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 ending April 30, 1995
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 No. 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)
Registrant's telephone number, including area code 513-276-3931
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 at least the
past 90 days. Yes (X) No ( )
At the close of business on June 8, 1995, the registrant had
8,925,173 shares of Common Stock, par value $.01 per share,
outstanding.<PAGE>
REX STORES CORPORATION AND SUBSIDIARIES
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Condensed Balance Sheets......... 3
Consolidated Statements of Income............. 5
Consolidated Statements of Shareholders'
Equity...................................... 6
Consolidated Statements of Cash Flows......... 7
Notes to Consolidated Financial Statements.... 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K................ 13
2
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
REX STORES CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<CAPTION>
A S S E T S
April 30 January 31 April 30
1995 1995 1994
(In Thousands)
<S> <C> <C> <C>
ASSETS:
Cash and cash equivalents $ 4,008 $ 12,663 $ 9,597
Short-term investments 1,555 1,555 630
Accounts receivable, net 495 1,077 82
Merchandise inventory 131,284 115,347 97,596
Prepaid expenses and other 1,722 1,470 1,597
Prepaid income taxes and future
income tax benefits 2,860 2,860 2,563
---------- --------- ---------
Total current assets 141,924 134,972 112,065
NET LAND, BUILDINGS AND EQUIPMENT 50,931 50,025 25,687
FUTURE INCOME TAX BENEFIT 7,619 7,619 6,709
---------- --------- ---------
Total assets $ 200,474 $ 192,616 $ 144,461
========== ========= =========
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C> <C>
CURRENT LIABILITIES:
Notes payable $ 2,956 $ - $ -
Current portion of long-term debt 1,687 1,680 607
Accounts payable, trade 42,931 33,295 39,299
Accrued income taxes 504 3,343 -
Current portion, deferred income
and gain on sale and leaseback 7,670 7,376 6,658
Accrued payroll and related 4,446 6,082 3,590
Other liabilities 4,758 4,499 4,278
--------- --------- ---------
Total current liabilities 64,952 56,275 54,432
--------- --------- ---------
3
<PAGE>
Liabilities and Shareholders' Equity (Continued)
LONG-TERM LIABILITIES:
Long-term debt 25,129 25,595 12,993
Deferred income 13,857 13,573 10,803
Deferred gain on sale and
leaseback 7,678 7,779 9,442
--------- --------- ---------
Total long-term liabilities 46,664 46,947 33,238
--------- --------- ---------
SHAREHOLDERS' EQUITY:
Common stock 95 94 80
Treasury stock (3,882) (1,618) (1,915)
Paid-in capital 56,243 56,090 35,251
Retained earnings 36,402 34,828 23,375
--------- --------- ---------
Total shareholders' equity 88,858 89,394 56,791
--------- --------- ---------
Total liabilities and
shareholders' equity $ 200,474 $ 192,616 $ 144,461
========= ========= =========
</TABLE>
[FN]
The accompanying notes are an integral part of
these unaudited consolidated statements.
4
<PAGE>
<TABLE>
REX STORES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
Three Months Ended
April 30
1995 1994
(In Thousands, Except Per Share Amounts)
<S> <C> <C>
NET SALES $ 87,427 $ 69,134
--------- ---------
COSTS AND EXPENSES:
Cost of merchandise sold 65,602 50,768
Selling, general and
administrative expenses 18,642 16,254
--------- ---------
Total costs and expenses 84,244 67,022
--------- ---------
INCOME FROM OPERATIONS 3,183 2,112
INVESTMENT INCOME 109 101
INTEREST EXPENSE 691 322
--------- ---------
Income before income taxes 2,601 1,891
PROVISION FOR INCOME TAXES 1,027 748
--------- ---------
NET INCOME $ 1,574 $ 1,143
========= =========
WEIGHTED AVERAGE NUMBER OF
COMMON AND COMMON EQUIVA-
LENT SHARES OUTSTANDING 9,429 8,217
========= =========
NET INCOME PER COMMON AND
COMMON EQUIVALENT SHARE $ .17 $ .14
========= =========
</TABLE>
[FN]
The accompanying notes are an integral part of
these unaudited consolidated statements.
