SEC Filing - REX American Resources Corporation

SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED JANUARY 31, 1997 COMMISSION FILE NO. 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 No.) 2875 Needmore Road, Dayton, Ohio 45414 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (937) 276-3931 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common Stock, $.01 par value New York Stock Exchange 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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No . --- ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ] At the close of business on April 15, 1997 the aggregate market value of the registrant's outstanding Common Stock held by non-affiliates of the registrant (for purposes of this calculation, 2,011,125 shares beneficially owned by directors and executive officers of the registrant were treated as being held by affiliates of the registrant), was $56,227,604. There were 7,852,954 shares of the registrant's Common Stock outstanding as of April 15, 1997. Documents Incorporated by Reference Portions of REX Stores Corporation's definitive Proxy Statement for its Annual Meeting of Shareholders on June 6, 1997 are incorporated by reference into Part III.

PART I Item 1. Business General REX Stores Corporation (the "Company") is a leader in the consumer electronics/appliance retailing industry, locating its stores in small to medium sized markets. Since 1980, when its first four stores were acquired, the Company has expanded into a national chain operating 222 stores in 35 states under the trade name "REX." The stores are located predominately in the Midwest and Southeast, with a recent expansion into the western region of the United States through the opening of 14 stores in the Northwest during fiscal 1996 and 1997. The Company's stores average approximately 10,500 square feet and offer a broad selection of brand name products within selected major product categories including televisions, video and audio equipment, appliances and personal computers. The Company's business strategy emphasizes depth of selection within its key product categories. Brand name products are offered at everyday low prices combined with frequent special sales and promotions. The Company concentrates its stores in small and medium sized markets where it believes that by introducing a high volume, low price merchandising concept, it can become a dominant retailer. The Company supports its merchandising strategy with extensive newspaper advertising in each of its local markets and maintains a knowledgeable sales force which focuses on customer service. The Company believes its low price policy, attention to customer satisfaction and deep product selection provide customers with superior value. The Company's business strategy has resulted in significant growth over the last five years. The number of stores increased from 98 to 222 during the five fiscal years ended January 31, 1997, while net sales increased from $233.1 million in fiscal 1993 to $427.4 million in fiscal 1997. The Company's expansion strategy is to continue to open stores in small to medium sized markets. The Company will focus on markets with a newspaper circulation which can efficiently and cost-effectively utilize the Company's print advertising materials and where the Company believes it can become a dominant retailer. The Company was incorporated in Delaware in 1984 under the name Audio/Video Affiliates, Inc. as a holding company to succeed to the entire ownership of three affiliated corporations, Rex Radio and Television, Inc. ("Rex Radio & TV"), Stereo Town, Inc. ("Stereo Town") and Kelly & Cohen Appliances, Inc. ("Kelly & Cohen"), which were formed in 1980, 1981, and 1983, respectively. Effective August 2, 1993, the Company's name was changed to REX Stores Corporation to enable the investing and consuming public to 2

identify the Company more closely with its retail business. Unless the context otherwise requires, the term "Company" as used in this report refers to REX Stores Corporation and its three operating subsidiaries, and all references in this report to fiscal years are to the Company's fiscal year ended January 31 of each year. The Company's principal offices are located at 2875 Needmore Road, Dayton, Ohio 45414. Its telephone number is (937) 276-3931. Business Strategy The Company's objective is to be a dominant consumer electronics and home appliance retailer in each of its markets. The key elements of its business strategy include: Focus on Small and Medium Sized Markets. The Company concentrates its stores in small and medium sized markets (generally with populations of 30,000 to 300,000) which enables it to operate on a low overhead basis and enhances its ability to become a dominant retailer in an area. Depth of Product Selection. The Company sells brand name products and emphasizes depth of product selection within its key product categories. The Company offers merchandise at a range of price points in each product category and generally maintains sufficient product stock for immediate delivery to customers. Everyday Low Prices. The Company offers its products at everyday low prices combined with frequent special sales and promotions. The Company monitors prices at competing stores and adjusts its prices as necessary to meet or beat the competition. The Company guarantees the lowest price on its products through a policy of refunding 125% (130% in certain markets) of the difference between the Company's price and a competitor's price on the same item. Price/Product Focused Advertising. The Company's advertising stresses the offering of nationally recognized brands at significant savings and emphasizes its low price guarantee. The Company supports its marketing strategy principally with extensive newspaper advertising. The Company also utilizes in-store sales promotions to provide shopping excitement and generate traffic. Strong Operational Controls. The Company's information systems allow management to monitor its merchandising programs, store operations and expenses. The Company's operational controls provide it with cost efficiencies which reduce overhead while allowing the Company to provide high levels of service. Value Oriented Sales Format. The Company's knowledgeable sales force is trained to provide professional, courteous service to all customers. The Company believes its low price policy, attention to customer satisfaction and deep product selection provide customers with superior value. 3

Expansion Strategy When deciding whether to enter a new market or open another store in an existing market, the Company evaluates a number of criteria, including: size and growth pattern of the population, sales volume potential, and competition within the market area, including size, strength and merchandising philosophy of former, existing and potential competitors. In choosing specific sites, the Company applies standardized site selection criteria taking into account numerous factors, including: local demographics, real estate occupancy expense based upon ownership and/or leasing, cost of advertising, traffic patterns and overall retail activity. Stores typically are located on high traffic arteries, adjacent to or in major shopping malls, with adequate and safe lighted parking to support high sales volume. The Company will either lease or purchase new store sites depending upon opportunities available to it and relative costs. Of the 35 new stores opened in fiscal 1997, 15 were leased sites and 20 were Company purchased sites. For leased stores, the Company anticipates per store capital expenditures of approximately $75,000 to $200,000. This amount may increase significantly to the extent the Company is responsible for the remodeling or renovation of the new leased site. The Company anticipates expenditures of approximately $800,000 to $1,200,000 when it purchases real estate, which include the cost of the land purchased, building construction and fixtures. The purchase amount varies depending upon the size and location of the new store. Historically, the Company has obtained long-term mortgage financing of approximately 75% of the cost of opening owned stores. Mortgage financing is generally obtained after a store is opened, either on a site by site or multiple store basis. The extent to which the Company will seek mortgage financing for owned stores will be dependent upon mortgage rates, terms and availability. The inventory requirements for new stores are estimated at $350,000 to $500,000 per store depending upon the season and store size. A portion of this inventory is financed through trade credit. Merchandising Products The Company offers a broad selection of brand name consumer electronics and home appliance products at a range of price points. The Company emphasizes depth of product selection within selected key product categories, with the greatest depth in televisions, VCRs, camcorders and audio equipment. The Company sells approximately 1,000 products produced by approximately 55 manufacturers. The Company's product categories include: 4

Televisions Video Audio Appliances Other TVs VCRs Stereo Systems Air Conditioners Personal Computers TV/VCR Camcorders Receivers Dehumidifiers Radar Detectors Combos Digital Compact Disc Microwave Ovens Tapes Satellite Players Washers Stands Systems Turntables Dryers Telephones Tape Decks Ranges Binoculars Speakers Dishwashers Fax Machines Car Stereos Refrigerators Extended Service Portable Radios Freezers Contracts Vacuum Cleaners The leading brands sold by the Company during fiscal 1997 (in alphabetical order) were General Electric, Hitachi, Hotpoint, JVC, Magnavox, Panasonic, Pioneer, RCA, Sharp, Toshiba, Whirlpool and Zenith. All REX stores carry a full range of the Company's televisions, video and audio products, microwave ovens and air conditioners and a limited line of home office products, and 207 stores carry major appliances. The following table shows the approximate percent of net sales for each major product group for the last three fiscal years. Fiscal Year Product Category 1995 1996 1997 Televisions. . . . . . . . . . . 39% 37% 36% Video. . . . . . . . . . . . . . 21 20 18 Audio. . . . . . . . . . . . . . 17 17 18 Appliances . . . . . . . . . . . 16 17 18 Other. . . . . . . . . . . . . . 7 9 10 ---- ---- ---- 100% 100% 100% ==== ==== ==== Pricing The Company's policy is to offer its products at everyday low prices combined with frequent special sales and promotions. The Company's retail prices are established by its merchandising department, but each district manager is 5

responsible for monitoring the prices offered by competitors and has authority to adjust prices to meet local market conditions. The Company's commitment to offer guaranteed lowest prices is supported by the Company's guarantee to refund 125-130% of the difference in price if, within 30 days of purchase, a customer can locate the same item offered by a local competitor at a lower price. Advertising The Company uses a "price and item" approach in its advertising, stressing the offering of nationally recognized brands at significant savings. The emphasis of the Company's advertising is its "Guaranteed Lowest Price," which states "Our prices are guaranteed in writing. If you find any other local store stocking and offering to sell for less the identical item in a factory sealed box within 30 days after your REX purchase, we'll refund the difference plus an additional 25% (30% in selected markets) of the difference." Advertisements are concentrated principally in newspapers and preprinted newspaper inserts, which are produced for the Company by an outside advertising agency and are supplemented by television. Advertisements are also complemented by in-store signage high- lighting special values, including "Value Every Day," "Best Value," and "Top of the Line." The Company's advertising strategy includes preferred customer private mailers, special events such as "Midnight Madness Sales" and coupon sales to provide shopping excitement and generate traffic. Purchasing The Company's merchandise purchasing is performed predominantly by four members of senior management. Each individual has responsibility for a specific product category, and two share appliance buying responsibility. Because the Company purchases complete product lines in large volume, the Company believes it is able to obtain quality products at competitive prices and advertising subsidies from vendors to promote the sale of their products. For fiscal 1997, five vendors accounted for approximately 62% of the Company's purchases. The Company typically does not maintain long-term purchase contracts with vendors and operates principally on an order-by-order basis. Store Operations Stores The Company designs its stores to be "destination stores," generating their own traffic, but in the general vicinity of major retail shopping. Currently, approximately 146 stores are located in free-standing buildings, with the balance 6

situated in strip shopping centers and malls. In fiscal 1997, 14 of the Company's 15 new leased stores were in mall locations that provide exterior access and signage rights. The Company will select locations for future leased stores based on its evaluation of individual site economic and market conditions. The Company's stores average approximately 10,500 square feet including storage space, not including the two stores located in the Company's regional distribution centers. Stores typically have, on average, approximately 7,300 square feet of selling space and approximately 3,200 square feet of storage. Stores are open seven days and six nights per week, except for certain holidays. 7

