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, 1997
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 937-276-3931
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 12, 1997, the registrant had
7,897,139 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................ 12
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
1997 1997 1996
(In Thousands)
<S> <C> <C> <C>
ASSETS:
Cash and cash equivalents $ 2,119 $ 3,959 $ 1,931
Short-term investments 1,633 1,645 1,565
Accounts receivable, net 542 1,477 408
Merchandise inventory 156,318 135,033 164,920
Prepaid expenses and other 3,861 2,219 1,997
Future income tax benefits 5,544 5,544 3,818
---------- --------- ---------
Total current assets 170,017 149,877 174,639
PROPERTY AND EQUIPMENT, NET 89,480 89,638 71,316
FUTURE INCOME TAX BENEFITS 8,519 8,519 8,269
---------- --------- ---------
Total assets $ 268,016 $ 248,034 $ 254,224
========== ========= =========
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C> <C>
CURRENT LIABILITIES:
Notes payable $ 25,816 $ 12,142 $ 27,150
Current portion of long-term debt 3,152 3,131 2,058
Current portion, deferred income
and deferred gain on
sale and leaseback 11,101 10,844 9,570
Accounts payable, trade 41,541 31,265 44,327
Accrued income taxes 0 1,077 789
Accrued payroll 4,361 4,866 4,696
Other liabilities 5,208 6,401 5,521
--------- --------- ---------
Total current liabilities 91,179 69,726 94,111
--------- --------- ---------
3<PAGE>
Liabilities and Shareholders' Equity (Continued)
LONG-TERM LIABILITIES:
Long-term debt 52,323 51,102 32,090
Deferred income 17,992 18,279 16,835
Deferred gain on sale and
leaseback 5,971 6,207 6,914
--------- --------- ---------
Total long-term liabilities 76,286 75,588 55,839
--------- --------- ---------
SHAREHOLDERS' EQUITY:
Common stock 96 96 96
Paid-in capital 57,336 57,229 56,903
Retained earnings 57,560 56,763 51,157
Treasury stock (14,441) (11,368) (3,882)
--------- --------- ---------
Total shareholders' equity 100,551 102,720 104,274
--------- --------- ---------
Total liabilities and
shareholders' equity $ 268,016 $ 248,034 $ 254,224
========= ========= =========
</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
1997 1996
(In Thousands, Except Per Share Amounts)
<S> <C> <C>
NET SALES $ 88,265 $ 97,384
--------- ---------
COSTS AND EXPENSES:
Cost of merchandise sold 63,870 72,503
Selling, general and
administrative expenses 21,573 20,798
--------- ---------
Total costs and expenses 85,443 93,301
--------- ---------
INCOME FROM OPERATIONS 2,822 4,083
INVESTMENT INCOME 28 22
INTEREST EXPENSE 1,532 1,203
--------- ---------
Income before provision for
income taxes 1,318 2,902
PROVISION FOR INCOME TAXES 521 1,146
--------- ---------
NET INCOME $ 797 $ 1,756
========= =========
WEIGHTED AVERAGE NUMBER OF
COMMON AND COMMON EQUIVA-
LENT SHARES OUTSTANDING 8,276 9,389
========= =========
NET INCOME PER SHARE $ 0.10 $ 0.19
========= =========
</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, 1996 9,568 $ 96 534 $3,882 $56,903 $51,157
Common stock
issued 34 - - - 326 -
Treasury stock
acquired - - 854 7,486 - -
Net income - - - - - 5,606
----- ------ ----- ------ ------- -------
Balance at
January 31, 1997 9,602 $ 96 1,388 11,368 $57,229 $56,763
Common stock
issued 13 - - - 107 -
Treasury stock
acquire - - 375 3,073 - -
Net income - - - - - 797
----- ------ ----- ------ ------- -------
Balance at
April 30, 1997 9,615 $ 96 1,763 $14,441 $57,336 $57,560
===== ====== ===== ====== ======= =======
</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
1997 1996
(In Thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 797 $ 1,756
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization, net 743 717
Deferred income (30) 683
Accounts receivable 935 1,196
Merchandise inventory (21,285) (18,354)
Other current assets (1,644) (173)
Accounts payable, trade 10,276 4,802
Other liabilities (2,775) (5,016)
-------- --------
NET CASH USED IN OPERATING ACTIVITIES (12,983) (14,389)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Short-term investments 12 (40)
Capital expenditures (819) (1,830)
Capital disposals - 2
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (807) (1,868)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in note payable 13,674 17,823
Payments of long-term debt (680) (492)
Long-term debt borrowings 1,922 -
Common stock issued 107 172
Treasury stock acquired (3,073) -
-------- --------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 11,950 17,503
-------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (1,840) 1,246
CASH AND CASH EQUIVALENTS,
beginning of period 3,959 685
-------- --------
CASH AND CASH EQUIVALENTS,
end of period $ 2,119 $ 1,931
</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, 1997
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, 1997.
