ======== ======== WEIGHTED AVERAGE SHARES OUTSTANDING-DILUTED 14,728 13,258 14,755 13,238 ======= ======== ======== ======== Diluted Net Income Per Share Before Extraordinary Item 0.37 0.29 0.66 0.53 Extraordinary Item - - (0.01) - DILUTED NET INCOME PER SHARE $ 0.37 $ 0.29 $ 0.65 $ 0.53 ======= ======== ======== ======== The accompanying notes are an integral part of these unaudited consolidated statements. 6
REX STORES CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY UNAUDITED Common Shares ----------------------------------------------------- Issued Treasury Paid-in Retained Shares Amount Shares Amount Capital Earnings (In Thousands) Balance at January 31, 2002 27,358 $274 15,113 $103,710 $116,701 $134,708 Net income -- -- -- -- -- 9,575 Treasury stock acquired -- -- 121 2,031 -- -- Common stock issued 368 3 (53) (373) 2,325 -- ------ ---- ------ -------- -------- -------- Balance at July 31, 2002 27,726 $277 15,181 $105,368 $119,026 $144,283 ====== ==== ====== ======== ======== ======== The accompanying notes are an integral part of these unaudited consolidated statements. 7
REX STORES CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS UNAUDITED Six Months Ended July 31 2002 2001 (In Thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 9,575 $ 6,975 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization, net 2,167 2,100 (Gain) Loss on disposal of fixed assets 262 (94) Deferred income (1,798) (848) Income of limited partnerships (9,640) (7,849) Changes in assets and liabilities: Accounts receivable 572 1,977 Merchandise inventory (37,843) (16,085) Other current assets (522) 417 Accounts payable, trade 8,519 4,543 Other current liabilities 667 (1,154) -------- -------- NET CASH USED IN OPERATING ACTIVITIES (28,041) (10,018) -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (468) (1,785) Proceeds from sale of real estate and fixed assets 300 896 Proceeds from sale of partnership interest 7,858 7,849 Restricted investments (10) (35) -------- -------- NET CASH PROVIDED BY INVESTING ACTIVITIES 7,680 6,925 -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Increase (Decrease) in notes payable (1) 8,706 Payments of long-term debt (9,710) (2,269) Proceeds from long-term debt - 6,100 Common stock issued 2,328 1,092 Treasury stock issued 373 292 Treasury stock acquired (2,031) (8,693) -------- -------- 8
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (9,041) 5,228 -------- ------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (29,402) 2,135 CASH AND CASH EQUIVALENTS, beginning of period 39,441 687 -------- ------- CASH AND CASH EQUIVALENTS, end of period $ 10,039 $ 2,822 ======== ======= The accompanying notes are an integral part of these unaudited consolidated statements. 9
REX STORES CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS July 31, 2002 Note 1. Consolidated Financial Statements The consolidated financial statements included in this report have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission and include, in the opinion of management, all adjustments necessary to state fairly the information set forth therein. Any such adjustments were of a normal recurring nature. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these unaudited consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended January 31, 2002 (fiscal 2001). The results of operations for the interim periods are not necessarily indicative of the results to be expected for the year. Note 2. Accounting Policies The interim consolidated financial statements have been prepared in accordance with the accounting policies described in the notes to the consolidated financial statements included in the Company's 2001 Annual Report on Form 10-K. While management believes that the procedures followed in the preparation of interim financial information are reasonable, the accuracy of some estimated amounts is dependent upon facts that will exist or calculations that will be accomplished at fiscal year end. Examples of such estimates include changes in the LIFO reserve (based upon the Company's best estimate of inflation to date), management bonuses and the provision for income taxes. Any adjustments pursuant to such estimates during the quarter were of a normal recurring nature. Certain reclassifications have been made to prior year amounts to conform with their fiscal 2002 presentation. 10
Notes to Consolidated Financial Statements (Continued) Note 3. Stock Option Plans The following summarizes options granted, exercised and canceled or expired during the six months ended July 31, 2002: Shares Under Stock Option Plans Outstanding at January 31, 2002 ($3.61 to $10.37 per share) 6,881,610 Granted ($14.745 to $16.04 per share) 353,936 Exercised ($3.61 to $10.14 per share) (421,102) Canceled or expired ($4.61 to $14.745 per share) (39,000) --------- Outstanding at July 31, 2002 ($3.61 to $16.04 per share) 6,775,444 ========= Note 4. Net Income Per Share The following table reconciles the basic and diluted net income per share computation for each period presented:
credits taken. The timing of the completion of the audit has not been determined. To date the Company has received approximately $36.8 million in payments with respect to its sales of its Partnership interests, which payments are non-refundable irrespective of the outcome of the audit. Net income for the 2002 second quarter and first half periods also reflects pre-tax income, net of litigation expenses, of approximately $0.4 million from the settlement of a previously filed lawsuit relating to its participation as a limited partner in a second limited partnership formed to produce synthetic fuel which qualifies for tax credits under Section 29 of the Internal Revenue Code. As part of the settlement, which was effected without the admission of liability by any party, the Company entered into an Amended and Restated Agreement of Limited Partnership which facilitates future production of synthetic fuel. Note 7. Subsequent Events On September 5, 2002, the Company closed on its purchase of a plant located in Gillette, Wyoming designed and constructed for the production of synthetic fuel which qualifies for tax credits under Section 29 of the Internal Revenue Code. The Company has obtained a Private Letter Ruling from the Internal Revenue Service which would allow the disassembly, and reconstruction, of the facility at a yet to be determined host site. The Company is presently searching for potential partners as to the relocation and commercialization of the plant and limiting the Company's maximum financial investment in the venture. If the plant cannot be relocated on terms acceptable to the Company, the Company is obligated to remove the plant from its existing site at a currently estimated cost to the Company of up to $2 million. While this acquisition may result in the future production of synthetic fuel, there can be no assurances that this facility will ever be placed into commercial operation. 12
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. We are a specialty retailer in the consumer electronics/appliance industry. As of July 31, 2002 we operated 255 stores in 37 states, predominantly in small to medium-sized markets under the trade name "REX". Fiscal Year All references in this report to a particular fiscal year are to REX's fiscal year ended January 31. For example, "fiscal 2001" means the period February 1, 2001 to January 31, 2002. Results of Operations The following table sets forth, for the periods indicated, the relative percentages that certain income and expense items bear to net sales: Three Months Ended Six Months Ended July 31 July 31 2002 2001 2002 2001 Net sales 100.0% 100.0% 100.0% 100.0% Cost of merchandise sold 68.5 70.6 69.7 71.3 ----- ----- ----- ----- Gross profit 31.5 29.4 30.3 28.7 Selling, general and administrative expenses 27.9 26.8 27.3 26.0 ----- ----- ----- ----- Income from operations 3.6 2.6 3.0 2.7 Investment income 0.1 -- 0.1 0.1 Interest expense (1.4) (2.2) (1.4) (2.1) Income from limited partnerships 5.4 4.7 5.2 3.8 ----- ----- ----- ----- Income before provision for income taxes 7.7 5.1 6.9 4.5 Provision for income taxes 1.9 1.3 1.7 1.1 ----- ----- ----- ----- Income before extraordinary item 5.8 3.8 5.2 3.4 Extraordinary loss from early extinguishment of debt -- -- 0.1 -- ----- ----- ----- ----- 13
Net income 5.8% 3.8% 5.1% 3.4% ===== ===== ===== ===== Comparison of Three and Six Months Ended July 31, 2002 and 2001 Net sales in the second quarter ended July 31, 2002 were $93.1 million compared to $100.5 million in the prior year's second quarter, representing a decrease of $7.4 million or 7.4%. This decrease was primarily due to a decline in comparable store sales of 5.6%. The decline was also partially caused by a net reduction of nine stores since the end of the second quarter of fiscal 2001. The strongest product category for the Company for the second quarter of fiscal 2002 was appliances which positively impacted comparable store sales by 1.6%. This was due to strong air conditioner sales for the quarter due to warmer summer conditions compared to the prior year. The remaining major product categories contributed to our negative comparable store sales with the audio category contributing 3.1%, the video category contributing 2.1% and the television category contributing 2.0%. Net sales for the first half of fiscal 2002 were $186.6 million compared to $205.3 million for the first half of fiscal 2001, representing a decrease of $18.7 million or 9.1%. This decrease was primarily due to a decline in comparable store sales of 7.2%. The decline was also partially caused by a net reduction of nine stores since the end of the second quarter of fiscal 2001. The only major product category which positively impacted comparable store sales was the appliance category which positively contributed 0.3% to comparable store sales due to strong air conditioner sales in the second quarter. The remaining major product categories contributed to the negative comparable store sales with the video category contributing 3.5%, the audio category contributing 2.7% and the television category contributing 1.3%. As of July 31, 2002, we had 255 stores compared to 264 stores one year earlier. We did not open any stores and closed seven stores during the first half of fiscal 2002. There were six stores opened and four closed in the first half of fiscal 2001. Gross profit of $29.3 million (31.5% of net sales) in the second quarter of fiscal 2002 was $0.3 million lower than the $29.6 million (29.4% of net sales) recorded in the second quarter of fiscal 2001. Gross profit for the first half of fiscal 2002 was $56.6 million (30.3% of net sales) compared to $58.8 million (28.7% of net sales) for the first half of fiscal 2001. The gross profit margin for the second quarter of fiscal 2002 was positively impacted from stronger air conditioner sales which had a high gross profit margin due to 14