The following table shows the Company's store locations as of January 31, 1997: Store Locations Alabama: (11) Georgia: (9) Indiana: (3) Mississippi: (11) Auburn Albany Anderson Columbus Daphne Augusta Muncie Gautier Decatur Brunswick Richmond Greenville Florence Columbus Gulfport Gadsden LaGrange Kansas: (2) Hattiesburg Huntsville Macon Hutchinson Jackson (2) Mobile (2) Rome Lawrence Meridian Montgomery Valdosta Ridgeland Oxford Warner Robins Kentucky: (3) Tupelo Tuscaloosa Ashland Vicksburg Idaho: (2) Hopkinsville Arkansas: (2) Idaho Falls Paducah Montana: (2) Fort Smith Pocatello Butte Springdale Louisiana: (6) Great Falls Iowa: (12) Alexandria Colorado: (3) Burlington Baton Rouge Nebraska: (3) Grand Junction Council Bluffs Houma Grand Island Greeley Des Moines (2) Lake Charles Norfolk Pueblo Dubuque New Iberia North Platte Ft. Dodge Opelousas Florida: (27) Marshalltown New York: (17) Bradenton Mason City Maryland: (2) Auburn Charlotte Harbor Ottumwa Cumberland Clifton Park Crystal River Sioux City Hagerstown Cortland Ft. Pierce Waterloo Fredonia Gainesville West Des Moines Massachusetts: (2) Geneva Hudson Hadley Horseheads Lake City Illinois: (13) Lanesborough Johnson City Largo Alton Kingston Leesburg Bradley Michigan: (3) Lakewood Mary Esther Carbondale Adrian Latham Melbourne Champaign Bay City New Hartford Merritt Island Danville Benton Harbor Olean Naples Decatur Plattsburg Ocala Galesburg Minnesota: (1) Queensbury Palm Harbor Newburg Willmar Rome Panama City Pekin Schenectady Pensacola (2) Peoria Missouri: (4) Watertown Sarasota Peru Jefferson City St. Augustine Quincy Joplin North Carolina: (5) St. Petersburg Rockford Springfield Asheville Spring Hill St. Joseph Goldsboro Stuart Hendersonville Tallahassee (2) Rocky Mount Titusville Salisbury Venice 8

Store Locations (continued) North Dakota: (2) Pennsylvania: (18) South Dakota: (2) Washington: (1) Grand Forks Altoona Aberdeen Union Gap Minot Bloomsburg Rapid City Chambersburg West Virginia: (5) Ohio: (15) Cranberry Tennessee: (7) Beckley Ashtabula Erie (2) Bristol Bluefield Beavercreek Greensburg Chattanooga Bridgeport Dayton (2) Hanover Clarksville Morgantown Defiance Hazleton Cleveland Vienna Kettering Hermitage Johnson City Lima Indiana Kingsport Wisconsin: (4) Marion Johnstown Morristown Fond du Lac Miamisburg Lower Burrell Janesville New Philadelphia Meadville Texas: (12) Manitowac Piqua New Castle Austin (2) Oshkosh Sandusky Scranton Brownsville St. Clairsville Wilkes-Barre Denton Wyoming: (2) Springfield York Harlingen Casper Wooster Longview Cheyenne South Carolina: (9) Midland Oklahoma: (1) Aiken Odessa Enid Anderson San Angelo Charleston Sherman Florence Temple Greenwood Victoria Murrell's Inlet Orangeburg Virginia: (1) Rock Hill Danville Sumter In fiscal 1997, the Company opened 35 new stores, entering Maryland, Massachusetts, Montana, North Dakota and South Dakota with two stores each and Minnesota with one store. The Company also added six stores in New York, five stores in Pennsylvania, three stores in Iowa, two stores each in Florida and Georgia, and one store each in Alabama, Colorado, Michigan, Mississippi, South Carolina and Texas. The Company's operations are divided into regional districts, containing from three to 12 stores whose managers report to a district manager. The Company's 37 district managers report to one of four regional vice presidents. Each store is staffed with a full-time manager and assistant manager, commis- sioned sales personnel and, in higher-traffic stores, seasonal support personnel. Store managers are paid on a commission basis and have the opportunity to earn bonuses based upon their store's sales and gross margins. Sales personnel work on a commission basis, or a combination of commissions and hourly wages. 9

The Company evaluates the performance of its stores on a continuous basis and, based on an assessment of factors it deems relevant, will close any store which is not adequately contributing to Company profitability. The Company closed 12 stores during fiscal 1997. There were no store closings during fiscal 1996 and 1995. Personnel The Company trains its employees to explain and demonstrate to customers the use and operation of the Company's merchandise and to develop good salesmanship practices. The Company's in-house training program for new employees combines on-the-job training with use of a detailed Company-developed manual entitled "The REX Way." Sales personnel attend in-house training sessions conducted by experienced salespeople or manufacturers' representatives and receive sales, product and other information in meetings with managers. The Company also has a manager-in-training program that consists of on-the-job training of the assistant manager at the store. The Company's policy is to staff store management positions with personnel promoted from within the Company and to staff new stores with existing managers or assistant managers. The Company believes it has an adequate number of available managers and assistant managers to meet its planned expansion. Services Virtually all of the products sold by the Company carry manufacturers' warranties and, except for its least expensive items, the Company offers extended service contracts to customers usually for an additional charge which typically provide one to five years of extended warranty coverage. The Company offers maintenance and repair services for most of the products which it sells. These services are generally subcontracted to independent repair firms. The Company's return policy provides that any merchandise may be returned for exchange or refund within seven days of purchase if accompanied by original packaging material. The Company accepts MasterCard, Visa and Discover. The Company estimates that, during fiscal 1997, approximately 30% of its total sales were made on these credit cards, and approximately 15% were made on installment credit contracts arranged through banks or independent finance companies which bear the credit risk of these contracts. 10

Distribution The Company's stores are supplied by regional distribution centers which consist of a 315,000 square foot leased facility in Dayton, Ohio and a 180,000 square foot owned facility in Pensacola, Florida, of which the Company leases 90,000 square feet to an outside company. The Company also leases a 67,000 square foot auxiliary warehouse in Pensacola, Florida. The Company has purchased land and plans to build a 150,000 square foot distribution center in Cheyenne, Wyoming in fiscal 1998 at an approximate cost of $3.0 million. The regional distribution centers reduce inventory requirements at individual stores, while preserving the benefits of volume purchasing and facilitating centralized inventory and accounting controls. Virtually all of the Company's merchandise is distributed through its distribution centers, with the exception of major appliances which are often shipped directly by the vendor to the retail location. All deliveries to stores are made by independent contract carriers. Management Information Systems The Company has developed a computerized management information system which operates an internally developed software package. The Company's computer system provides management with the information necessary to manage inventory by stock keeping unit ("SKU"), monitor sales and store activity on a daily basis, capture marketing and customer information, track productivity by salesperson and control the Company's accounting operations. The host computer is integrated with the Company's point-of-sale system which serves as the collection mechanism for all sales activity. The combined system provides for next-day review of inventory levels, sales by store and by SKU and commissions earned, assists in cash management and enables management to track merchandise from receipt at the distribution center until time of sale. Competition The Company's business is characterized by substantial competition. The Company's competitors include other specialty electronics retailers, department stores, discount stores, furniture stores, warehouse clubs and catalog showrooms. Some of these competitors have greater financial and other resources than the Company. Competition within the Company's industry is based upon price, breadth of product selection, product quality and customer service. Facilities One hundred and three of the Company's stores are located in buildings owned by the Company, including two strip shopping centers in Austin, Texas of 60,000 and 40,000 square 11

feet. The Company uses approximately 10,000 square feet in each shopping center for a store and leases the remainder. The Company also owns a 38,000 square foot shopping center in College Station, Texas in which it does not operate a retail store. The strip shopping centers are professionally managed by local real estate management firms. The remaining 119 stores operate on leased premises, with the unexpired terms of the leases ranging from one year to 28 years, inclusive of options to renew, except for two month to month leases. For fiscal 1997, the total net rent expense for the Company's leased facilities was approximately $6,944,000. To date, the Company has not experienced difficulty in securing leases or purchasing sites for suitable locations for its stores. The Company continues to remodel and upgrade existing stores as appropriate. In addition, to minimize construction costs, the Company has developed prototype formats for new store construction. Employees At January 31, 1997, the Company had 140 hourly and salaried employees and 949 sales employees. The Company also employs additional personnel during peak selling seasons. None of the Company's employees are represented by a labor union. The Company considers its relationship with its employees to be satisfactory. Service Marks The Company has registered its rights in its service mark "REX" with the United States Patent and Trademark Office. The Company is not aware of any adverse claims concerning its service mark. Item 2. Properties The information required by this Item 2 is set forth in Item 1 of this report under "Store Operations--Stores," "Store Operations--Distribution" and "Facilities" and is incorporated herein by reference. Item 3. Legal Proceedings The Company is involved in various legal proceedings incidental to the conduct of its business. The Company believes that these proceedings will not have a material adverse effect on the financial condition or operations of the Company. Item 4. Submission of Matters to a Vote of Security Holders None. 12