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 1997 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, 1997:
<TABLE>
<CAPTION>
Shares Under Stock
Option Plans
<S> <C>
Outstanding at January 31, 1997 2,119,227
($3.375 to $18.975 per share)
Exercised ($6.375 to $7.5625 per share) (14,223)
---------
Outstanding at April 30, 1997
($3.375 to $18.975 per share) 2,105,004
---------
</TABLE>
On February 26, 1997, the Company's Board of Directors approved a
re-pricing of 362,035 stock options, with exercise prices ranging
from $13.00 to $18.975 per share, to the market price as of the
date of approval of $8.125 per share. Stock options held by
employees who are members of the Board of Directors and stock
options held by Non-Employee Directors were not re-priced.
Note 4. Earnings Per Share
In February 1997, the Financial Accounting Standards Board
Issued Statement of Financial Accounting Standards No. 128 (SFAS
No. 128) "Earnings per Share," which establishes standards for
computing and presenting earnings per share (EPS) for all publicly
held companies. SFAS No. 128 replaces the presentation of primary
EPS with a presentation of basic EPS and requires the presentation
of basic and diluted EPS on the face of the income statement for
all entities with complex capital structures. Basic EPS excludes
all dilution, while diluted EPS reflects the potential dilution
that could occur if securities, stock options or other contracts to
issue common stock were exercised resulting in the issuance of
common stock.
The adoption of SFAS No. 128 is required for financial
statements issued after December 15, 1997 and requires restatement
of all prior period EPS data. Under SFAS No. 128, basic EPS and
diluted EPS would have been $.10 for the quarter ending April 30,
1997. Basic EPS and diluted EPS would have been $.20 and $.19,
respectively, for the quarter ending April 30, 1996.
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 under the trade name "REX".
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
1997 1996
<S> <C> <C>
Net sales 100.0% 100.0%
Cost of merchandise sold 72.4 74.4
----- -----
Gross profit 27.6 25.6
Selling, general and
administrative expense 24.4 21.4
----- -----
Income from operations 3.2 4.2
Interest, net 1.7 1.2
----- -----
Income before income
taxes 1.5 3.0
Provision for income taxes .6 1.2
----- -----
Net income .9% 1.8%
===== =====
</TABLE>
10<PAGE>
Comparison of Three Months Ended April 30, 1997 and 1996
Net sales in the first quarter ended April 30, 1997 were $88.3
million compared to $97.4 million in the prior year's comparable
period, representing a decrease of $9.1 million or 9.4%. This
decrease is the result of a 20.4% decline in comparable store sales
for the quarter, partially offset by sales from 25 net additional
stores in the current quarter compared to the prior year's first
quarter. The Company considers a store to be comparable after it
has been open six fiscal quarters.
