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, 1996 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 (513) 276-3931
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class 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. [ ]
At the close of business on April 16, 1996 the aggregate market value of
the registrant's outstanding Common Stock held by non-affiliates of the
registrant (for purposes of this calculation, 2,011,741 shares beneficially
owned by directors and executive officers of the registrant were treated as
being held by affiliates of the registrant), was $98,252,420.
There were 9,029,771 shares of the registrant's Common Stock outstanding
as of April 16, 1996.
Documents Incorporated by Reference
Portions of REX Stores Corporation's definitive Proxy Statement for its
Annual Meeting of Shareholders on June 7, 1996 are incorporated by reference
into Part III.
<PAGE>
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 199 stores in 29
states under the trade name "REX." The stores are located predominately in
the Midwest and Southeast, and during fiscal 1996 the Company opened seven
stores in the Northwest. 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 90 to 199 during the
five fiscal years ended January 31, 1996, net sales increased from $201.8
million in fiscal 1992 to $442.2 million in fiscal 1996 and income from
operations increased from $5.8 million in fiscal 1992 to $28.6 million in
fiscal 1996.
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. In fiscal 1996, the Company opened 34 new stores and plans
to open approximately 35 to 40 additional REX stores in fiscal 1997.
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 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
2<PAGE>
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 (513) 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.
Expansion Strategy
The Company plans to continue its store expansion program by opening
approximately 35 to 40 REX stores in fiscal 1997. The Company will continue
to focus predominantly on small to medium sized markets. Based upon the
3<PAGE>
Company's performance in fiscal 1994, 1995 and 1996, a new store typically
becomes profitable upon completion of its first Christmas selling season.
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 34 new stores opened
in fiscal 1996, 15 were leased sites and 19 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<PAGE>
<TABLE>
<CAPTION>
Televisions Video Audio Appliances Other
<S> <S> <S> <S> <S>
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 Cartridges
Systems Turntables Dryers Stands
Tape Decks Ranges Telephones
Speakers Dishwashers Cameras
Car Stereos Refrigerators Binoculars
Portable Radios Freezers Fax Machines
Vacuum Cleaners Jewelry
Extended Service
Contracts
</TABLE>
The leading brands sold by the Company during fiscal 1996 (in
alphabetical order) were General Electric, Hitachi, Hotpoint, JVC, Magnavox,
Panasonic, Pioneer, RCA, Sharp and Zenith.
All REX stores carry a full range of the Company's televisions, video and
audio products, microwave ovens and air conditioners and 183 stores carry
major appliances. New stores will offer appliances as space allows. The
Company also had jewelry departments in seven stores, which it discontinued
during fiscal 1996.
During fiscal 1995, the Company began test marketing personal computers
and related accessories in 34 stores in selected markets. Based upon the
results, the Company has expanded its offering of personal computers to a
total of approximately 98 stores during fiscal 1996.
The following table shows the approximate percent of net sales for each
major product group for the last three fiscal years.
<TABLE>
<CAPTION>
Fiscal Year
Product Category 1994 1995 1996
<S> <C> <C> <C>
Televisions 40% 39% 37%
Video 22 21 20
Audio 17 17 17
Appliances 14 16 17
Other 7 7 9
--- --- ---
100% 100% 100%
=== === ===
</TABLE>
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
5<PAGE>
manager is 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 "If you find that you can purchase the identical item for less
anywhere else within 30 days after purchase any place in the area, we will
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 highlighting 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 1996, four vendors accounted for approximately 55% 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 130 stores are located in free-standing buildings,
with the balance situated in strip shopping centers and malls. In fiscal
1996, 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.