Executive Officers of the Company Set forth below is certain information about each of the Company's executive officers. Name Age Position(s) Stuart Rose. . . . . . 42 Chairman of the Board and Chief Executive Officer* Lawrence Tomchin . . . 69 President and Chief Operating Officer* Douglas Bruggeman . . 36 Vice President-Finance and Treasurer Edward Kress . . . . . 47 Secretary* ________________ *Also serves as a director of the Company. Stuart Rose has been the Chairman of the Board and Chief Executive Officer of the Company since its incorporation in 1984 as a holding company to succeed to the ownership of Rex Radio & TV, Kelly & Cohen and Stereo Town. Prior to 1984, Mr. Rose was Chairman of the Board and Chief Executive Officer of Rex Radio & TV, which he founded in 1980 to acquire the stock of a corporation which operated four retail stores. Lawrence Tomchin has been the President and Chief Operating Officer of the Company since 1990. From 1984 to 1990, he was the Executive Vice President and Chief Operating Officer of the Company. Mr. Tomchin has been a director of the Company since 1984. Mr. Tomchin was Vice President and General Manager of the corporation which was acquired by Rex Radio & TV in 1980 and served as Executive Vice President of Rex Radio & TV after the acquisition. Douglas Bruggeman has been Vice President - Finance and Treasurer of the Company since 1989. From 1987 to 1989, Mr. Bruggeman was the Manager of Corporate Accounting for the Company. Mr. Bruggeman was employed with the accounting firm of Ernst & Young prior to joining the Company in 1986. Edward Kress has been the Secretary of the Company since 1984 and a director of the Company since 1985. Mr. Kress has been a partner of the law firm of Chernesky, Heyman & Kress, counsel for the Company, since 1988. From 1985 to 1988, Mr. Kress was a member of the law firm of Smith & Schnacke. Mr. Kress has practiced law in Dayton, Ohio since 1974. 13

PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters SHAREHOLDER INFORMATION Common Share Information and Quarterly Share Prices The Company's Common Stock is traded on the New York Stock Exchange under the symbol RSC. Fiscal Quarter Ended High Low April 30, 1995 $16.50 $12.25 July 31, 1995 16.50 13.25 October 31, 1995 18.75 15.50 January 31, 1996 17.75 12.87 April 30, 1996 $15.88 $15.50 July 31, 1996 12.88 12.50 October 31, 1996 9.75 9.50 January 31, 1997 8.88 8.13 As of April 15, 1997, there were 333 holders of record of the Company's Common Stock, including shares held in nominee or street name by brokers. Dividend Policy The Company's revolving credit agreement places restrictions on the payment of dividends. The Company has not paid dividends in prior years. 14

Item 6. Selected Financial Data Five Year Financial Summary January 31, ------------------------------------------------- (In Thousands, Except Per Share Amounts) 1997 1996 1995 1994 1993 Net sales $427,378 $442,217 $382,775 $298,171 $233,080 Net income $ 7,362 $ 14,573 $ 12,596 $ 8,632 $ 4,788 Net income per common share $ 0.80 $ 1.56 $ 1.40 $ 1.10 $ 0.72 Total assets $248,034 $234,599 $192,616 $132,319 $ 88,599 Long-term debt, of current maturities $ 51,102 $ 32,590 $ 25,595 $ 10,879 $ 2,902 15

Quarterly Financial Data (Unaudited) Quarters Ended (In Thousands Except Per Share Amounts) April 30, July 31, October 31, January 31, 1996 1996 1996 1997 Net sales $97,383 $95,653 $90,543 $143,799 Cost of merchandise sold 72,503 70,931 67,990 106,343 Net income 1,756 1,475 252 3,879 Earnings per common share $ 0.18 $ 0.15 $ 0.03 $ 0.44 Quarters Ended (In Thousands Except Per Share Amounts) April 30, July 31, October 31, January 31, 1995 1995 1995 1996 Net sales $87,427 $96,458 $94,914 $163,418 Cost of merchandise sold 65,602 71,484 70,546 120,004 Net income 1,574 2,513 1,942 8,544 Earnings per common share $ 0.17 $ 0.27 $ 0.21 $ 0.91 16

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Overview The Company is a leader in the consumer electronics/appliance retailing industry, operating predominantly in small to medium sized markets in the Midwest and Southeast under the trade name "REX." Since acquiring its first four stores in 1980, the Company has expanded into a national chain operating 222 stores in 35 states. During fiscal 1996 and 1997, the Company expanded into the western region of the United States by opening fourteen stores in seven northwestern states. The Company has focused on maintaining strict cost controls, offering customers a broad selection of merchandise at "everyday low prices" and expansion within small and medium sized markets where its low cost structure and operating strategy enhance its ability to become a dominant retailer. During fiscal 1997, 1996 and 1995, the Company opened 35, 34 and 33 stores, respectively. The Company closed twelve stores in fiscal 1997 and no stores were closed in fiscal 1996 and 1995. Comparable store sales declined 17.5% and 5.4% in fiscal 1997 and 1996, respectively, and grew 5.5% in fiscal 1995. The decrease in comparable store sales reflects an industry wide decline in consumer demand for electronics and an intensely competitive retail environment. The Company considers a store to be comparable after it has been open six full fiscal quarters. Comparable store sales comparisons do not include sales of extended service contracts. Extended Service Contracts The Company's extended service contract revenues, net of sales commissions, are deferred and amortized on a straight-line basis over the life of the contracts after the expiration of applicable manufacturers' warranty periods. Terms of coverage, including the manufacturers' warranty periods, are usually for periods of 12 to 60 months. Extended service contract revenues represented 2.9%, 2.4% and 2.6% of net sales for fiscal 1997, 1996 and 1995, respectively. Service contract costs are charged to operations as incurred. Gross profit realized from extended service contract revenues was $9.6 million, $8.3 million and $7.8 million in fiscal 1997, 1996 and 1995, respectively. 17

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: Fiscal Year Ended January 31, 1997 1996 1995 Net sales 100.0% 100.0% 100.0% Cost of merchandise sold 74.4 74.1 74.7 ----- ----- ----- Gross profit 25.6 25.9 25.3 Selling, general and administrative expenses 21.5 19.4 19.4 ----- ----- ----- Income from operations 4.1 6.5 5.9 Interest, net 1.3 1.1 .5 ----- ----- ----- Income before income taxes 2.8 5.4 5.4 Provision for income taxes 1.1 2.1 2.1 ----- ----- ----- Net income 1.7% 3.3% 3.3% ===== ===== ===== Comparison of Fiscal Years Ended January 31, 1997 and 1996 Net sales in fiscal 1997 were $427.4 million, a 3.4% decrease from the $442.2 million achieved in fiscal 1996. This decrease was caused by a decline of 17.5% in comparable store sales, partially offset by the net addition of 23 stores in fiscal 1997 and the first full year of sales for 34 stores opened in fiscal 1996. During fiscal 1997 the Company opened 35 stores and closed 12, while during fiscal 1996 the Company opened 34 stores and closed none. The number of stores open at January 31, 1997 was 222 compared to 199 at January 31, 1996. Gross profit of $109.6 million in fiscal 1997 (25.6% of net sales) was 4.3% lower than the $114.6 million (25.9% of net sales) recorded the prior year. The lower gross profit margin is primarily due to competitive pressures and an increase in major appliance and computer sales, which generally have a lower gross profit margin. This was partially offset by an increase in extended service contract revenues, which generally have a higher gross profit margin. 18