As of April 30, 1997, the Company had 222 stores compared to
197 stores one year earlier. There were no stores opened or closed
during the first quarter of fiscal 1998. 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 $24.4 million in the first quarter of fiscal
1998 (27.6% of net sales) was 2.0% lower than the $24.9 million
gross profit (25.6% of net sales) recorded in the first quarter of
fiscal 1997. The improved gross profit margin, as a percent of net
sales, for the first quarter of fiscal 1998 is primarily the result
of lower merchandise cost on certain products due to opportunistic
purchasing and the recognition of a higher amount of extended
service contract revenues, which generally have a higher gross
profit margin.
Selling, general and administrative expenses for the quarter
ended April 30, 1997 were $21.6 million (24.4% of net sales), a
3.7% increase over the $20.8 million (21.4% of net sales) for the
quarter ended April 30, 1996. The increase in expenses was
primarily attributable to higher advertising costs and operating
expenses associated with more store locations. The increase in
expenses as a percent of net sales results from the decline in
comparable store sales.
Interest expense increased to $1.5 million in the first
quarter of fiscal 1998 from $1.2 million in the first quarter of
fiscal 1997. This increase is primarily a result of additional
mortgage debt of approximately $21.3 million (at an average
interest rate of approximately 8.8%) since April 30, 1996
associated with more Company owned store locations.
The effective tax rate was approximately 39.5% in the first
quarter of fiscal 1998 and 1997.
As a result of the foregoing, net income for the first quarter
of fiscal 1997 was $797,000, a 54.6% decrease from $1.8 million for
the first quarter of fiscal 1997.
11<PAGE>
Liquidity and Capital Resources
Net cash used in operating activities was $13.0 million for
the first quarter of fiscal 1998. Cash flow was provided by net
income of $797,000 adjusted for non-cash charges of $713,000. The
primary use of cash was an increase in inventory of $21.3 million
primarily due to the addition of seasonal air conditioner inventory
and opportunistic purchases. This increase was partially offset by
increased accounts payable of $10.3 million. Changes in other
working capital items also served to decrease cash by approximately
$3.5 million.
At April 30, 1997, working capital was $78.8 million compared
to $80.2 million at January 31, 1997. The ratio of current assets
to current liabilities was 1.9 to 1 at April 30, 1997, and 2.1 to
1 at January 31, 1997.
The Company had outstanding borrowings of $25.8 million on its
revolving line of credit at April 30, 1997 at a average interest
rate of 8.06%. At April 30, 1997, the Company had approximately
$72.0 million borrowing availability on the revolving line of
credit after reduction for the outstanding letter of credit.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. The following exhibits are filed with this
report:
4(h) Amendment Agreement dated April 1, 1997 to
Amended and Restated Loan Agreement dated July
31, 1995 and to Guaranty of registrant dated
July 31, 1995 among the Borrowers, the
registrant, the lenders named therein, and
Fleet Bank, N.A. (as successor to NatWest Bank
N.A.) as agent
27 Financial Data Schedule
(b) Reports on Form 8-K. No reports on Form 8-K were filed
during the quarter ended April 30, 1997.
12<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 12, 1997 Stuart A. Rose
Stuart A. Rose
Chairman of the Board
(Chief Executive Officer)
June 12, 1997 Douglas L. Bruggeman
Douglas L. Bruggeman
Vice President, Finance and
Treasurer
(Principal Financial and
Chief Accounting Officer)
13<PAGE>
AMENDMENT NO. 1 TO AMENDED AND RESTATED LOAN AGREEMENT
AND TO GUARANTY
AMENDMENT AGREEMENT, dated as of April 1, 1997, among REX RADIO
AND TELEVISION, INC., an Ohio corporation ("Rex Radio"), KELLY & COHEN
APPLIANCES, INC., an Ohio corporation ("Kelly"), STEREO TOWN, INC., a
Georgia corporation ("Stereo Town"), REX KANSAS, INC., a Kansas corporation
("Rex Kansas" and together with Rex Radio, Kelly and Stereo Town, each a
"Borrower" and collectively, the "Borrowers"), REX STORES CORPORATION, a
Delaware corporation (the "Guarantor"), those financial institutions named
as lenders on the signature pages hereto (the "Lenders") and FLEET BANK,
N.A. (as successor to NatWest Bank N.A.), in its capacity as agent (the
"Agent") for itself and the Lenders. Reference is hereby made to (i)
the Amended and Restated Loan Agreement, dated as of July 31, 1995
(as same may be further amended, supplemented, modified or restated in
accordance with its terms, the "Loan Agreement") , among the Borrowers, the
Lenders and the Agent and (ii) the Guaranty, dated January 31, 1989 and as
amended and restated as of July 31, 1995 (as same may be further amended,
supplemented, modified or restated in accordance with its terms, the
"Guaranty") by the Guarantor in favor of the Agent. Capitalized terms used
herein and not otherwise defined shall have the meanings attributed to them
in the Loan Agreement or the Guaranty, as the context may require.