6<PAGE>
The following table shows the Company's store locations as of January 31,
1996:
<TABLE>
<CAPTION>
Store Locations
<C> <C> <C> <C>
Alabama: (10) Georgia: (11) Indiana: (3) Nebraska: (4)
Auburn Albany Anderson Grand Island
Decatur Augusta Muncie Lincoln
Florence Bogart Richmond Norfolk
Gadsden Brunswick North Platte
Huntsville Columbus Kansas: (2)
Mobile (2) Duluth Hutchinson New York: (11)
Montgomery Macon Lawrence Auburn
Oxford Marietta Clifton Park
Tuscaloosa Rome Kentucky: (3) Geneva
Savannah Ashland Horseheads
Arkansas: (2) Warner Robins Hopkinsville Johnson City
Fort Smith Paducah Lakewood
Springdale Idaho: (2) New Hartford
Idaho Falls Louisiana: (6) Olean
Colorado: (2) Pocatello Alexandria Queensbury
Grand Junction Baton Rouge Schenectady
Pueblo Iowa: (9) Houma Watertown
Burlington Lake Charles
Florida: (25) Council Bluffs New Iberia North Carolina: (8)
Bradenton Des Moines (2) Opelousas Asheville
Charlotte Harbor Dubuque Charlotte (2)
Crystal River Mason City Michigan: (2) Goldsboro
Ft. Pierce Sioux City Bay City Hendersonville
Gainesville Waterloo Benton Harbor Rocky Mount
Hudson West Des Moines Salisbury
Lake City Missouri: (4) West Durham
Largo Illinois: (14) Jefferson City
Leesburg Alton Joplin Ohio: (15)
Mary Esther Bradley Springfield Ashtabula
Melbourne Carbondale St. Joseph Beavercreek
Merritt Island Champaign Dayton (2)
Naples Danville Mississippi: (11) Defiance
Ocala Decatur Columbus Kettering
Palm Harbor Galesburg Gautier Lima
Panama City Newburg Greenville Marion
Pensacola (2) Pekin Gulfport Miamisburg
Sarasota Peoria Hattiesburg New Philadelphia
St. Augustine Peru Jackson (2) Piqua
St. Petersburg Quincy Meridian Sandusky
Stuart Rockford Ridgeland St. Clairsville
Tallahassee Springfield Tupelo Springfield
Titusville Vicksburg Wooster
Venice
7 <PAGE>
Store Locations (continued)
Oklahoma: (1) South Carolina: (8) Texas: (13) Washington: (1)
Enid Aiken Austin (2) Union Gap
Anderson College Station
Pennsylvania: (13) Charleston Denton West Virginia: (5)
Altoona Florence Harlingen Beckley
Cranberry Greenwood Longview Bluefield
Erie (2) Murrell's Inlet Midland Bridgeport
Greensburg Orangeburg Odessa Morgantown
Hanover Rock Hill San Angelo Vienna
Indiana Sherman
Johnstown Tennessee: (7) Temple Wisconsin: (4)
Lower Burrell Bristol Victoria Fond du Lac
Meadville Chattanooga Waco Janesville
Scranton Clarksville Manitowac
Wilkes-Barre Cleveland Virginia: (1) Oshkosh
York Johnson City Danville
Kingsport Wyoming: (2)
Morristown Casper
Cheyenne
</TABLE>
In fiscal 1996, the Company opened 34 new stores, entering Colorado,
Idaho and Wyoming with two stores each and Washington with one store, and
adding five stores in New York, four stores in Florida, three stores each in
Illinois and Texas, two stores each in Iowa, Louisiana, Nebraska and North
Carolina, and one store each in Kentucky, Missouri, Ohio and Wisconsin.
The Company's operations are divided into regional districts, containing
from two to 14 stores whose managers report to a district manager. The
Company's 30 district managers report to one of three regional vice
presidents. Each store is staffed with a full-time manager and assistant
manager, commissioned sales personnel and, in higher-traffic stores, 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.
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 two stores during fiscal 1994 and no stores during fiscal 1995 and
1996.
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
8<PAGE>
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 1996, approximately 29% of its total sales were made on
these credit cards, and approximately 16% were made on installment credit
contracts arranged through banks or independent finance companies which bear
the credit risk of these contracts.
Distribution
The Company's stores are supplied by leased regional distribution
centers which consist of a 315,000 square foot facility in Dayton, Ohio, and a
67,000 square foot facility in Pensacola, Florida. The Company also owns a
150,000 square foot auxiliary warehouse in Pensacola, Florida in which it
utilizes 60,000 square feet and leases the remainder.
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
9<PAGE>
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
Eighty 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 feet and a strip shopping center in College Station, Texas
of 38,000 square feet. The Company uses approximately 10,000 square feet in
each shopping center for a store and leases the remainder. The strip shopping
centers are professionally managed by local real estate management firms.
The remaining 116 stores operate on leased premises, with the unexpired
terms of the leases ranging from one year to 29 years, inclusive of options to
renew, except for one month to month lease. For fiscal 1996, the total net
rent expense for the Company's leased stores was approximately $6,500,000.
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, 1996, the Company had 154 hourly and salaried employees
and 983 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.
10<PAGE>
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.
11<PAGE>
Executive Officers of the Company
Set forth below is certain information about each of the Company's
executive officers.
<TABLE>
<CAPTION>
Name Age Position(s)
<S> <C> <C>
Stuart Rose 41 Chairman of the Board and Chief Executive Officer*
Lawrence Tomchin 68 President and Chief Operating Officer*
Douglas Bruggeman 35 Vice President-Finance and Treasurer
Edward Kress 46 Secretary*
</TABLE>
*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.
12<PAGE>
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.
<TABLE>
<CAPTION>
Fiscal Quarter Ended High Low
<S> <C> <C>
April 30, 1994 $22.87 $16.87
July 31, 1994 18.62 14.37
October 31, 1994 20.62 14.75
January 31, 1995 18.87 14.62
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
</TABLE>
As of April 16, 1996, there were 351 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.