Selling, general and administrative expenses for fiscal 1997 were $91.9 million (21.5% of net sales), a 5.7% increase over the $86.0 million (19.4% of net sales) in fiscal 1996. The increase in expense was primarily attributable to $3.5 million in increased advertising costs, $1.5 million in increased occupancy and depreciation costs and $1.7 million in increased operating costs associated with more store locations in the current year. Payroll costs decreased by $800,000 due to a reduction in direct selling costs resulting from the decline in sales. The increase in selling, general and administrative expenses as a percentage of net sales is primarily the result of the decline in comparable store sales. Income from operations was $17.7 million (4.1% of net sales) in fiscal 1997, a 38.1% decrease from $28.6 million (6.5% of net sales) for fiscal 1996. This decline was primarily due to the 17.5% decline in comparable store sales and the increased selling, general and administrative expenses associated with more store locations. Interest expense increased to $5.6 million in fiscal 1997 from $4.7 million in fiscal 1996. The increase in interest expense is primarily attributable to additional mortgage debt associated with more Company owned store locations (average outstanding borrowings of approximately $40.8 million in fiscal 1997 compared to $31.5 million in fiscal 1996) and an increase of approximately $3.4 million in the average outstanding borrowings on the revolving line of credit. The effective tax rate was 39.5% for fiscal 1997 and 1996. As a result of the foregoing, net income for fiscal 1997 was $7.4 million, a 49.5% decrease from $14.6 million in fiscal 1996. Comparison of Fiscal Years Ended January 31, 1996 and 1995 Net sales in fiscal 1996 were $442.2 million, a 15.5% increase over the $382.8 million achieved in fiscal 1995. The increase was due to the addition of 34 stores during the year and the first full year of sales for 33 stores opened during fiscal 1995, partially offset by a decline of 5.4% in comparable store sales during the year. No stores were closed in fiscal 1996 and 1995. The number of stores open at January 31, 1996 was 199 compared to 165 at January 31, 1995. Gross profit of $114.6 million in fiscal 1996 (25.9% of net sales) was 18.5% higher than the $96.7 million of gross profit (25.3% of net sales) recorded the prior year. The improved gross 19

profit margin in fiscal 1996 was primarily the result of lower merchandise cost on certain products due to opportunistic purchasing. This was partially offset by an increase in major appliance and computer sales which generally have a lower gross profit margin. Extended service contract revenues, which generally have a higher gross profit margin, also declined as a percent of net sales. Selling, general and administrative expenses for fiscal 1996 were $86.0 million (19.4% of net sales), a 15.9% increase over the $74.2 million (19.4% of net sales) in fiscal 1995. The increase in expense was primarily attributable to $5.1 million of higher payroll costs related to the increased number of stores and increased sales, $3.7 million of increased advertising costs and $2.9 million of higher depreciation, occupancy and other operating costs associated with more store locations. As a percentage of net sales, selling, general and administrative expenses were consistent between years. Income from operations was $28.6 million (6.5% of net sales) in fiscal 1996, a 27.2% increase over $22.5 million (5.9% of net sales) for fiscal 1995. This improvement was primarily a result of increased sales volume and an improved gross profit margin resulting from opportunistic purchasing. Interest expense increased to $4.7 million in fiscal 1996 from $1.9 million in fiscal 1995. The increase in interest expense was primarily attributable to additional mortgage debt associated with more Company owned store locations (average outstanding borrowings of approximately $31.5 million in fiscal 1996 compared to $14.3 million in fiscal 1995) and an increase of approximately $10.3 million in the average outstanding borrowings on the revolving line of credit to support higher inventory levels associated with store expansion and opportunistic purchasing. The effective tax rate was 39.5% for fiscal 1996 and 1995. As a result of the foregoing, net income for fiscal 1996 was $14.6 million, a 15.7% increase over $12.6 million for fiscal 1995. Liquidity and Capital Resources The Company's primary sources of financing have been cash flow provided by net income, mortgages on owned property, borrowings under its revolving line of credit and in fiscal 1995, the proceeds from a public offering of Common Stock. Net cash provided by operating activities was $10.9 million for fiscal 1997. Operating cash flow was primarily provided by net income of $7.4 million and $3.2 million of deferred income from sales of extended service contracts. Cash was also provided by a decrease in inventory of $11.5 million, offset by a decrease in accounts payable of $8.3 million and a decrease in other liabilities of $3.7 million. 20

At January 31, 1997, working capital was $80.2 million compared to $80.0 million at January 31, 1996. The ratio of current assets to current liabilities was 2.1 to 1 at January 31, 1997 and 1996. Capital expenditures in fiscal 1997 totaled $23.4 million and were primarily associated with the opening of 35 stores. During fiscal 1997, the Company purchased 854,000 shares of its common stock for $7.5 million. Subsequent to the end of fiscal 1997 and through March 26, 1997, the Company purchased 375,000 shares of its common stock for $3.1 million. The Company is authorized by its Board of Directors to purchase an additional 788,700 shares of its common stock and all shares purchased will be held in treasury for possible future use. The Company has a revolving credit agreement with seven banks through July 31, 2000, with interest at prime or LIBOR plus 1.875%. Amounts available for borrowing are equal to the lesser of (i) $100 million for the months of January through June and $150 million for the months of July through December or (ii) the sum of specified percentages of eligible accounts receivable and eligible inventories, as defined. Amounts available for borrowing are reduced by any letter of credit commitments outstanding. At January 31, 1997, borrowings of $12.1 million were outstanding at an average interest rate of 7.38%. A total of approximately $73.0 million was available at January 31, 1997. Borrowing levels vary during the course of a year based on the Company's seasonal working capital needs. The maximum direct borrowings outstanding during fiscal 1997 were approximately $42.9 million, which existed immediately prior to the Christmas selling season due to the build-up of seasonal inventory requirements. The weighted average interest rate was 8.96% for fiscal 1997. The revolving credit agreement contains restrictive covenants which require the Company to maintain specified levels of consolidated tangible net worth and limit capital expenditures and the incurrence of additional indebtedness. The revolving credit agreement also places restrictions on common stock repurchases and the payment of dividends. At January 31, 1997, the Company had approximately $54.2 million of mortgage debt outstanding (including $21.9 million obtained in fiscal 1997 from mortgaging 34 stores) at a weighted average interest rate of 8.96%, with maturities from 2000 to 2012. Seasonality and Quarterly Fluctuations The Company's business is seasonal. As is the case with many other retailers, the Company's net sales and net income are greatest in its fourth fiscal quarter, which includes the Christmas selling season. The fourth fiscal quarter accounted for 33.6% and 36.9% of net sales and 52.7% and 58.6% of net 21

income in fiscal 1997 and 1996, respectively. Year to year comparisons of quarterly results of operations and comparable store sales can be affected by a variety of factors, including the duration of the holiday selling season, weather conditions and the timing of new store openings. The following table provides certain unaudited financial information for the Company for each of the quarters in fiscal 1997 and 1996. Fiscal Quarter Ended April 30, July 31, October 31, January 31, % of % of % of % of $000s Annual $000s Annual $000s Annual $000s Annual Fiscal 1997 Net sales $97,383 22.8% $95,653 22.4% $90,543 21.2% $143,799 33.6% Income from operations 4,082 23.0 3,883 21.9 1,760 10.0 7,981 45.1 Net income 1,756 23.9 1,475 20.0 252 3.4 3,879 52.7 Fiscal 1996 Net sales $87,427 19.8% $96,458 21.8% $94,914 21.5% $163,418 36.9% Income from operations 3,183 11.1 5,145 18.0 4,652 16.3 15,620 54.6 Net income 1,574 10.8 2,513 17.3 1,942 13.3 8,544 58.6 Recently Issued Accounting Standards In the first quarter of fiscal 1997, the Company adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," which addresses the identification and measurement of asset impairments and requires recognition of impairment losses on long-lived assets when book values exceed expected future cash flows. The application of this standard did not have a material impact on the Company's financial position or results of operations. The Company adopted the provisions of SFAS No. 123 "Accounting for Stock-Based Compensation" in fiscal 1997, which established new accounting and disclosure requirements for stock-based employee compensation plans. The Company adopted this standard by continuing to follow the accounting prescribed by APB Opinion No. 25 "Accounting for Stock Issued to Employees" and presenting the required pro forma disclosures. Therefore, the application of this standard did not have a material impact on the Company's financial position or results of operations. 22