SECTION I. AMENDMENT TO LOAN AGREEMENT
1. Section 1.01 of the Loan Agreement is amended by adding the
following defined term in the correct alphabetical order:
"Cumulative Net Income Factor " shall mean for any period of time
commencing with the beginning of Parent's fiscal year which ended in
January 1996, (i) that amount which is the sum of fifty percent (50%) of
the Net Income, if any, for Parent's fiscal year ended in January 1996 and
for each fiscal year of Parent thereafter which falls within such period of
time less (ii) that amount which is the sum of one hundred percent (100%)
of the Net Loss (as hereinafter defined), if any, for any fiscal year of
Parent after Parent's fiscal year ended in January 1996 which falls within
such period of time. For purposes of this definition, (i) "Net Loss" shall
mean for any period an amount equal to the net loss of Parent and its
Subsidiaries determined on a Consolidated basis as determined in accordance
with GAAP for such period and (ii) Net Income or Net Loss for any fiscal
year of Parent shall be determined based upon the annual financial
statements required to be furnished to the Agent pursuant to Section 8.01
(b) hereto.'
<PAGE>
2. Section 9.05 of the Loan Agreement is amended by deleting clause
(ii) thereof in its entirety and substituting the following therefor:
"(ii) dividend to Parent from and after April 1, 1997 not more than the
Cumulative Net Income Factor from the beginning of Parent's fiscal year
ended in January 1996 through the end of the fiscal year of Parent just ended;
provided, however, that, for purposes of this clause (ii), (x) no such
dividend payment(s) shall be made to Parent in any fiscal year of Parent
earlier than ten (10) days after delivery to the Agent of the annual
financial statements for the fiscal year of Parent just ended required
pursuant to Section 8.01(b) hereof and (y) such dividends shall be used by
Parent within three (3) days of receipt by Parent or its agent thereof
solely to pay dividends to holders of Parent's common stock and/or for Stock
Repurchases and Permitted Acquisitions pursuant to and in accordance with
Section 14 (h) of the Parent Guaranty, any such monies not so used by Parent
to be immediately returned to the applicable Borrower"
SECTION II. AMENDMENT TO GUARANTY
1. Section 14(g) of the Guaranty is hereby amended by (i) deleting the
phrase "except that the Guarantor shall be permitted up to an aggregate during
the term of the Loan Agreement of $20,000,000 for any combination of the
following" and substituting therefor the phrase "except that for the period
from and including April 1, 1997 through and including the remaining term of
the Loan Agreement the Guarantor shall be permitted up to an aggregate of
$20,000,000 for any combination of the following" and (ii) adding clause
"(i) (x)" immediately after the phrase "Section 9.05" in subclause (iii)
of each of clauses (I) and (II).