13<PAGE>
Item 6. Selected Financial Data
Five Year Financial Summary
<TABLE>
<CAPTION>
January 31,
(In Thousands, Except
Per Share Amounts) 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Net sales $442,217 $382,775 $298,171 $233,080 $201,804
Net income $ 14,573 $ 12,596 $ 8,632 $ 4,788 $ 3,006
Net income per
common share $ 1.56 $ 1.40 $ 1.10 $ .72 $ .45
Total assets $234,599 $192,616 $132,319 $ 88,599 $ 71,064
Long-term debt,
net of current
maturities $ 32,590 $ 25,595 $ 10,879 $ 2,902 $ 2,857
</TABLE>
14<PAGE>
Quarterly Financial Data (Unaudited)
<TABLE>
<CAPTION>
Quarters Ended
(In Thousands Except Per Share Amounts)
April 30, July 31, October 31, January 31,
1995 1995 1995 1996
<S> <C> <C> <C> <C>
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 $ .17 $ .27 $ .21 $ .91
Quarters Ended
(In Thousands Except Per Share Amounts)
April 30, July 31, October 31, January 31,
1994 1994 1994 1995
Net sales $69,134 $81,122 $80,160 $152,359
Cost of merchandise sold 50,768 59,944 60,066 115,295
Net income 1,143 1,958 1,599 7,896
Earnings per common
share (a) $ .14 $ .22 $ .17 $ .83
</TABLE>
[FN]
(a) The total of the quarterly net income per share amounts is less than
the annual net income per share amount due to 63% of net income
occurring in the fourth quarter of fiscal 1995, whose per share amount
reflects for the entire quarter the Company's 1.3 million share
offering in June 1994, while the annual per share amount only reflects
the increased outstanding shares for the 8 months since the issuance
of the shares in June 1994.
15<PAGE>
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 predominately 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 199 stores in 29 states. During fiscal 1996, the
Company expanded into the western region of the United States by opening
seven stores in four northwestern states.
The Company has focused on maintaining strict cost controls, depth of
merchandise selection and expansion within small and medium sized markets
where its low cost structure and operating strategy enhance its ability to
become a dominant retailer. Net sales and income from operations have
increased each year since fiscal 1990.
During fiscal 1994, 1995 and 1996, the Company opened 28, 33 and 34
stores, respectively, and closed two stores in fiscal 1994. No stores
were closed in fiscal 1995 and 1996. Comparable store sales grew 7.5%
and 5.5% for fiscal 1994 and 1995, respectively, and declined 5.4% for
fiscal 1996. For the periods prior to fiscal 1995, the Company considered
a store to be comparable after it had been open four fiscal quarters.
Effective February 1, 1994, the Company considers a store to be comparable
after it has been open six full fiscal quarters. This change in policy is
intended to reduce the distorting effect on sales of new store grand
openings during which time the Company utilizes higher levels of
advertising and promotion. 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%, 2.6% and 2.4% of net sales for fiscal
1994, 1995 and 1996, respectively. Service contract costs are charged to
operations as incurred. Gross profit realized from extended service
contract revenues was $7.1 million, $7.8 million and $8.3 million in fiscal
1994, 1995 and 1996, respectively. Merchandise sales increased at a higher
rate than extended service contract revenues in fiscal 1994, 1995 and 1996
resulting in declining extended service contract revenues as a percentage
of net sales.
16<PAGE>
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>
Fiscal Year Ended
January 31,
1996 1995 1994
<S> <C> <C> <C>
Net sales 100.0% 100.0% 100.0%
Cost of merchandise sold 74.1 74.7 73.9
----- ----- -----
Gross profit 25.9 25.3 26.1
Selling, general
and administrative expenses 19.4 19.4 21.0
----- ----- -----
Income from operations 6.5 5.9 5.1
Interest, net 1.1 .5 .3
----- ----- -----
Income before income taxes 5.4 5.4 4.8
Provision for income taxes 2.1 2.1 1.9
----- ----- -----
Net income 3.3% 3.3% 2.9%
===== ===== =====
</TABLE>
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 profit margin in fiscal 1996
is 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 and a decline in extended service contract revenues, which
generally have a higher 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.
17<PAGE>
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 is 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.
Comparison of Fiscal Years Ended January 31, 1995 and 1994
Net sales in fiscal 1995 were $382.8 million, a 28.4% increase over
the $298.2 achieved in fiscal 1994. This increase was due to the addition
of 33 stores during the year, the first full year of sales for 28 stores
opened during fiscal 1994 and an increase of 5.5% in comparable store sales
during the year. No stores were closed in fiscal 1995. In the prior
fiscal year, the Company opened 28 stores and closed two. The number of
stores open at January 31, 1995 was 165 compared to 132 at January 31,
1994.
Gross profit of $96.7 million in fiscal 1995 (25.3% of net sales) was
24.5% higher than the $77.7 million gross profit (26.1% of net sales)
recorded the prior year. The lower gross profit margins generally reflect
an increased competitive environment in certain markets, an increase in
major appliance sales and the introduction of computer sales into 34
stores. Major appliance sales and computer sales generally have a lower
gross profit margin percentage. 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 1995 were
$74.2 million (19.4% of net sales), an 18.8% increase over the $62.5
million (21.0% of net sales) in fiscal 1994. The increase in expenses was
primarily attributable to $6.1 million of higher payroll costs related to
the increased number of stores and increased sales, $4.2 million of
increased advertising costs and $1.4 million of higher depreciation costs
and operating costs associated with more store locations. The reduction of
selling, general and administrative expenses as a percentage of net sales
was primarily a result of more efficient advertising for existing stores
and the increase in the number of owned stores compared to leased stores.