Item 8. Financial Statements and Supplementary Data REX STORES CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS JANUARY 31, 1997 AND 1996 1997 1996 ASSETS (In Thousands) CURRENT ASSETS: Cash and cash equivalents $ 3,959 $ 685 Short-term investments 1,645 1,525 Accounts receivable, net of allowance for doubtful accounts of $376 and $638 in 1997 and 1996, respectively (Note 4) 1,477 1,604 Merchandise inventory (Note 4) 135,033 146,566 Prepaid expenses and other 2,219 1,825 Future income tax benefits 5,544 3,818 -------- -------- Total current assets 149,877 156,023 PROPERTY AND EQUIPMENT, NET (Notes 1, 4 and 5) 89,638 70,307 FUTURE INCOME TAX BENEFITS 8,519 8,269 -------- -------- Total assets $248,034 $234,599 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Note payable (Note 4) $ 12,142 $ 9,327 Current portion of long-term debt (Note 5) 3,131 2,050 Current portion of deferred income and deferred gain on sale and leaseback (Notes 2 and 7) 10,844 9,083 Accounts payable, trade 31,265 39,525 Accrued income taxes 1,077 4,121 Accrued payroll 4,866 5,614 Other current liabilities 6,401 6,287 -------- -------- Total current liabilities 69,726 76,007 LONG-TERM LIABILITIES: Long-term debt (Note 5) 51,102 32,590 Deferred income (Note 2) 18,279 16,506 Deferred gain on sale and leaseback (Note 7) 6,207 7,150 -------- -------- Total long-term liabilities 75,588 56,246 COMMITMENTS AND CONTINGENCIES (Notes 7 and 9) SHAREHOLDERS' EQUITY (Notes 3, 4 and 6): Common stock, 45,000 shares authorized, 9,602 and 9,521 shares issued, at par 96 95 Paid-in capital 57,229 56,732 Retained earnings 56,763 49,401 Treasury stock, 1,388 and 534 shares (11,368) (3,882) -------- -------- Total shareholders' equity 102,720 102,346 -------- -------- Total liabilities and shareholders' equity $248,034 $234,599 ======== ======== [FN] The accompanying notes to consolidated financial statements are an integral part of these consolidated balance sheets. 23

REX STORES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED JANUARY 31, 1997, 1996 AND 1995 1997 1996 1995 (In Thousands, Except Per Share Amounts) NET SALES $427,378 $442,217 $382,775 -------- -------- -------- COSTS AND EXPENSES: Cost of merchandise sold 317,767 327,636 286,073 Selling, general and administrative expenses 91,905 85,981 74,216 -------- -------- -------- Total costs and expenses 409,672 413,617 360,289 -------- -------- -------- INCOME FROM OPERATIONS 17,706 28,600 22,486 INVESTMENT INCOME 85 182 229 INTEREST EXPENSE 5,624 4,707 1,899 -------- -------- -------- INCOME BEFORE PROVISION FOR INCOME TAXES 12,167 24,075 20,816 PROVISION FOR INCOME TAXES 4,805 9,502 8,220 -------- -------- -------- NET INCOME $ 7,362 $ 14,573 $ 12,596 ======== ======== ======== WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING 9,219 9,365 9,014 -------- -------- -------- NET INCOME PER SHARE $ 0.80 $ 1.56 $ 1.40 ======== ======== ======== [FN] The accompanying notes to consolidated financial statements are an integral part of these consolidated statements. 24

REX STORES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JANUARY 31, 1997, 1996 AND 1995 1997 1996 1995 (In Thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 7,362 $ 14,573 $ 12,596 Adjustments to reconcile net income to net cash provided by (used in) operating activities- Depreciation and amortization, net 2,943 2,357 1,559 Deferred income 3,221 4,415 3,770 Future income tax benefits (2,054) (1,608) (1,207) Accounts receivable 127 (527) (403) Merchandise inventory 11,533 (31,219) (40,385) Other current assets (323) (361) (281) Accounts payable, trade (8,260) 6,230 5,271 Other current liabilities (3,678) 2,098 3,123 ------- ------- ------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 10,871 (4,042) (15,957) ------- ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Short-term investments (120) 30 (925) Capital expenditures (23,448) (23,080) (28,101) Capital disposals 552 43 120 ------- ------- ------- NET CASH USED IN INVESTING ACTIVITIES (23,016) (23,007) (28,906) ------- ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Increase in note payable 2,815 9,327 - Proceeds from long-term debt 21,911 9,201 16,885 Payments of long-term debt (2,318) (1,836) (981) Common stock issued 497 643 20,907 Treasury stock issued (acquired) (7,486) (2,264) 297 ------- ------- ------- NET CASH PROVIDED BY FINANCING ACTIVITIES 15,419 15,071 37,108 ------- ------- ------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 3,274 (11,978) (7,755) CASH AND CASH EQUIVALENTS, beginning of year 685 12,663 20,418 ------- ------- -------- CASH AND CASH EQUIVALENTS, end of year $ 3,959 $ 685 $ 12,663 ======= ======= ======== [FN] The accompanying notes to consolidated financial statements are an integral part of these consolidated statements. 25

REX STORES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY FOR THE YEARS ENDED JANUARY 31, 1997, 1996 AND 1995 Common Stock Issued Treasury Paid-In Retained Shares Amount Shares Amount Capital Earnings (In Thousands) BALANCE, January 31, 1994 8,027 $80 460 $ 1,915 $35,197 $22,232 Net income - - - - - 12,596 Common stock issued 1,393 14 (88) (297) 20,893 - ----- --- ----- ------- ------- ------- BALANCE, January 31, 1995 9,420 94 372 1,618 56,090 34,828 Net income - - - - - 14,573 Treasury stock acquired - - 162 2,264 - - Common stock issued 101 1 - - 642 - ----- --- ----- ------- ------- ------- BALANCE, January 31, 1996 9,521 95 534 3,882 56,732 49,401 Net income - - - - - 7,362 Treasury stock acquired - - 854 7,486 - - Common stock issued 81 1 - - 497 - ----- --- ----- ------- ------- ------- BALANCE, January 31, 1997 9,602 $96 1,388 $11,368 $57,229 $56,763 ===== === ===== ======= ======= ======= [FN] The accompanying notes to consolidated financial statements are an integral part of these consolidated statements 26

REX STORES CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JANUARY 31, 1997 AND 1996 (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- (a) Principles of Consolidation--The accompanying financial statements consolidate the operating results and financial position of REX Stores Corporation and its wholly-owned subsidiaries (the Company). All significant intercompany balances and transactions have been eliminated. The Company operates 222 retail consumer electronics and appliance stores under the REX name in 35 states, predominantly in the Midwest and Southeast. (b) Net Income Per Share--Net income per share is computed using the weighted average number of common and common equivalent shares outstanding during the period. Fully-diluted earnings per share do not differ significantly from primary earnings per share. (c) Cash Equivalents and Short-term Investments--Cash equivalents are principally short-term investments with original maturities of less than three months. Short-term investments, which are principally marketable securities, are stated at cost plus accrued interest, which approximates market. The carrying amount of cash equivalents and short-term investments is a reasonable estimate of fair value. Investments at January 31, 1997 and 1996 are restricted by two states to cover possible future claims under product service contracts. (d) Merchandise Inventory--Substantially all inventory is valued at the lower of average cost or market, which approximates cost on a first-in, first-out (FIFO) basis, including certain costs associated with purchasing, warehousing and transporting merchandise. The inventory of an acquired subsidiary, Kelly & Cohen Appliances, Inc. (K&C), is valued at the lower of last-in, first-out (LIFO) or market. The K&C inventory value using the FIFO method ($38,437,000 and $41,880,000 at January 31, 1997 and 1996, respectively) approximates the LIFO value in all years presented. Five suppliers accounted for approximately 62% of the Company's purchases in 1997. 27

(e) Property and Equipment--Property and equipment is recorded at cost. Depreciation is computed using the straight-line method. Estimated useful lives are 30 to 40 years for buildings and improvements, and 3 to 12 years for fixtures and equipment. Leasehold improvements are depreciated over 10-12 years. The components of cost at January 31, 1997 and 1996 are as follows: 1997 1996 (In thousands) Land $ 23,530 $18,452 Buildings and improvements 53,890 40,492 Fixtures and equipment 14,386 12,294 Leasehold improvements 9,409 7,740 -------- ------- 101,215 78,978 Less: accumulated depreciation (11,577) (8,671) -------- ------- $ 89,638 $70,307 ======== ======= In the first quarter of fiscal 1997, the Company adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," which addresses the identification and measurement of asset impairments and requires recognition of impairment losses on long-lived assets when book values exceed expected future cash flows. The application of this standard did not have a material impact on the Company's financial position or results of operations. (f) Interest Cost--Interest expense of $5,624,000, $4,707,000 and $1,899,000 for the years ended January 31, 1997, 1996 and 1995, respectively, is net of approximately $193,000, $207,000 and $182,000 of interest capitalized related to store construction. Total interest expense approximates interest paid for all years presented. (g) Loan Acquisition Costs--Direct expenses and fees associated with obtaining notes payable or long-term debt are capitalized and amortized to interest expense over the life of the loan. (h) Advertising Costs--Advertising costs are expensed as incurred. Advertising expense was approximately $33,473,000, $29,989,000 and $26,241,000 in 1997, 1996 and 1995, respectively. (i) Store Opening and Closing Costs--Store opening costs are expensed as incurred. The costs associated with closing stores are accrued when the decision is made to close a location. 28

(j) Use of Estimates--The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. (k) Reclassifications--Certain reclassifications have been made to prior year financial statements to conform with the classifications used in the 1997 financial statements. (2) DEFERRED INCOME ON SERVICE CONTRACTS- The Company sells product service contracts covering periods beyond the normal manufacturers' warranty periods, usually with terms of coverage (including manufacturers' warranty periods) of between 12 to 60 months. Revenues net of sales commissions are deferred and amortized on a straight-line basis over the life of the contracts after the expiration of applicable manufacturers' warranty periods. Service contract costs are charged to operations as incurred. (3) COMMON STOCK TRANSACTIONS- During the years ended January 31, 1997 and 1996, the Company purchased 854,000 and 162,000 shares of its common stock for $7.5 million and $2.3 million, respectively. Subsequent to January 31, 1997 and through March 26, 1997, the Company purchased 375,000 shares of its common stock for $3.1 million. The Company is authorized by its Board of Directors to purchase an additional 788,700 shares of its common stock and all shares purchased will be held in treasury for possible future use. On June 2, 1994, the Company completed the sale of 1.3 million shares of common stock under a Form S-3 registration statement and received net proceeds of $19.8 million. On July 1, 1994, the Company sold an additional 13,333 shares pursuant to the over allotment option and received net proceeds of approximately $203,000. 29