2. Section 14(h) of the Guaranty is hereby amended by deleting same in
its entirety and substituting the following therefor:
"(h) Notwithstanding anything to the contrary set forth herein, so
long as no Default or Event of Default shall have occurred and be continuing or
would occur after giving effect to the following, the Guarantor shall be
permitted to pay dividends to holders of its common stock and make Stock
Repurchases and Permitted Acquisitions solely with monies received from the
Borrowers in accordance with Section 9.05(ii) of the Loan Agreement, any such
monies not used by Parent for the payment of dividends on its common stock
or for Stock Repurchases or Permitted Acquisitions within three (3) days of
receipt thereof by Parent or its agent to be immediately returned to the
applicable Borrower; provided, that no dividend, Stock Repurchase or
Permitted Acquisition shall be permitted under this Section 14(h) if,
at any time during the twelve month period immediately preceding such
dividend, Stock Repurchase or Permitted Acquisition, as the case maybe, and
after giving effect thereto, Availability shall be less than $25,000,000; and
provided, further, that in addition to the foregoing requirements no Permitted
<PAGE>
Acquisition shall be permitted under this Section 14(h) unless the
requirements set forth in clauses (C), (E), (F) and (G) of Section 14(g) above
are satisfied with respect to such Permitted Acquisition. It is further
understood and agreed that it shall constitute an Event of Default if, at any
time during the twelve month period immediately subsequent to any dividend on
Parent's common stock or any Stock Repurchase or Permitted Acquisition,
Availability shall be less than $25,000,000."
SECTION III. CONDITIONS PRECEDENT
This Amendment Agreement shall become effective upon the execution and
delivery of counterparts hereof by the Borrowers, the Guarantor, the Agent and
the Required Lenders and the fulfillment of the following conditions:
1. No unwaived event has occurred and is continuing which constitutes a
Default or an Event of Default.
2. All representations and warranties made by the Borrowers and the
Guarantor in this Amendment Agreement shall be true and correct.
3. All legal matters incidental to the transactions contemplated hereunder
shall be satisfactory to the Agent, and the Agent shall have received such
confirmations, approvals, opinions or other documents or instruments as it
shall request in connection herewith.
4. The Agent shall have received fully executed counterparts to this
Amendment Agreement signed by the Borrowers, the Guarantor and the Required
Lenders.
SECTION IV. MISCELLANEOUS
1. By its signature below, each of the Borrowers reaffirms and
restates the representations and warranties set forth in Article VII of the
Loan Agreement, and all such representations and warranties are true and
correct on the date hereof with the same force and effect as if made on such
date (except to the extent that they relate expressly to an earlier date).
The Guarantor reaffirms and restates the representations and warranties set
forth in Section 14 of the Guaranty, and all such representations and
warranties are true and correct on the date hereof with the same force and
effect as if made on such date (except to the extent that they relate
expressly to an earlier date). In addition, each of the Borrowers and the
Guarantor represents and warrants (which representations and warranties
shall survive the execution and delivery hereof) to the Agent and the
Lenders that:
<PAGE>
(a) it has the power and authority to execute, deliver and carry
out the terms and provisions of this Amendment Agreement and the transactions
contemplated hereby, and has taken or caused to be taken all necessary
actions to authorize the execution, delivery and performance of this Amendment
Agreement and the transactions contemplated hereby;
(b) no consent of any other Person (including, without limitation,
shareholders or creditors of the Borrowers or the Guarantor) and no action
of, or filing with any governmental or public body or authority is required to
authorize, or is otherwise required in connection with the execution, delivery
and performance of this Amendment Agreement, or consummation of the
transactions contemplated hereby;
(c) this Amendment Agreement has been duly executed and delivered by
or on behalf of the Borrowers and the Guarantor and constitutes a legal, valid
and binding obligation of each of the Borrowers and the Guarantor enforceable in
accordance with its terms, subject as to enforceability to bankruptcy,
reorganization, insolvency, moratorium and other similar laws affecting the
enforcement of creditors' rights generally and the exercise of judicial
discretion in accordance with general principles of equity;
(d) the execution, delivery and performance of this Amendment
Agreement will not violate any law, statute or regulation, or any order or
decree of any court or governmental instrumentality, or conflict with, or
result in the breach of, or constitute a default under any contractual
obligation of any Borrower or the Guarantor; and
(e) as of the date hereof (after giving effect to the consummation
of the transactions contemplated under this Amendment Agreement) there exists
no Default or Event of Default.