18<PAGE>
Income from operations was $22.5 million (5.9% of net sales) in fiscal
1995, a 47.3% increase over the $15.3 million (5.1% of net sales) for
fiscal 1994. This improvement was primarily a result of increased sales
volume and reduced advertising and occupancy costs relative to sales.
Interest expense increased to $1.9 million for fiscal 1995 from $1.1
million in fiscal 1994. The increase in interest expense is attributable
to additional mortgage debt associated with more Company owned store
locations and an increase of approximately $5.2 million in the average
outstanding borrowings on the revolving line of credit to support the store
expansion.
The effective tax rate was 39.5% for fiscal 1995 and 1994.
As a result of the foregoing, net income for fiscal 1995 was $12.6
million, a 45.9% increase over $8.6 million for fiscal 1994.
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 1994 and 1995, the proceeds from
public offerings of Common Stock.
Net cash used in operating activities was $4.0 million for fiscal
1996. Operating cash flow was provided by net income of $14.6 million and
$4.4 million of deferred income from sales of extended service contracts,
adjusted for non-cash charges of $.7 million. The primary use of cash was
an increase in inventory of $31.2 million due to additional stores,
increased sales volume and opportunistic purchasing. This increase was
partially offset by increased accounts payable of $6.2 million.
At January 31, 1996 working capital was $80.0 million compared to
$78.7 million at January 31, 1995. The ratio of current assets to current
liabilities was 2.1 to 1 at January 31, 1996 and 2.4 to 1 at January 31,
1995.
Capital expenditures in fiscal 1996 totaled $23.1 million and were
primarily associated with the opening of 34 stores.
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. The Company has outstanding a $4.3 million letter of credit
which is required to be kept in place until August 1996 pursuant to a
sale/leaseback transaction completed in fiscal 1990. The letter of credit
secures the Company's obligations under these leases.
19<PAGE>
At January 31, 1996, borrowings of $9.3 million were outstanding at an
average interest rate of 7.64%. A total of approximately $78.9 million was
available after reduction for the outstanding letter of credit at January
31, 1996. 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 1996 were approximately $55.6 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 9.45% for fiscal 1996. 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, 1996, the Company had approximately $34.6 million of
mortgage debt outstanding (including $9.2 million obtained in fiscal 1996
from mortgaging 16 stores) at a weighted average interest rate of 9.4%,
with maturities from 2000 to 2010. The Company has received a commitment
to provide $10 million of mortgage financing for a term of 10 years, with a
balloon payment at the end of the scheduled term. Interest would be
charged at a variable rate of prime plus 1/2% or a fixed rate (for five
years) of Treasuries plus 225 basis points.
During fiscal 1997, the Company plans to open 35 to 40 REX stores with
anticipated capital expenditures of approximately $20 to $24 million. See
"Business--Expansion Strategy." 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.
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 36.9% and 39.8% of net sales and 58.6%
and 62.7% of net income in fiscal 1996 and 1995, 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.
20<PAGE>
The following table provides certain unaudited financial information
for the Company for each of the quarters in fiscal 1996 and 1995.
<TABLE>
<CAPTION>
Fiscal Quarter Ended
April 30, July 31, October 31, January 31,
% of % of % of % of
$000s Annual $000s Annual $000s Annual $000s Annual
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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
Fiscal 1995
Net sales $69,134 18.1% $81,122 21.2% $80,160 20.9% $152,359 39.8%
Income from
operations 2,112 9.4 3,531 15.7 3,223 14.3 13,620 60.6
Net income 1,143 9.1 1,958 15.5 1,599 12.7 7,896 62.7
</TABLE>
Recently Issued Accounting Standards
In March 1995, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 121 "Accounting for
the Impairment of Long-Lived Assets and for 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 Company is required to adopt
the provisions of SFAS No. 121 in the first quarter of fiscal 1997. It is
anticipated that the application of this standard will not have a material
impact on the Company's financial position or results of operations.
In October 1995, the FASB issued SFAS No. 123 "Accounting for
Stock-Based Compensation," which establishes new accounting and disclosure
requirements for stock-based employee compensation plans. The Company will
adopt this standard in fiscal 1997 by continuing to follow the accounting
prescribed by Accounting Principles Board Opinion No. 25 "Accounting for
Stock Issued to Employees" and presenting the required pro forma
disclosures. Therefore, the application of this standard will not have a
material impact on the Company's financial position or results of
operations.