(4) REVOLVING LINE OF CREDIT- The Company has a revolving credit agreement with seven banks which expires July 31, 2000. Under the terms of the agreement, available revolving credit borrowings are equal to the lesser of: (i) $100 million for the months of January through June and $150 million for the months of July through December or (ii) the sum of specific percentages of eligible accounts receivable and eligible inventories, as defined. Borrowings available are reduced by any letter of credit commitments outstanding. Outstanding borrowings under the revolving credit agreement totaled $12,142,000 and $9,327,000 at January 31, 1997 and 1996, respectively. The carrying amount of the borrowings at January 31, 1997 and 1996 approximates fair value as the revolving credit agreement bears a current market rate of interest. At January 31, 1997, a total of approximately $73.0 million was available for borrowings under the revolving credit agreement. The interest rate charged on borrowings is prime or LIBOR plus 1.875% and commitment fees of 1/4% are payable on the unused portion. The weighted average interest rate on borrowings outstanding at January 31, 1997 was 7.38%. Borrowings are secured by certain fixed assets, accounts receivable and inventories. The revolving credit agreement contains restrictive covenants which require the Company to maintain specified levels of consolidated tangible net worth and limit capital expenditures and the incurrence of additional indebtedness. The revolving credit agreement also places restrictions on the amount of common stock repurchases and the payment of dividends. (5) LONG-TERM DEBT- Long-term debt consists of notes payable secured by certain land, buildings and leasehold improvements. Interest rates range from 7.50% to 9.95%. Principal and interest are payable monthly over terms which generally range from 10 to 15 years. Substantially all of the notes payable require balloon payments at the end of the scheduled term. Maturities of long-term debt are as follows (in thousands): Year Ending January 31, Amount 1998 $ 3,131 1999 3,127 2000 3,259 2001 4,143 2002 6,229 2003 and thereafter 34,344 ------- $54,233 ======= 30

The fair value of the Company's long-term debt at January 31, 1997 and 1996 was approximately $56.1 million and $35.9 million, respectively. The fair value was estimated based on rates available to the Company for debt with similar terms and maturities. (6) EMPLOYEE BENEFITS- Stock Option Plans--Effective June 2, 1995, the Company adopted the REX Stores Corporation 1995 Omnibus Stock Incentive Plan (the Omnibus Plan), which amended and restated the 1994 Incentive Stock Option Plan. Under the Omnibus Plan, the Company may grant to officers and key employees awards in the form of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, other stock-based awards and cash incentive awards. The Omnibus Plan also provides for yearly grants of non-qualified stock options to directors who are not employees of the Company. The exercise price of each stock based award must be at least 100% of the fair market value of the Company's common stock on the date of grant. A maximum of 2,000,000 shares of common stock are authorized for issuance under the Omnibus Plan and at January 31, 1997, 641,257 shares remained available for issuance. At January 31, 1997, 227,705 stock options also remained outstanding under the 1984 Incentive Stock Option Plan which expired in fiscal 1995. In November 1989, non-qualified executive stock options were issued to two key executives under a separate plan for 600,000 shares at the then-current market price of $3.38 per share. No additional shares are available for grant under this plan. At January 31, 1997, 512,079 of these options remained outstanding and exercisable. The Company accounts for its stock-based compensation plans under APB Opinion No. 25, "Accounting for Stock Issued to Employees", under which no compensation cost has been recognized. Had compensation cost for these plans been determined at fair value consistent with SFAS No. 123, "Accounting for Stock-Based Compensation", the Company's net income and earnings per share would have been reduced to the following pro forma amounts: 1997 1996 Net income (000's): As reported $7,362 $14,573 Pro forma $5,932 $13,923 Earnings per share: As reported $ 0.80 $ 1.56 Pro forma $ 0.72 $ 1.54 The fair values of options granted were estimated as of the date of grant using a Black-Scholes option pricing model with the following weighted average assumptions used for grants in fiscal 31

1997 and 1996: risk-free interest rate of 6.3%, expected volatility of 46.7% and an expected life of 5 years. In accordance with the provisions of SFAS No. 123, the fair value method of accounting was not applied to options granted prior to February 1, 1995 in estimating the pro forma amounts. Therefore, the pro forma effect on net income and earnings per share may not be representative of that to be expected in future years. The following summarizes stock option activity for the years ended January 31, 1997, 1996 and 1995: 1997 1996 1995 Weighted Weighted Weighted Average Average Average Shares Exercise Shares Exercise Shares Exercise (000's) Price (000's) Price (000's) Price Outstanding at beginning of year 2,069 $11.60 1,422 $ 9.93 1,497 $ 8.78 Granted 202 15.47 768 13.90 100 17.22 Exercised (81) 5.34 (101) 4.32 (167) 3.94 Canceled or expired (71) 14.62 (20) 14.07 (8) 10.90 ----- ------ ----- ------- ----- ------- Outstanding at end of year 2,119 $12.15 2,069 $ 11.60 1,422 $ 9.93 ===== ====== ===== ======= ===== ======= Exercisable at end of year 1,143 $10.37 997 $ 8.67 862 $ 6.42 ===== ====== ===== ======= ===== ======= Weighted average fair value of options granted $8.30 $9.02 ===== ===== Price ranges and other information for stock options outstanding as of January 31, 1997 were as follows: Outstanding Exercisable Weighted Weighted Average Weighted Range of Shares Average Remaining Shares Average Exercise Prices (000's) Exercise Life (000's) Exercise Price Price $3.38 512 $ 3.38 2.8 yrs. 512 $ 3.38 $6.38 to $7.56 98 6.77 0.7 yrs. 86 6.73 $13.00 to $18.98 1,509 15.48 6.6 yrs. 545 17.52 ----- ------ ------- ----- ------ 2,119 $12.15 5.4 yrs. 1,143 $10.37 ===== ====== ======= ===== ====== 32

On February 26, 1997, the Company's Board of Directors approved a re-pricing of 362,035 stock options, with exercise prices ranging from $13.00 to $18.98 per share, to the market price as of the date of approval of $8.13 per share. Stock options held by employees who are members of the Board of Directors and stock options held by Non-Employee Directors were not re-priced. Profit Sharing Plan--The Company has a qualified, noncontributory profit sharing plan covering full-time employees who meet certain eligibility requirements. The Plan also allows 401(k) savings contributions by participants with certain Company matching contributions. Aggregate contributions to the Plan are determined annually by the Board of Directors and are not to exceed 15% of total compensation paid to all participants during such year. The Company contributed matching amounts of approximately $28,000, $36,000 and $32,000 for the years ended January 31, 1997, 1996 and 1995, respectively, under the Plan. (7) LEASES AND COMMITMENTS- The Company is committed under operating leases for certain warehouse and retail store locations. The lease agreements are for varying terms through 2007 and contain renewal options for additional periods. Real estate taxes, insurance and maintenance costs are generally paid by the Company. Contingent rentals based on sales volume are not significant. Certain leases contain scheduled rent increases and rent expense is recognized on a straight-line basis over the term of the leases. On August 30, 1989, the Company completed a transaction for the sale and leaseback of 75 of its stores and three warehouse facilities under an initial 15-year lease term. This transaction resulted in pre-tax financial statement gain of $15.6 million (net of expenses), which was deferred and is being amortized as a reduction to lease expense over the term of the leases. The unamortized deferred gain at January 31, 1997 was approximately $7.2 million. The following is a summary of rent expense under these operating leases (in thousands): Years ended Minimum Gain Sublease January 31, Rentals Amortization Income Total 1997 $9,076 $(629) $(1,503) $6,944 1996 8,383 (405) (1,475) 6,503 1995 7,767 (367) (1,198) 6,202 33

Future minimum annual rentals and gain amortization on non-cancelable leases as of January 31, 1997 are as follows (in thousands): Minimum Gain Years ended January 31, Rentals Amortization 1998 $ 8,490 $ 943 1999 7,997 943 2000 7,367 943 2001 6,806 943 2002 6,006 943 2003 and thereafter 13,661 2,435 ------- ------ $50,327 $7,150 ======= ====== (8) INCOME TAXES - The provision for income taxes for the years ended January 31, 1997, 1996 and 1995 consists of the following (in thousands): Years Ended January 31, 1997 1996 1995 Federal: Current $5,803 $9,264 $7,969 Deferred (1,824) (1,358) (1,129) ------ ------ ------ 3,979 7,906 6,840 ------ ------ ------ State and Local: Current 1,056 1,846 1,438 Deferred (230) (250) (58) ------ ------ ------ 826 1,596 1,380 ------ ------ ------ $4,805 $9,502 $8,220 ====== ====== ====== 34

