SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JANUARY 31, 1997 COMMISSION FILE NO. 0-13283
REX STORES CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 31-1095548
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2875 Needmore Road, Dayton, Ohio 45414
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (937) 276-3931
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange
on which registered
Common Stock, $.01 par value New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X No .
--- ---
<PAGE>
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
At the close of business on April 15, 1997 the aggregate
market value of the registrant's outstanding Common Stock held by
non-affiliates of the registrant (for purposes of this calculation,
2,011,125 shares beneficially owned by directors and executive
officers of the registrant were treated as being held by affiliates
of the registrant), was $56,227,604.
There were 7,852,954 shares of the registrant's Common Stock
outstanding as of April 15, 1997.
Documents Incorporated by Reference
Portions of REX Stores Corporation's definitive Proxy
Statement for its Annual Meeting of Shareholders on June 6, 1997
are incorporated by reference into Part III.
<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 222 stores in 35 states under the trade
name "REX." The stores are located predominately in the Midwest
and Southeast, with a recent expansion into the western region of
the United States through the opening of 14 stores in the Northwest
during fiscal 1996 and 1997. The Company's stores average
approximately 10,500 square feet and offer a broad selection of
brand name products within selected major product categories
including televisions, video and audio equipment, appliances and
personal computers.
The Company's business strategy emphasizes depth of selection
within its key product categories. Brand name products are offered
at everyday low prices combined with frequent special sales and
promotions. The Company concentrates its stores in small and
medium sized markets where it believes that by introducing a high
volume, low price merchandising concept, it can become a dominant
retailer. The Company supports its merchandising strategy with
extensive newspaper advertising in each of its local markets and
maintains a knowledgeable sales force which focuses on customer
service. The Company believes its low price policy, attention to
customer satisfaction and deep product selection provide customers
with superior value.
The Company's business strategy has resulted in significant
growth over the last five years. The number of stores increased
from 98 to 222 during the five fiscal years ended January 31, 1997,
while net sales increased from $233.1 million in fiscal 1993 to
$427.4 million in fiscal 1997.
The Company's expansion strategy is to continue to open stores
in small to medium sized markets. The Company will focus on
markets with a newspaper circulation which can efficiently and
cost-effectively utilize the Company's print advertising materials
and where the Company believes it can become a dominant retailer.
The Company was incorporated in Delaware in 1984 under the name
Audio/Video Affiliates, Inc. as a holding company to succeed to the
entire ownership of three affiliated corporations, Rex Radio and
Television, Inc. ("Rex Radio & TV"), Stereo Town, Inc. ("Stereo
Town") and Kelly & Cohen Appliances, Inc. ("Kelly & Cohen"), which
were formed in 1980, 1981, and 1983, respectively. Effective
August 2, 1993, the Company's name was changed to REX Stores
Corporation to enable the investing and consuming public to
2<PAGE>
identify the Company more closely with its retail business. Unless
the context otherwise requires, the term "Company" as used in this
report refers to REX Stores Corporation and its three operating
subsidiaries, and all references in this report to fiscal years are
to the Company's fiscal year ended January 31 of each year. The
Company's principal offices are located at 2875 Needmore Road,
Dayton, Ohio 45414. Its telephone number is (937) 276-3931.
Business Strategy
The Company's objective is to be a dominant consumer
electronics and home appliance retailer in each of its markets.
The key elements of its business strategy include:
Focus on Small and Medium Sized Markets. The Company
concentrates its stores in small and medium sized markets
(generally with populations of 30,000 to 300,000) which enables it
to operate on a low overhead basis and enhances its ability to
become a dominant retailer in an area.
Depth of Product Selection. The Company sells brand name
products and emphasizes depth of product selection within its key
product categories. The Company offers merchandise at a range of
price points in each product category and generally maintains
sufficient product stock for immediate delivery to customers.
Everyday Low Prices. The Company offers its products at
everyday low prices combined with frequent special sales and
promotions. The Company monitors prices at competing stores and
adjusts its prices as necessary to meet or beat the competition.
The Company guarantees the lowest price on its products through a
policy of refunding 125% (130% in certain markets) of the
difference between the Company's price and a competitor's price on
the same item.