5<PAGE>
<TABLE>
REX STORES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<CAPTION>
In Thousands
Common Shares
-------------------------------
Issued Treasury Paid-in Retained
Shares Amount Shares Amount Capital Earnings
<S> <C> <C> <C> <C> <C> <C>
Balance at
April 30, 1994 8,039 $ 80 460 $1,915 $35,251 $23,375
Common stock
issued 1,381 14 (88) (297) 20,839 -
Net income - - - - - 11,453
----- ------ --- ------ ------- -------
Balance at
January 31, 1995 9,420 $ 94 372 $1,618 $56,090 $34,828
Common stock
issued 37 1 - - 153 -
Treasury stock
acquired - - 162 2,264 - -
Net income - - - - - 1,574
----- ------ --- ------ ------- -------
Balance at
April 30, 1995 9,457 $ 95 534 $3,882 $56,243 $36,402
===== ====== === ====== ======= =======
</TABLE>
[FN]
The accompanying notes are an integral part of
these unaudited consolidated statements.
6
<PAGE>
REX STORES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
April 30
1995 1994
(In Thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,574 $ 1,143
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 502 331
Deferred income 579 437
Accounts receivable 582 592
Merchandise inventory (15,937) (22,634)
Other current assets (254) (321)
Accounts payable, trade 9,636 11,275
Other liabilities (4,216) (3,014)
-------- --------
NET CASH USED IN OPERATING ACTIVITIES (7,534) (12,191)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,508) (913)
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (1,508) (913)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Notes payable 2,956 -
Payments of long-term debt (459) (137)
Long term debt borrowings - 2,366
Common stock issued 154 54
Treasury stock acquired (2,264) -
-------- --------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 387 2,283
-------- --------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (8,655) (10,821)
CASH AND CASH EQUIVALENTS,
beginning of period 12,663 20,418
-------- --------
CASH AND CASH EQUIVALENTS,
end of period $ 4,008 $ 9,597
</TABLE> ======== ========
[FN]
The accompanying notes are an integral part of
these unaudited consolidated statements.
7
<PAGE>
REX STORES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 1995
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 generally accepted accounting
principles 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, 1995.
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 1995 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) and
management bonuses. Any adjustments pursuant to such estimates
during the quarter were of a normal recurring nature.
8
<PAGE>
Notes to Consolidated Financial Statements (Continued)
Note 3. Equivalent Shares Outstanding
The Company follows the treasury method of calculating common
equivalent shares outstanding. The following summarizes options
granted, exercised and cancelled or expired at April 30, 1995:
<TABLE>
<CAPTION>
Shares Under Stock
Option Plans
<S> <C>
Outstanding at January 31, 1995 1,421,574
($3.25 to $18.975 per share)
Exercised ($3.25 to $13.00 per share) (37,432)
---------
Outstanding at April 30, 1995
($3.25 to $18.975 per share) 1,384,142
---------
</TABLE>
9
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
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.
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:
<TABLE>
<CAPTION>
Three Months Ended
April 30
1995 1994
<S> <C> <C>
Net sales 100.0% 100.0%
Cost of merchandise sold 75.0 73.4
----- -----
Gross profit 25.0 26.6
Selling, general and
administrative expense 21.3 23.5
----- -----
Income from operations 3.7 3.1
Interest, net .7 .3
----- -----
Income before income
taxes 3.0 2.8
Provision for income taxes 1.2 1.1
----- -----
Net income 1.8% 1.7%
===== =====
</TABLE>
10
<PAGE>
Comparison of Three Months Ended April 30, 1995 and 1994
Net sales in the first quarter ended April 30, 1995 were $87.4
million compared to $69.1 million in the prior year's comparable
period, representing an increase of $18.3 million or 26.5%. This
increase is a result of 33 additional stores in the current quarter
compared to the prior year's first quarter and an increase in
comparable store merchandise sales of 1% for the quarter. The
Company considers a store to be comparable after it has been open
six fiscal quarters.
As of April 30, 1995, the Company had 165 stores compared to
132 stores one year earlier. There were no stores opened or closed
during the first quarter of fiscal 1996 or 1995. The Company
anticipates opening 30 to 35 new stores in fiscal 1996. 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.
Gross profit of $21.8 million in the first quarter of fiscal
1996 (25.0% of net sales) was 18.8% higher than the $18.4 million
gross profit (26.6% of net sales) recorded in the first quarter of
fiscal 1995. The decline in gross profit margin percentage is
primarily a result of increased competition in certain markets, the
introduction of personal computer sales into 34 stores, which have
a lower gross profit margin, and a decline in extended service
contract revenues as a percentage of net sales, which generally
have a higher gross profit margin.