The tax effects of significant temporary differences representing deferred tax assets and liabilities are as follows: January 31, 1997 1996 Assets: Deferral of service contract income $ 9,933 $ 8,806 Sale and leaseback deferred gain 2,502 2,723 Accrued liabilities 957 - Other items 3,117 2,945 ------- ------- 16,509 14,474 Liabilities: Inventory accounting (1,064) (1,064) Depreciation (1,332) (1,285) Other items (50) (38) ------- ------ (2,446) (2,387) Total net future income tax benefits $14,063 $12,087 ======= ======= The Company paid income taxes of $9,801,000, $10,100,000 and $6,854,000 in the years ended January 31, 1997, 1996 and 1995, respectively. The effective income tax rate on consolidated pre-tax income differs from the Federal income tax statutory rate as follows: Years Ended January 31, 1997 1996 1995 Federal income tax at statutory rate 35.0% 35.0% 35.0% State and local taxes, net of federal tax benefit 4.1 4.2 4.3 Other .4 .3 .2 ----- ----- ----- 39.5% 39.5% 39.5% ===== ===== ===== (9) CONTINGENCIES- The Company is involved in various legal actions arising in the normal course of business. After taking into consideration legal counsels' evaluation of such actions, management is of the opinion that their outcome will not have a significant effect on the Company's consolidated financial statements. 35

Report of Independent Public Accountants To the Shareholders and Board of Directors of REX Stores Corporation: We have audited the accompanying consolidated balance sheets of REX Stores Corporation (a Delaware corporation) and subsidiaries as of January 31, 1997 and 1996, and the related consolidated statements of income, shareholders' equity and cash flows for each of the three fiscal years in the period ended January 31, 1997. These consolidated financial statements and the schedule referred to below are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and the schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of REX Stores Corporation and subsidiaries as of January 31, 1997 and 1996, and the results of their operations and their cash flows for each of the three fiscal years in the period ended January 31, 1997, in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic consolidated financial statements taken as a whole. The schedule listed under Part IV, Item 14(a)(2) is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic consolidated financial statements. This schedule has been subjected to the auditing procedures applied in our audits of the basic consolidated financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic consolidated financial statements taken as a whole. Cincinnati, Ohio March 26, 1997 Arthur Andersen LLP 36

REX STORES CORPORATION AND SUBSIDIARIES SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED JANUARY 31, 1997, 1996 AND 1995 (In Thousands) Additions Deductions Balance Charges for Which Beginning Charged Cost Reserves Were Balance End of Year and Expenses Created of Year 1997 Allowance for doubtful accounts $638 $146 $408 $376 ==== ==== ==== ==== 1996 Allowance for doubtful accounts $784 $287 $433 $638 ==== ==== ==== ==== 1995 Allowance for doubtful accounts $643 $475 $334 $784 ==== ==== ==== ==== Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. 37

PART III Item 10. Directors and Executive Offices of the Registrant The information required by this Item 10 is incorporated herein by reference to the Company's Proxy Statement for its Annual Meeting of Shareholders on June 6, 1997, except for certain information concerning the executive officers of the Company which is set forth in Part I of this report. Item 11. Executive Compensation The information required by this Item 11 is set forth in the Company's Proxy Statement for its Annual Meeting of Shareholders on June 6, 1997 and is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management The information required by this Item 12 is set forth in the Company's Proxy Statement for its Annual Meeting of Shareholders on June 6, 1997 and is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions The information required by this Item 13 is set forth in the Company's Proxy Statement for its Annual Meeting of Shareholders on June 6, 1997 and is incorporated herein by reference. PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K (a)(1) Financial Statements. The following consolidated financial statements of the Company and its subsidiaries are incorporated by reference as part of this report at Item 8 hereof. Consolidated Balance Sheets as of January 31, 1997 and 1996 Consolidated Statements of Income for the years ended January 31, 1997, 1996 and 1995 Consolidated Statements of Cash Flows for the years ended January 31, 1997, 1996 and 1995 Consolidated Statements of Shareholders' Equity for the years ended January 31, 1997, 1996 and 1995 Notes to Consolidated Financial Statements Report of Independent Public Accountants (a)(2) Financial Statement Schedules. 38

The following financial statement schedule is incorporated by reference as part of this report at Item 8 hereof. Schedule II - Valuation and Qualifying Accounts All other schedules are omitted because they are not applicable or not required, or because the required information is included in the consolidated financial statements or notes thereto. (a)(3) Exhibits. See Exhibit Index at page 41 of this report. Management Contracts and Compensatory Plans and Arrangements Employment Agreement dated September 1, 1995 between Rex Radio and Television, Inc. and Stuart Rose -- Form 10-Q for quarter ended October 31, 1995, exhibit 10(a). Employment Agreement dated September 1, 1995 between Rex Radio and Television, Inc. and Lawrence Tomchin -- Form 10-Q for quarter ended October 31, 1995, exhibit 10(b). Executive Stock Option dated September 22, 1993 to Stuart Rose -- Form 10-Q for quarter ended October 31, 1993, exhibit 10(a). Executive Stock Option dated September 22, 1993 to Lawrence Tomchin -- Form 10-Q for quarter ended October 31, 1993, exhibit 10(b). Executive Stock Option dated November 20, 1989 to Stuart Rose -- Form 10-Q for quarter ended October 31, 1989, exhibit 6.3. Executive Stock Option dated November 20, 1989 to Lawrence Tomchin -- Form 10-Q for quarter ended October 31, 1989, exhibit 6.4. Subscription Agreement dated December 1, 1989 from Stuart Rose -- Form 10-Q for quarter ended October 31, 1989, exhibit 6.5. Subscription Agreement dated December 1, 1989 from Lawrence Tomchin -- Form 10-Q for quarter ended October 31, 1989, exhibit 6.6. 1984 Incentive Stock Option Plan -- Form 10-K for fiscal year ended January 31, 1992, exhibit 10(a). 1995 Omnibus Stock Incentive Plan -- Post-effective amendment No. 1 to Form S-8 registration statement (No. 33-81706), exhibit 4(c). (b) Reports on Form 8-K. No reports on Form 8-K were filed by the Company during the quarter ended January 31, 1997. 39

SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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 STUART ROSE Stuart Rose Chairman of the Board and Chief Executive Officer Date: April 16, 1997 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Capacity Date STUART ROSE Chairman of the Board ) Stuart Rose and Chief Executive ) Officer (principal ) executive officer) ) ) DOUGLAS BRUGGEMAN Vice President-Finance ) Douglas Bruggeman and Treasurer (principal ) financial and accounting ) officer) ) ) LAWRENCE TOMCHIN* Director ) Lawrence Tomchin ) ) ) April 16, 1997 EDWARD KRESS Director ) Edward Kress ) ) ) ROBERT DAVIDOFF* Director ) Robert Davidoff ) ) ) TIBOR FABIAN* Director ) Tibor Fabian ) ) ) LEE FISHER* Director ) Lee Fisher ) *By STUART ROSE (Stuart Rose, Attorney-in-Fact) 40

EXHIBIT INDEX Page (3) Articles of incorporation and by-laws: 3(a) Certificate of Incorporation, as amended (incorporated by reference to Exhibit 3(a) to Form 10-K for fiscal year ended January 31, 1994, File No. 0-13283) 3(b)(1) By-Laws, as amended (incorporated by reference to Registration Statement No. 2-95738, Exhibit 3(b), filed February 8, 1985) 3(b)(2) Amendment to By-Laws adopted June 29, 1987 (incorporated by reference to Exhibit 4.5 to Form 10-Q for quarter ended July 31, 1987, File No. 0-13283) (4) Instruments defining the rights of security holders, including indentures: 4(a) Amended and Restated Loan Agreement dated July 31, 1995 among Rex Radio and Television, Inc., Kelly & Cohen Appliances, Inc., Stereo Town, Inc. and Rex Kansas, Inc. (the "Borrowers"), the lenders named therein, and NatWest Bank N.A. as agent (incorporated by reference to Exhibit 4(a) to Form 10-Q for quarter ended July 31, 1995, File No. 0-13283) 4(b) Form of Amended and Restated Revolving Credit Note (incorporated by reference to Exhibit 4(b) to Form 10-Q for quarter ended July 31, 1995, File No. 0-13283) 4(c) Guaranty of registrant dated July 31, 1995 (incorporated by reference to Exhibit 4(c) to Form 10-Q for quarter ended July 31, 1995, File No. 0-13283) 4(d) Borrowers Pledge Agreement as amended and restated through July 31, 1995 (incorporated by reference to Exhibit 4(d) to Form 10-Q for quarter ended July 31, 1995, File No. 0-13283) 4(e) Borrowers General Security Agreement as amended and restated through July 31, 1995 (incorporated by reference to Exhibit 4(e) to Form 10-Q for quarter ended July 31, 1995, File No. 0-13283) 4(f) Parent Pledge Agreement as amended and restated through July 31, 1995 (incorporated by reference to Exhibit 4(f) to Form 10-Q for quarter ended July 31, 1995, File No. 0-13283) 41