21<PAGE>
Item 8. Financial Statements and Supplementary Data
REX STORES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JANUARY 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
ASSETS (In Thousands)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 685 $ 12,663
Short-term investments 1,525 1,555
Accounts receivable, net of allowance
for doubtful accounts of $638 and $784
in 1996 and 1995, respectively (Note 4) 1,604 1,077
Merchandise inventory (Note 4) 146,566 115,347
Prepaid expenses and other 1,825 1,470
Future income tax benefits (Note 9) 3,818 2,860
-------- --------
Total current assets 156,023 134,972
PROPERTY AND EQUIPMENT, NET (Notes 4 and 5) 70,307 50,025
FUTURE INCOME TAX BENEFITS (Note 9) 8,269 7,619
-------- --------
Total assets $234,599 $192,616
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable (Note 4) $ 9,327 $ -
Current portion of long-term debt (Note 5) 2,050 1,680
Current portion, deferred income and
deferred gain on sale
and leaseback (Notes 2 and 7) 9,083 7,376
Accounts payable, trade 39,525 33,295
Accrued income taxes 4,121 3,343
Accrued payroll 6,570 6,082
Other liabilities 5,331 4,499
-------- --------
Total current liabilities 76,007 56,275
LONG-TERM LIABILITIES:
Long-term debt (Note 5) 32,590 25,595
Deferred income (Note 2) 16,506 13,573
Deferred gain on sale and leaseback (Note 7) 7,150 7,779
-------- -------
Total long-term liabilities 56,246 46,947
COMMITMENTS AND CONTINGENCIES (Notes 8 and 10)
SHAREHOLDERS' EQUITY (Notes 3, 4, and 6):
Common stock, 45,000 shares authorized, 9,521
and 9,420 shares issued, at par 95 94
Paid-in capital 56,732 56,090
Retained earnings 49,401 34,828
Treasury stock, 534 and 372 shares (3,882) (1,618)
-------- --------
Total shareholders' equity 102,346 89,394
-------- --------
Total liabilities and shareholders' equity $234,599 $192,616
========= ========
</TABLE>
[FN]
The accompanying notes to consolidated financial statements
are an integral part of these consolidated balance sheets.
22<PAGE>
REX STORES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED JANUARY 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
(In Thousands,
Except Per Share Amounts)
<S> <C> <C> <C>
NET SALES $442,217 $382,775 $298,171
-------- -------- --------
COSTS AND EXPENSES:
Cost of merchandise sold 327,636 286,073 220,441
Selling, general and
administrative expenses 85,981 74,216 62,467
-------- -------- --------
Total costs and expenses 413,617 360,289 282,908
-------- -------- --------
INCOME FROM OPERATIONS 28,600 22,486 15,263
INVESTMENT INCOME 182 229 139
INTEREST EXPENSE 4,707 1,899 1,136
-------- -------- --------
INCOME BEFORE PROVISION FOR
INCOME TAXES 24,075 20,816 14,266
PROVISION FOR INCOME TAXES 9,502 8,220 5,634
-------- -------- --------
NET INCOME $ 14,573 $ 12,596 $ 8,632
========= ========= =========
WEIGHTED AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES OUTSTANDING 9,365 9,014 7,863
-------- -------- --------
NET INCOME PER SHARE $ 1.56 $ 1.40 $ 1.10
======== ======== ========
</TABLE>
[FN]
The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements.
23<PAGE>
REX STORES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JANUARY 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
(In Thousands)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 14,573 $ 12,596 $ 8,632
Adjustments to reconcile net
income to net cash provided by
(used in) operating activities-
Depreciation and amortization, net 2,357 1,559 1,084
Deferred income 4,415 3,770 1,836
Future income tax benefits (1,608) (1,207) 315
Accounts receivable (527) (403) 245
Merchandise inventory (31,219) (40,385) (16,699)
Other current assets (361) (281) (70)
Accounts payable, trade 6,230 5,271 6,312
Other liabilities 2,098 3,123 1,297
-------- -------- --------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (4,042) (15,957) 2,952
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Short-term investments 30 (925) 845
Capital expenditures (23,080) (28,101) (13,882)
Capital disposals 43 120 549
-------- -------- --------
NET CASH USED IN INVESTING ACTIVITIES (23,007) (28,906) (12,488)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in note payable 9,327 - -
Proceeds from long-term debt 9,201 16,885 8,612
Payments of long-term debt (1,836) (981) (221)
Common stock issued 643 20,907 17,503
Treasury stock issued (acquired) (2,264) 297 -
-------- -------- --------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 15,071 37,108 25,894
-------- -------- --------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (11,978) (7,755) 16,358
CASH AND CASH EQUIVALENTS,
beginning of year 12,663 20,418 4,060
-------- -------- --------
CASH AND CASH EQUIVALENTS,
end of year $ 685 $ 12,663 $ 20,418
======== ======== ========
</TABLE>
[FN]
The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements.
24<PAGE>
REX STORES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED JANUARY 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
Common Stock
Issued Treasury Paid-In Retained
Shares Amount Shares Amount Capital Earnings
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
BALANCE,
January 31, 1993 6,675 $67 460 $ 1,915 $17,707 $13,600
Net income - - - - - 8,632
Common stock issued 1,352 13 - - 17,490 -
----- --- --- ------- ------- -------
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
===== === === ======= ======= =======
</TABLE>
[FN]
The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements.