opportunistic purchases. Overall the gross profit margin has been positively impacted by a shift in sales toward higher gross profit margin products and more favorable pricing from vendors. Selling, general and administrative expenses for the second quarter of fiscal 2002 were $26.0 million (27.9% of net sales) compared to $26.9 million (26.8% of net sales) for the second quarter of fiscal 2001. This represents a decrease of $0.9 million or 3.4%. Selling, general and administrative expenses for the first half of fiscal 2002 were $51.0 million (27.3% of net sales), a 4.2% decrease from $53.3 million (26.0% of net sales) for the first half of fiscal 2001. The reduction in expenditures primarily relates to less advertising dollars spent due to limited expenditures on radio and television advertising in the current year and the reduction in the number of stores in operation. Interest expense decreased to $1.3 million (1.4% of net sales) for the second quarter of fiscal 2002 from $2.3 million (2.2% of net sales) for the second quarter of fiscal 2001. Interest expense for the first half of fiscal 2002 was $2.6 million (1.4% of net sales) compared to $4.2 million (2.1% of net sales) for the first half of fiscal 2001. The decline in interest expense was primarily caused by a reduction in the amount of mortgage debt outstanding and restructuring a large portion of the remaining mortgage debt to lower floating interest rates. Results for the second quarter and first half of fiscals 2002 and 2001 also reflect the impact of our equity investment in two limited partnerships which produce synthetic fuels. Effective February 1, 1999, we entered into an agreement to sell a portion of our investment in one of the limited partnerships, which resulted in the reduction in our ownership interest from 30% to 17%. Effective July 31, 2000, we sold an additional portion of our ownership interest in that partnership, reducing our ownership percentage from 17% to 8%. Effective May 31, 2001, we sold our remaining 8% ownership interest. We report the installment income from these sales on a quarterly basis. Below is a table summarizing the income from the sales, net of certain expenses. Three Months Ended Six Months Ended July 31 July 31 2002 2001 2002 2001 (In Thousands) February 1, 1999 sale $1,850 $1,780 $3,699 $3,587 July 31, 2000 sale 1,350 1,626 2,700 2,914 May 31, 2001 sale 1,436 1,347 2,873 1,347 15
------ ------ ------ ------ $4,636 $4,753 $9,272 $7,848 ====== ====== ====== ====== The Internal Revenue Service (IRS) is presently auditing this limited partnership. Approximately $2.5 million of the payment due to the Company during the fiscal 2002 second quarter relating to sales of certain portions of the limited partnership interest is being held in escrow pending the results of the IRS audit. Subsequent payments relating to certain of these sales will also be held in escrow pending the results of the IRS audit. The timing of the completion of the audit has not been determined. Net income for the 2002 second quarter and first half periods also reflects pre-tax income, net of litigation expenses, of approximately $0.4 million from the settlement of a previously filed lawsuit relating to our participation as a limited partner in a second limited partnership formed to produce synthetic fuel which qualifies for tax credits under Section 29 of the Internal Revenue Code. As part of the settlement, which was effected without the admission of liability by any party, the Company entered into an Amended and Restated Agreement of Limited Partnership which facilitates future production of synthetic fuel. Our effective tax rate was 25% for all periods presented after reflecting our share of federal income tax credits earned by the limited partnerships under Section 29 of the Internal Revenue Code. As a result of the foregoing, net income for the second quarter of fiscal 2002 was $5.4 million, a 39.3% increase from $3.9 million for the second quarter of fiscal 2001. Net income for the first half of fiscal 2002 was $9.6 million, a 37.3% increase from $7.0 million for the first half of fiscal 2001. Liquidity and Capital Resources Net cash used in operating activities was $28.0 million for the first six months of fiscal 2002, compared to $10.0 million for the first six months of fiscal 2001. For the first half of fiscal 2002, cash was provided by net income of $9.6 million, adjusted for the impact of $9.6 million for gains on our installment sales of the limited partnership interest, non-cash items of $0.4 million which consisted of deferred income and depreciation and amortization and $0.3 million loss from disposal of fixed assets. Cash was also provided by an increase of $8.5 million in accounts payable, an increase of $0.7 million in other liabilities and a decrease of $0.6 million in accounts receivable. The primary use of cash was an increase of $37.8 million in inventory due to the timing of purchases. Cash was also used by 16