By its signature below, each of the Borrowers and the Guarantor agree that
it shall constitute an Event of Default if any representation or warranty made
above should be false or misleading in any material respect.
2. Each of the Loan Agreement and the Guaranty is hereby ratified and
confirmed in all respects and, except as expressly amended hereby, all of the
representations, warranties, terms, covenants and conditions of the Loan
Agreement and the Guaranty shall remain unamended, unwaived and in effect in
accordance with their respective terms. The amendments set forth herein
shall be limited precisely as provided for herein and shall not be deemed
to be amendments or consents to, or waivers of modifications of, any term
or provision of the Loan Documents or any other document or instrument
referred to herein or therein or of any transaction or further or future
action on the part of any Borrower or the Guarantor requiring the consent
of the Agent or any Lender, except to the extent specifically provided for
herein.
<PAGE>
3. Each Borrower and the Guarantor confirms in favor of the Agent and
each Lender that it agrees that it has no defense, offset, claim, counterclaim
or recoupment with respect to any of its obligations or liabilities under the
Loan Agreement, the Guaranty, the Parent Security Agreement, the Parent Pledge
or any other Loan Document and that, except as herein provided, all terms of
the Loan Agreement, the Guaranty, the Parent Security Agreement, the Parent
Pledge and the other Loan Documents shall continue in full force and effect.
4. This Amendment Agreement may be executed by the parties hereto
individually or in combination, in one or more counterparts, each of which
shall be an original and all of which shall constitute one and the same
agreement.
5. THIS AMENDMENT AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE
(WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES
THEREOF).
"Borrowers"
REX RADIO AND TELEVISION, INC.
By: ____________________________
Name: Edward M. Kress
Title: Secretary
KELLY & COHEN APPLIANCES, INC.
By: ____________________________
Name: Edward M. Kress
Title: Secretary
<PAGE>
STEREO TOWN, INC.
By: ____________________________
Name: Edward M. Kress
Title: Secretary
REX KANSAS, INC.
By: ____________________________
Name: Edward M. Kress
Title: Secretary
"Guarantor"
REX STORES CORPORATION
By: ____________________________
Name: Edward M. Kress
Title: Secretary
"Lenders"
FLEET BANK, N.A.,
Individually
By:______________________________
Name: Thomas Maiale
Title: Vice President
BANK ONE, DAYTON, N.A.
By:______________________________
Name: John B. Middelberg
Title: Vice President
<PAGE>
HELLER FINANCIAL, INC.
By:______________________________
Name: Tara Hopkins
Title: Assistant Vice President
NATIONAL CITY BANK, DAYTON
By:______________________________
Name: Neal J. Hinker
Title: Vice President
THE PROVIDENT BANK
By:______________________________
Name: Jerome J. Brunswick
Title: Regional Vice President
THE FIFTH THIRD BANK
By:______________________________
Name: D. Ward Allen
Title: Vice President
STAR BANK, N.A.
By:______________________________
Name: Thomas D. Gibbons
Title: Vice President
"Agent"
FLEET BANK, N.A.,
As Agent
By:______________________________
Name: Thomas Maiale
Title: Vice President
<PAGE>
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<NAME> REX STORES CORPORATION
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-START> FEB-1-1997
<PERIOD-END> APR-30-1997
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<SECURITIES> 1,633
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<COMMON> 96
0
0
<OTHER-SE> 100,455
<TOTAL-LIABILITY-AND-EQUITY> 268,016
<SALES> 88,265
<TOTAL-REVENUES> 88,265
<CGS> 63,870
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<OTHER-EXPENSES> 0
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<INTEREST-EXPENSE> 1,532
<INCOME-PRETAX> 1,318
<INCOME-TAX> 521
<INCOME-CONTINUING> 797
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<CHANGES> 0
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<EPS-PRIMARY> .10
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<PAGE>
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