25 <PAGE>
REX STORES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JANUARY 31, 1996 AND 1995
(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 retail consumer electronics and
appliance stores under the REX name in 29 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, 1996 and 1995 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 ($41,880,000
and $33,201,000 at January 31, 1996 and 1995, respectively)
approximates the LIFO value in all years presented. Four suppliers
accounted for approximately 55% of the Company's purchases in 1996.
26<PAGE>
(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 10 years for fixtures and equipment. Leasehold improvements
are depreciated over 10 years or the term of the lease, if shorter.
The components of cost at January 31, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
1996 1995
( In thousands)
<S> <C> <C>
Land $18,452 $12,972
Buildings and improvements 40,492 28,383
Fixtures and equipment 12,294 9,283
Leasehold improvements 7,740 6,015
------- -------
78,978 56,653
Less: accumulated depreciation (8,671) (6,628)
------- -------
$70,307 $50,025
======= =======
</TABLE>
In March 1995, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 121 "Accounting
for the Impairment of Long-Lived Assets and for 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 Company is required to adopt the provisions of SFAS No. 121 in
the first quarter of fiscal 1997. It is anticipated that the
application of this standard will not have a material impact on the
Company's financial position or results of operations.
(f) Interest Cost--Interest expense of $4,707,000, $1,899,000 and
$1,136,000 for the years ended January 31, 1996, 1995 and 1994,
respectively, is net of approximately $207,000, $182,000 and $65,000
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 on a straight-line basis over the life
of the loan.
(h) Advertising Costs--Advertising costs are expensed as incurred.
Advertising expense was approximately $29,989,000, $26,241,000 and
$22,085,000 in 1996, 1995 and 1994, respectively.
27<PAGE>
(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.
(j) Income Taxes--The Company follows SFAS No. 109, "Accounting for Income
Taxes." Under SFAS No. 109, deferred tax assets or liabilities are
computed based on the temporary difference between the financial
statement and tax basis of certain assets and liabilities given the
provisions of enacted tax laws.
(k) 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.
(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) SALE OF COMMON STOCK-
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.
On June 2, 1993, the Company completed the sale of 1.3 million shares of
common stock under a Form S-2 registration statement and received net
proceeds of $17.2 million.
28<PAGE>
(4) REVOLVING LINE OF CREDIT-
Effective July 31, 1995, the Company entered into an amended and restated
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 (see Note 7). At January 31,
1996, outstanding borrowings under the revolving credit agreement totaled
$9,327,000. There were no borrowings outstanding at January 31, 1995.
The carrying amount of the borrowings at January 31, 1996 approximates
fair value as the revolving credit agreement bears a current market rate
of interest. At January 31, 1996, a total of approximately $78.9 million
was available after the letter of credit reductions.
The interest rate on borrowings is at 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, 1996 was
7.64%. 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 several notes payable secured by certain land,
buildings and leasehold improvements. Interest rates range from 7.50% to
10.69%. 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.
29 <PAGE>
Maturities of long-term debt are as follows (in thousands):
<TABLE>
<CAPTION>
Year Ending
January 31, Amount
<S> <C>
1997 $ 2,050
1998 2,081
1999 2,172
2000 2,269
2001 3,108
2002 and thereafter 22,960
-------
$34,640
=======
</TABLE>
The fair value of the Company's long-term debt at January 31, 1996 was
approximately $35,939,000. The fair value was estimated based on rates
available to the Company for debt with similar terms and maturities.
(6) EMPLOYEE BENEFITS-
(a) 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 nonqualified stock
options to directors who are not employees of the Company. A maximum
of 2,000,000 shares of common stock may be subject to awards
granted under the Omnibus Plan. 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. At January 31, 1996,
options also remain outstanding under a 1984 Incentive Stock
Option Plan which expired in fiscal 1995.
At January 31, 1996, 782,155 shares of common stock are available for
grant under the Omnibus Plan. A total of 485,153, 350,051, and
172,204 options are exercisable under the above described plans at
January 31, 1996, 1995 and 1994, respectively.
On November 20, 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. Of these options, 87,921
were exercised in fiscal 1995, and all of the remaining options are
exercisable as of January 31, 1996. No additional shares are available
for grant under this plan.