Price/Product Focused Advertising. The Company's advertising
stresses the offering of nationally recognized brands at
significant savings and emphasizes its low price guarantee. The
Company supports its marketing strategy principally with extensive
newspaper advertising. The Company also utilizes in-store sales
promotions to provide shopping excitement and generate traffic.
Strong Operational Controls. The Company's information systems
allow management to monitor its merchandising programs, store
operations and expenses. The Company's operational controls
provide it with cost efficiencies which reduce overhead while
allowing the Company to provide high levels of service.
Value Oriented Sales Format. The Company's knowledgeable sales
force is trained to provide professional, courteous service to all
customers. The Company believes its low price policy, attention to
customer satisfaction and deep product selection provide customers
with superior value.
3<PAGE>
Expansion Strategy
When deciding whether to enter a new market or open another
store in an existing market, the Company evaluates a number of
criteria, including: size and growth pattern of the population,
sales volume potential, and competition within the market area,
including size, strength and merchandising philosophy of former,
existing and potential competitors. In choosing specific sites,
the Company applies standardized site selection criteria taking
into account numerous factors, including: local demographics, real
estate occupancy expense based upon ownership and/or leasing, cost
of advertising, traffic patterns and overall retail activity.
Stores typically are located on high traffic arteries, adjacent to
or in major shopping malls, with adequate and safe lighted parking
to support high sales volume.
The Company will either lease or purchase new store sites
depending upon opportunities available to it and relative costs.
Of the 35 new stores opened in fiscal 1997, 15 were leased sites
and 20 were Company purchased sites. For leased stores, the
Company anticipates per store capital expenditures of approximately
$75,000 to $200,000. This amount may increase significantly to the
extent the Company is responsible for the remodeling or renovation
of the new leased site. The Company anticipates expenditures of
approximately $800,000 to $1,200,000 when it purchases real estate,
which include the cost of the land purchased, building construction
and fixtures. The purchase amount varies depending upon the size
and location of the new store. Historically, the Company has
obtained long-term mortgage financing of approximately 75% of the
cost of opening owned stores. Mortgage financing is generally
obtained after a store is opened, either on a site by site or
multiple store basis. The extent to which the Company will seek
mortgage financing for owned stores will be dependent upon mortgage
rates, terms and availability. The inventory requirements for new
stores are estimated at $350,000 to $500,000 per store depending
upon the season and store size. A portion of this inventory is
financed through trade credit.
Merchandising
Products
The Company offers a broad selection of brand name consumer
electronics and home appliance products at a range of price points.
The Company emphasizes depth of product selection within selected
key product categories, with the greatest depth in televisions,
VCRs, camcorders and audio equipment. The Company sells
approximately 1,000 products produced by approximately 55
manufacturers. The Company's product categories include:
4<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 Stands
Systems Turntables Dryers Telephones
Tape Decks Ranges Binoculars
Speakers Dishwashers Fax Machines
Car Stereos Refrigerators Extended Service
Portable Radios Freezers Contracts
Vacuum Cleaners
</TABLE>
The leading brands sold by the Company during fiscal 1997
(in alphabetical order) were General Electric, Hitachi, Hotpoint,
JVC, Magnavox, Panasonic, Pioneer, RCA, Sharp, Toshiba, Whirlpool
and Zenith.
All REX stores carry a full range of the Company's
televisions, video and audio products, microwave ovens and air
conditioners and a limited line of home office products, and 207
stores carry major appliances.
The following table shows the approximate percent of net
sales for each major product group for the last three fiscal
years.
<TABLE>
<CAPTION>
Fiscal Year
Product Category 1995 1996 1997
<S> <C> <C> <C>
Televisions. . . . . . . . . . . 39% 37% 36%
Video. . . . . . . . . . . . . . 21 20 18
Audio. . . . . . . . . . . . . . 17 17 18
Appliances . . . . . . . . . . . 16 17 18
Other. . . . . . . . . . . . . . 7 9 10
---- ---- ----
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 manager is
5<PAGE>
responsible for monitoring the prices offered by competitors and
has authority to adjust prices to meet local market conditions.
The Company's commitment to offer guaranteed lowest prices is
supported by the Company's guarantee to refund 125-130% of the
difference in price if, within 30 days of purchase, a customer
can locate the same item offered by a local competitor at a lower
price.