an increase in other assets of $0.5 million. At July 31, 2002, working capital was $94.2 million compared to $92.3 million at January 31, 2002. The ratio of current assets to current liabilities was 2.3 to 1 at July 31, 2002 and 2.4 to 1 at January 31, 2002. We received proceeds of approximately $7.9 million and $7.8 million during the first half of fiscals 2002 and 2001, respectively, from installment sales of our ownership interest in a limited partnership. Cash used in financing activities totaled $9.0 million for the first half of fiscal 2002. The primary use of cash was for payments on long-term mortgage debt of approximately $9.7 million for the early extinguishment of debt for eight retail store locations and scheduled repayments. Cash provided by financing activities totaled approximately $5.2 million of the first half of fiscal 2001. Cash was provided by borrowings of $8.7 million on the line of credit during the first half of fiscal 2001 and proceeds of $6.1 million from long-term debt borrowings related to mortgage financing of seven stores. We also received proceeds of $1.4 million from the exercise of employee stock options. Cash was used to purchase 1,064,700 shares (split adjusted) of our common stock for approximately $8.7 million during the first half of fiscal 2001. Cash was also used for payments on long-term debt of $2.3 million. At July 31, 2002 we had authorization from our Board of Directors to purchase 1,158,300 shares of our common stock. Subsequent to the end of the second quarter we have purchased 308,400 shares of our common stock. Recently Issued Accounting Standards In July 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 143, "Accounting for Asset Retirement Obligations". SFAS No. 143 addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated assets retirement costs. It applies to all legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and/or the normal operation of a long-lived asset. This Statement is effective for financial statements issued for fiscal years beginning after June 15, 2002. We believe that the implementation of the statement will not have a material impact on our results of operations and financial position. In May 2002, the FASB issued SFAS 145, "Recission of SFAS Nos. 4, 44, and 64, Amendment of SFAS 13, and Technical Corrections." For most companies, SFAS No. 145 will require gains and losses on extinguishment of debt to be classified as income or loss from continuing operations rather than as extraordinary items as previously required under SFAS No. 4. Extraordinary treatment will be required for certain extinguishments as provided in APB No. 30. The provisions of SFAS No. 145 related to the SFAS No. 4 revision are effective for financial statements issued for fiscal years beginning after May 15, 2002, however, early adoption is encouraged. Once adopted, any gain or loss on extinguishment of debt that was classified as an extraordinary item in prior periods presented that does not meet the criteria in APB No. 30 for classification as an extraordinary item should be reclassified. In addition, SFAS 145 amends FASB Statement No. 13, Accounting for Leases, to eliminate an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions. We have not yet assessed the impact of the adoption of this standard on our consolidated financial position, results of operations or cash flows. In July 2002, the FASB issued Statement No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." The standard requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. Examples of costs covered by the standard include lease termination costs and certain employee severance costs that are associated with a restructuring or other exit or disposal activity. Statement 146 is to be applied prospectively to exit or disposal activities initiated after December 31, 2002. We have not yet assessed the impact of the adoption of this standard on our consolidated financial position, results of operations or cash flows. Forward-Looking Statements This Form 10-Q contains or may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. The words "believes", "estimates", "plans", "expects", "intends", "anticipates" and similar expressions as they relate to the Company or its management are intended to identify such forward-looking statements. Forward-looking statements are inherently subject to risks and uncertainties. Factors that could cause actual results to differ materially from those in the forward-looking statements are set forth in Exhibit 99(a) to the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2002 (File No. 0-13283). Item 3. Quantitative and Qualitative Disclosure About Market Risk No material changes since January 31, 2002. 17
PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. No exhibits are filed with this report. (b) Reports on Form 8-K. During the quarter ended July 31, 2002, the Company filed a report on Form 8-K dated June 13, 2002, reporting under Item 4. "Changes in Registrant's Certifying Accountant," that on June 13, 2002, the Board of Directors of the Company approved the engagement of Deloitte & Touche LLP as its independent auditor for the year ending January 31, 2003 and dismissed the firm of Arthur Andersen LLP. 18
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, thereunto duly authorized. REX STORES CORPORATION Registrant September 13, 2002 STUART A. ROSE Stuart A. Rose Chairman of the Board (Chief Executive Officer) September 13, 2002 DOUGLAS L. BRUGGEMAN Douglas L. Bruggeman Vice President, Finance and Treasurer (Principal Financial and Chief Accounting Officer) CERTIFICATIONS I, Stuart A. Rose, certify that: 1. I have reviewed this quarterly report on Form 10-Q of REX Stores Corporation; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; and 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly 19
present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report. Date: September 13, 2002 STUART A. ROSE Stuart A. Rose Chairman of the Board and Chief Executive Officer I, Douglas L. Bruggeman, certify that: 1. I have reviewed this quarterly report on Form 10-Q of REX Stores Corporation; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; and 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report. Date: September 13, 2002 DOUGLAS L. BRUGGEMAN Douglas L. Bruggeman Vice President, Finance and Treasurer Principal Financial Officer 20