Selling, general and administrative expenses for the quarter
ended April 30, 1995 were $18.6 million (21.3% of net sales), a
14.7% increase over the $16.3 million (23.5% of net sales) for the
quarter ended April 30, 1994. The increase in expenses was
primarily attributable to higher payroll costs related to the
increased number of stores and increased sales, higher advertising
costs and general costs associated with more store locations. The
reduction of selling, general and administrative expenses from
23.5% in the first quarter of fiscal 1995 to 21.3% in the first
quarter of fiscal 1996 was primarily a result of more efficient
advertising for existing stores (expense as a percent of sales)
and the increase in the number of owned stores compared to leased
stores.
Income from operations was $3.2 million (3.7% of net sales) in
the first quarter of fiscal 1996, a 50.7% increase over $2.1
million (3.1% of net sales) for the first quarter of fiscal 1995.
This improvement was primarily a result of increased sales volume
from new stores and lower advertising and occupancy costs relative
to sales for the first quarter of fiscal 1996.
11<PAGE>
Interest expense increased to $691,000 in the first quarter of
fiscal 1996 from $322,000 in the first quarter of fiscal 1995.
This increase is primarily a result of additional mortgage debt of
$13.2 million since April 30, 1994 associated with more Company
owned store locations.
The effective tax rate was approximately 39.5% in the first
quarter of fiscal 1996 and 1995.
As a result of the foregoing, net income for the first quarter
of fiscal 1996 was $1.6 million, a 37.7% increase over $1.1 million
for the first quarter of fiscal 1995.
Liquidity and Capital Resources
Net cash used in operating activities was $7.5 million for the
first quarter of fiscal 1996. Operating cash flow was provided by
net income of $1.6 million adjusted for non-cash charges of $1.1
million. The primary use of cash was an increase in inventory of
$15.9 million due to opportunistic buying and the addition of
seasonal air conditioning inventory. This increase was partially
offset by increased accounts payable of $9.6 million. Changes in
other working capital items also served to decrease cash by
approximately $3.9 million.
At April 30, 1995, working capital was $77.0 million compared
to $78.7 million at January 31, 1995. The ratio of current assets
to current liabilities was 2.2 to 1 at April 30, 1995, and 2.4 to
1 at January 31, 1995.
The Company had outstanding borrowings of $3.0 million on its
revolving line of credit at April 30, 1995 at an interest rate of
9.0%. At April 30, 1995, the Company had approximately $52.0
million borrowing availability on the revolving line of credit
after reduction for outstanding letters of credit.
During fiscal 1996, the Company plans to open 30 to 35 REX
stores with anticipated capital expenditures of approximately $16
to $20 million. Capital expenditures for the first quarter of
fiscal 1996 were $1.5 million and were primarily in-process store
construction costs. The Company believes it will be able to obtain
long-term mortgage financing on a site-by-site basis for Company
built or Company purchased store locations as stores are completed.
12<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. The following exhibits are filed with this
report:
27 Financial Data Schedule...................... 15
(b) Reports on Form 8-K. No reports on Form 8-K were filed
during the quarter ended April 30, 1995.
13
<PAGE>
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
June 8, 1995 Stuart A. Rose
Stuart A. Rose
Chairman of the Board
(Chief Executive Officer)
June 8, 1995 Douglas L. Bruggeman
Douglas L. Bruggeman
Vice President, Finance and
Treasurer
(Principal Financial and
Chief Accounting Officer)
14
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000744187
<NAME> REX STORES CORPORATION
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-START> FEB-1-1995
<PERIOD-END> APR-30-1995
<EXCHANGE-RATE> 1
<CASH> 4,008
<SECURITIES> 1,555
<RECEIVABLES> 1,283
<ALLOWANCES> 788
<INVENTORY> 131,284
<CURRENT-ASSETS> 141,924
<PP&E> 58,143
<DEPRECIATION> 7,212
<TOTAL-ASSETS> 200,474
<CURRENT-LIABILITIES> 64,952
<BONDS> 25,129
<COMMON> 95
0
0
<OTHER-SE> 88,763
<TOTAL-LIABILITY-AND-EQUITY> 200,474
<SALES> 87,427
<TOTAL-REVENUES> 87,427
<CGS> 65,602
<TOTAL-COSTS> 65,602
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 691
<INCOME-PRETAX> 2,601
<INCOME-TAX> 1,027
<INCOME-CONTINUING> 1,574
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,574
<EPS-PRIMARY> .17
<EPS-DILUTED> .17
</TABLE>