30<PAGE>
The following summarizes options granted, exercised and canceled or
expired for the years ended January 31, 1996, 1995 and 1994:
<TABLE>
<CAPTION>
Shares Under
Stock Option
Plans
<S> <C>
Outstanding at January 31, 1993 ($3.25 to $7.56 per share) 1,014,679
Granted ($13.00 to $18.125 per share) 538,685
Canceled or expired (4,000)
Exercised ($3.25 to $6.88 per share) (52,100)
---------
Outstanding at January 31, 1994 ($3.25 to $18.125 per share) 1,497,264
Granted ($15.25 to $18.975 per share) 100,067
Canceled or expired (8,600)
Exercised ($3.25 to $13.00 per share) (167,157)
---------
Outstanding at January 31, 1995 ($3.25 to $18.975 per share) 1,421,574
Granted ($13.875 to $15.262 per share) 767,845
Canceled or expired (19,400)
Exercised ($3.25 to $15.25 per share) (101,461)
---------
Outstanding at January 31, 1996 ($3.25 to $18.975 per share) 2,068,558
=========
</TABLE>
In October 1995, the FASB issued SFAS No. 123 "Accounting for Stock-Based
Compensation," which establishes new accounting and disclosure
requirements for stock-based employee compensation plans. The Company
will adopt this standard in fiscal 1997 by continuing to follow the
accounting prescribed by Accounting Principles Board Opinion No. 25
"Accounting for Stock Issued to Employees" and presenting the required
pro forma disclosures. Therefore, the application of this standard
will not have a material impact on the Company's financial position or
results of operations.
(b) 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 $36,000, $32,000 and
$21,000 for the years ended January 31, 1996, 1995 and 1994,
respectively, under the Plan.
31<PAGE>
(7) SALE AND LEASEBACK TRANSACTION-
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. A pre-tax financial statement gain of $15.6
million (net of expenses) resulted from this sale. In connection with
this transaction, an unsecured letter of credit guarantee (LOC) in the
amount of $7.1 million had been outstanding. As a result of the LOC,
there is a contingency with respect to the ultimate gain to be realized
from the sale of these properties. Consequently, $7.1 million of such
gain has been deferred and will be amortized to results of operations
over the respective lease term of each property after the LOC expires.
The remaining pre-tax financial statement gain is being amortized as a
reduction to lease expense over the lease terms.
On May 5, 1994, the Company purchased, for $8.0 million, 14 store
locations which were leased pursuant to the sale/leaseback transaction.
Consummation of the purchase permitted the Company to reduce its
outstanding $7.1 million LOC by $1.4 million. In addition, the Company
concurrently amended the lease on its Dayton warehouse to place the
entire facility under a long-term lease arrangement, which resulted in
a further reduction of the Company's outstanding LOC by $1.4 million.
Accordingly, the balance of the outstanding LOC related to the
sale/leaseback transaction is $4.3 million at January 31, 1996 and 1995.
The $4.3 million LOC will remain outstanding until August 30, 1996 and
includes an annual commitment fee of 1.25% payable monthly. The LOC can
be drawn upon by the buyer/lessor in the event of a "material failure",
principally defined as a failure to make required lease payments under
the agreement or in the event of bankruptcy on the part of the Company.
For financial statement purposes, the LOC reduction from the purchase of
the 14 store locations resulted in approximately $1.2 million of the
deferred gain associated with the sale/leaseback being recorded as a
reduction in the carrying value of the properties purchased. The
remaining pre-tax financial statement gain of $14.4 million less the LOC
amount ($4.3 million) is being amortized as a reduction to rent expense
over the lease terms.
Rental payments increase by fixed amounts over the term of the leases and
are included in future minimum annual rentals in Note 8. Lease expense is
being recognized on a straight-line basis over the 15-year terms of the
leases. All of the leases have been accounted for as operating leases.
32<PAGE>
(8) 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.
Also see Note 7 for a discussion of the Sale and Leaseback transaction
and gain amortization.
The following is a summary of rent expense under these operating leases
(in thousands):
<TABLE>
<CAPTION>
Years ended Minimum Gain Sublease
January 31, Rentals Amortization Income Total
<S> <C> <C> <C> <C>
1996 $8,383 $(405) $(1,475) $6,503
1995 7,767 (367) (1,198) 6,202
1994 7,684 (251) (888) 6,545
</TABLE>
Future minimum annual rentals and gain amortization on non-cancelable
leases as of January 31, 1996 are as follows (in thousands):
<TABLE>
<CAPTION>
Minimum Gain
Years ended January 31, Rentals Amortization
<S> <C> <C>
1997 $ 7,068 $ 629
1998 6,385 943
1999 5,690 943
2000 5,139 943
2001 5,143 943
2002 and thereafter 16,979 3,379
------- -------
$46,404 $ 7,780
======= =======
</TABLE>
33<PAGE>
(9) INCOME TAXES-
The provision for income taxes for the years ended January 31, 1996, 1995
and 1994 consists of the following (in thousands):
<TABLE>
<CAPTION>
Years Ended January 31,
1996 1995 1994
<S> <C> <C> <C>
FEDERAL
Current $ 9,264 $ 7,969 $ 5,430
Deferred (1,358) (1,129) (857)
------- ------- -------
7,906 6,840 4,573
------- ------- -------
STATE AND LOCAL
Current 1,846 1,438 1,210
Deferred (250) (58) (149)
------- ------- -------
1,596 1,380 1,061
------- ------- -------
$ 9,502 $ 8,220 $ 5,634
======= ======= =======
</TABLE>
The tax effects of significant temporary differences representing
deferred tax assets and liabilities are as follows:
<TABLE>
<CAPTION>
Years Ended January 31,
1996 1995
<S> <C> <C>
Assets:
Deferral of service contract income $ 8,806 $ 7,150
Sale and leaseback deferred gain 2,723 2,766
Other items 2,945 2,740
------- -------
14,474 12,656
Liabilities:
Inventory accounting (1,064) (1,064)
Depreciation (1,285) (1,064)
Other items (38) (49)
------- -------
(2,387) (2,177)
------- -------
Total net future
income tax benefits $12,087 $10,479
======= =======
</TABLE>
34<PAGE>
The Company has determined, based on its history of operating earnings,
available carrybacks, expectations for the future and potential tax
planning strategies, that it is more likely than not that the net future
income tax benefits at January 31, 1996 will be realized.