4(g) Parent General Security Agreement as amended and restated through July 31, 1995 (incorporated by reference to Exhibit 4(g) to Form 10-Q for quarter ended July 31, 1995, File No. 0-13283) Pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K, the registrant has not filed as an exhibit to this Form 10-K certain instruments with respect to long-term debt where the total amount of securities authorized thereunder does not exceed 10% of the total assets of the registrant and its subsidiaries on a consolidated basis. The registrant agrees to furnish a copy of such instruments to the Commission upon request. (10) Material contracts: 10(a) Employment Agreement dated September 1, 1995 between Rex Radio and Television, Inc. and Stuart Rose (incorporated by reference to Exhibit 10(a) to Form 10-Q for quarter ended October 31, 1995, File No. 0-13283) 10(b) Employment Agreement dated September 1, 1995 between Rex Radio and Television, Inc. and Lawrence Tomchin (incorporated by reference to Exhibit 10(b) to Form 10-Q for quarter ended October 31, 1995, File No. 0-13283) 10(c) Executive Stock Option dated September 22, 1993 granting Stuart Rose an option to purchase 300,000 shares of registrant's Common Stock (incorporated by reference to Exhibit 10(a) to Form 10-Q for quarter ended October 31, 1993, File No. 0-13283) 10(d) Executive Stock Option dated September 22, 1993 granting Lawrence Tomchin an option to purchase 150,000 shares of registrant's Common Stock (incorporated by reference to Exhibit 10(b) to Form 10-Q for quarter ended October 31, 1993, File No. 0-13283) 10(e) Executive Stock Option dated November 20, 1989 granting Stuart Rose an option to purchase 300,000 shares of registrant's Common Stock (incorporated by reference to Exhibit 6.3 to Form 10-Q for quarter ended October 31, 1989, File No. 0-13283) 10(f) Executive Stock Option dated November 20, 1989 granting Lawrence Tomchin an option to purchase 300,000 shares of registrant's Common Stock (incorporated by reference to Exhibit 6.4 to Form 10-Q for quarter ended October 31, 1989, File No. 0-13283) 42

10(g) Subscription Agreement dated December 1, 1989 from Stuart Rose to purchase 300,000 shares of registrant's Common Stock (incorporated by reference to Exhibit 6.5 to Form 10-Q for quarter ended October 31, 1989, File No. 0-13283) 10(h) Subscription Agreement dated December 1, 1989 from Lawrence Tomchin to purchase 140,308 shares of registrant's Common Stock (incorporated by reference to Exhibit 6.6 to Form 10-Q for quarter ended October 31, 1989, File No. 0-13283) 10(i) 1984 Incentive Stock Option Plan, as amended effective February 6, 1992 (incorporated by reference to Exhibit 10(a) to Form 10-K for fiscal year ended January 31, 1992, File No. 0-13283) 10(j) 1995 Omnibus Stock Incentive Plan, as amended and restated effective June 2, 1995 (incorporated by reference to Exhibit 4(c) to Post-Effective Amendment No. 1 to Form S-8 Registration Statement No. 33-81706) 10(k) Real Estate Purchase and Sale Agreement (the "Agreement") dated March 8, 1989 between registrant as Guarantor, four of its subsidiaries (Rex Radio and Television, Inc., Stereo Town, Inc., Kelly & Cohen Appliances, Inc., and Rex Radio Warehouse Corporation) as Sellers and Holman/Shidler Investment Corporation as Buyer (incorporated by reference to Exhibit (b)(5)(1) to Amendment No. 1 to Schedule 13E-4 filed March 15, 1989, File No. 5-35828) The Table of Contents to the Agreement lists Exhibits A through P to the Agreement. Each of the following listed Exhibits to the Agreement is incorporated herein by reference as indicated below. The registrant will, upon request of the Commission, provide any of the additional Exhibits to the Agreement. 10(l) Form of Full Term Lease (incorporated by reference to Exhibit (b)(5)(2) to Amendment No. 1 to Schedule 13E-4 filed March 15, 1989, File No. 5-35828) 10(m) Form of Divisible Lease (incorporated by reference to Exhibit (b)(5)(3) to Amendment No. 1 to Schedule 13E-4 filed March 15, 1989, File No. 5-35828) 43

10(n) Form of Terminable Lease (incorporated by reference to Exhibit (b)(5)(4) to Amendment No. 1 to Schedule 13E-4 filed March 15, 1989, File No. 5-35828) 10(o) Continuing Lease Guaranty (incorporated by reference to Exhibit (b)(5)(5) to Amendment No. 1 to Schedule 13E-4 filed March 15, 1989, File No. 5-35828) 10(p) Agreement Regarding Leases and Amending Amended and Restated Real Property Purchase and Sale Agreement dated May 17, 1990 among Shidler/West Finance Partners I (Limited Partnership); Rex Radio and Television, Inc., Stereo Town, Inc., Kelly & Cohen Appliances, Inc. and Rex Radio Warehouse Corporation; and registrant (incorporated by reference to Exhibit (a)(10) to Form 10-Q for quarter ended April 30, 1990, File No. 0-13283) 10(q) Lease dated December 12, 1994 between Stuart Rose/Beavercreek, Inc. and Rex Radio and Television, Inc. (incorporated by reference to Exhibit 10(q) to Form 10-K for fiscal year ended January 31, 1995, File No. 0-13283) (21) Subsidiaries of the registrant: 21(a) Subsidiaries of registrant . . . . . . . . . . . . . . . . 45 (23) Consents of experts and counsel: 23(a) Consent of Arthur Andersen LLP to use its report dated March 26, 1997 included in this annual report on Form 10-K into registrant's Registration Statements on Form S-8 (Registration Nos. 33-3836, 33-81706 and 33-62645) . . . . . . . . . . . . . . . . . . 46 (24) Power of attorney: Powers of attorney of each person who signed this report on Form 10-K on behalf of another pursuant to a power of attorney . . . . . . . . . . . . . . . . 47-50 (27) Financial data schedule: Financial data schedule . . . . . . . . . . . . . . . . . 51 44

EXHIBIT 21(a) SUBSIDIARIES OF REX STORES CORPORATION State of Name Incorporation Rex Radio and Television, Inc. Ohio Stereo Town, Inc. Georgia Kelly & Cohen Appliances, Inc. Ohio Rex Kansas, Inc.(1) Kansas AVA Acquisition Corp.(2) Delaware A.V. Compadres, Inc.(2) Ohio ____________________ (1) Wholly-owned subsidiary of Rex Radio and Television, Inc. (2) Non-operating subsidiary 45

EXHIBIT 23(a) CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report included in this Form 10-K into the Company's previously filed Registration Statements on Form S-8 (No. 33-3836, No. 33-81706 and No. 33-62645). Cincinnati, Ohio, Arthur Andersen LLP April 16, 1997 46

Exhibit 24.1 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned, in his capacity as a director and/or officer of REX Stores Corporation, a Delaware corporation (the "Company"), hereby constitutes and appoints Stuart A. Rose and Edward M. Kress, and each or any one of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 1997 and to sign any and all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto such attorneys-in-fact and agents, and any one of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that such attorneys-in-fact and agents or any one of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has executed this instrument as of April 14, 1997. LAWRENCE TOMCHIN Lawrence Tomchin 47

Exhibit 24.2 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned, in his capacity as a director and/or officer of REX Stores Corporation, a Delaware corporation (the "Company"), hereby constitutes and appoints Stuart A. Rose, Lawrence Tomchin and Edward M. Kress, and each or any one of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 1997 and to sign any and all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto such attorneys-in-fact and agents, and any one of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that such attorneys-in-fact and agents or any one of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has executed this instrument as of April 14, 1997. ROBERT DAVIDOFF Robert Davidoff 48

Exhibit 24.3 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned, in his capacity as a director and/or officer of REX Stores Corporation, a Delaware corporation (the "Company"), hereby constitutes and appoints Stuart A. Rose, Lawrence Tomchin and Edward M. Kress, and each or any one of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 1997 and to sign any and all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto such attorneys-in-fact and agents, and any one of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that such attorneys-in-fact and agents or any one of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has executed this instrument as of April 14, 1997. TIBOR FABIAN Tibor Fabian 49

Exhibit 24.4 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned, in his capacity as a director and/or officer of REX Stores Corporation, a Delaware corporation (the "Company"), hereby constitutes and appoints Stuart A. Rose, Lawrence Tomchin and Edward M. Kress, and each or any one of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 1997 and to sign any and all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto such attorneys-in-fact and agents, and any one of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that such attorneys-in-fact and agents or any one of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has executed this instrument as of April 14, 1997. LEE FISHER Lee Fisher 50

5 0000744187 REX STORES CORPORATION 1,000 U.S. DOLLARS YEAR JAN-31-1997 FEB-1-1996 JAN-31-1997 1 3,959 1,645 1,853 376 135,033 149,877 101,215 11,577 248,034 69,726 51,102 96 0 0 102,624 248,034 427,378 427,378 317,767 317,767 0 0 5,624 12,167 4,805 7,362 0 0 0 7,362 .80 .80