The Company paid income taxes of $10,100,000, $6,854,000 and $7,410,000
in the years ended January 31, 1996, 1995 and 1994, respectively.
The effective income tax rate on consolidated pre-tax income differs
from the Federal income tax statutory rate as follows:
<TABLE>
<CAPTION>
Years Ended January 31,
1996 1995 1994
<S> <C> <C> <C>
Federal income tax at statutory rate 35.0% 35.0% 34.5%
State and local taxes, net
of federal tax benefit 4.2 4.3 4.7
Other .3 .2 .3
----- ----- -----
39.5% 39.5% 39.5%
==== ==== ====
</TABLE>
(10) 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<PAGE>
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, 1996 and 1995, 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, 1996. 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 financial statements referred to above present fairly,
in all material respects, the financial position of REX Stores Corporation and
subsidiaries as of January 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the three fiscal years in the
period ended January 31, 1996, 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 Commissions 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 25, 1996
36<PAGE>
REX STORES CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED JANUARY 31, 1996, 1995 AND 1994
(In Thousands)
<TABLE>
<CAPTION>
Additions Deductions
Balance Charges for Which
Beginning Charged Cost Reserves Were Balance End
of Year and Expenses Created of Year
<S> <C> <C> <C> <C>
1996
Allowance for
doubtful accounts $784 $287 $433 $638
==== ==== ==== ====
1995
Allowance for
doubtful accounts 643 475 334 784
==== ==== ==== ====
1994
Allowance for
doubtful accounts 408 487 252 643
==== ==== ==== ====
</TABLE>
37<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
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 7, 1996, 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 7, 1996 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 7, 1996 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 7, 1996 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, 1996 and 1995
Consolidated Statements of Income for the years ended January 31,
1996, 1995 and 1994
Consolidated Statements of Cash Flows for the years ended January 31,
1996, 1995 and 1994
38<PAGE>
Consolidated Statements of Shareholders' Equity for the years ended
January 31, 1996, 1995 and 1994
Notes to Consolidated Financial Statements
Report of Independent Public Accountants
(a)(2) Financial Statement Schedules.
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 42 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 January 1, 1994 between Rex Radio and
Television, Inc. and Stuart Rose -- Form 10-Q for quarter ended
October 31, 1993, exhibit 10(c).
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).
Employment Agreement dated January 1, 1994 between Rex Radio and
Television, Inc. and Lawrence Tomchin -- Form 10-Q for quarter ended
October 31, 1993, exhibit 10(d).
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.
39<PAGE>
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, 1996.
40<PAGE>
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 17, 1996
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 17, 1996
)
)
EDWARD KRESS Director )
Edward Kress )
)
)
ROBERT DAVIDOFF* Director )
Robert Davidoff )
)
)
TIBOR FABIAN* Director )
Tibor Fabian )
*By STUART ROSE
(Stuart Rose, Attorney-in-Fact)
41<PAGE>
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)
42<PAGE>
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)
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 January 1, 1994 between Rex
Radio and Television, Inc. and Stuart Rose
(incorporated by reference to Exhibit 10(c) to Form 10-Q
for quarter ended October 31, 1993, File No. 0-13283)
10(c) 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(d) Employment Agreement dated January 1, 1994 between Rex
Radio and Television, Inc. and Lawrence Tomchin
(incorporated by reference to Exhibit 10(d) to Form 10-Q
for quarter ended October 31, 1993, File No. 0-13283)
10(e) 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(f) 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)
43<PAGE>
10(g) 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(h) 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)
10(i) 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(j) 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(k) 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(l) 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(m) 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.
44<PAGE>
10(n) 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(o) 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)
10(p) 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(q) 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(r) 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(s) 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 47
(23) Consents of experts and counsel:
23(a) Consent of Arthur Andersen LLP to use its report
dated March 25, 1996 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) 48
(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 49-51
45<PAGE>
(27) Financial data schedule:
Financial data schedule 52
Copies of the Exhibits not contained herein may be
obtained by writing to Edward M. Kress, Secretary,
REX Stores Corporation, 2875 Needmore Road, Dayton,
Ohio 45414.
46<PAGE>