Advertising
The Company uses a "price and item" approach in its
advertising, stressing the offering of nationally recognized
brands at significant savings. The emphasis of the Company's
advertising is its "Guaranteed Lowest Price," which states "Our
prices are guaranteed in writing. If you find any other local
store stocking and offering to sell for less the identical item
in a factory sealed box within 30 days after your REX purchase,
we'll refund the difference plus an additional 25% (30% in
selected markets) of the difference." Advertisements are
concentrated principally in newspapers and preprinted newspaper
inserts, which are produced for the Company by an outside
advertising agency and are supplemented by television.
Advertisements are also complemented by in-store signage high-
lighting special values, including "Value Every Day," "Best
Value," and "Top of the Line." The Company's advertising
strategy includes preferred customer private mailers, special
events such as "Midnight Madness Sales" and coupon sales to
provide shopping excitement and generate traffic.
Purchasing
The Company's merchandise purchasing is performed
predominantly by four members of senior management. Each
individual has responsibility for a specific product category,
and two share appliance buying responsibility. Because the
Company purchases complete product lines in large volume, the
Company believes it is able to obtain quality products at
competitive prices and advertising subsidies from vendors to
promote the sale of their products. For fiscal 1997, five
vendors accounted for approximately 62% of the Company's
purchases. The Company typically does not maintain long-term
purchase contracts with vendors and operates principally on an
order-by-order basis.
Store Operations
Stores
The Company designs its stores to be "destination
stores," generating their own traffic, but in the general
vicinity of major retail shopping. Currently, approximately 146
stores are located in free-standing buildings, with the balance
6<PAGE>
situated in strip shopping centers and malls. In fiscal 1997, 14
of the Company's 15 new leased stores were in mall locations that
provide exterior access and signage rights. The Company will
select locations for future leased stores based on its evaluation
of individual site economic and market conditions.
The Company's stores average approximately 10,500
square feet including storage space, not including the two stores
located in the Company's regional distribution centers. Stores
typically have, on average, approximately 7,300 square feet of
selling space and approximately 3,200 square feet of storage.
Stores are open seven days and six nights per week, except for
certain holidays.
7<PAGE>
The following table shows the Company's store locations as of
January 31, 1997:
<TABLE>
<CAPTION>
Store Locations
<C> <C> <C> <C>
Alabama: (11) Georgia: (9) Indiana: (3) Mississippi: (11)
Auburn Albany Anderson Columbus
Daphne Augusta Muncie Gautier
Decatur Brunswick Richmond Greenville
Florence Columbus Gulfport
Gadsden LaGrange Kansas: (2) Hattiesburg
Huntsville Macon Hutchinson Jackson (2)
Mobile (2) Rome Lawrence Meridian
Montgomery Valdosta Ridgeland
Oxford Warner Robins Kentucky: (3) Tupelo
Tuscaloosa Ashland Vicksburg
Idaho: (2) Hopkinsville
Arkansas: (2) Idaho Falls Paducah Montana: (2)
Fort Smith Pocatello Butte
Springdale Louisiana: (6) Great Falls
Iowa: (12) Alexandria
Colorado: (3) Burlington Baton Rouge Nebraska: (3)
Grand Junction Council Bluffs Houma Grand Island
Greeley Des Moines (2) Lake Charles Norfolk
Pueblo Dubuque New Iberia North Platte
Ft. Dodge Opelousas
Florida: (27) Marshalltown New York: (17)
Bradenton Mason City Maryland: (2) Auburn
Charlotte Harbor Ottumwa Cumberland Clifton Park
Crystal River Sioux City Hagerstown Cortland
Ft. Pierce Waterloo Fredonia
Gainesville West Des Moines Massachusetts: (2) Geneva
Hudson Hadley Horseheads
Lake City Illinois: (13) Lanesborough Johnson City
Largo Alton Kingston
Leesburg Bradley Michigan: (3) Lakewood
Mary Esther Carbondale Adrian Latham
Melbourne Champaign Bay City New Hartford
Merritt Island Danville Benton Harbor Olean
Naples Decatur Plattsburg
Ocala Galesburg Minnesota: (1) Queensbury
Palm Harbor Newburg Willmar Rome
Panama City Pekin Schenectady
Pensacola (2) Peoria Missouri: (4) Watertown
Sarasota Peru Jefferson City
St. Augustine Quincy Joplin North Carolina: (5)
St. Petersburg Rockford Springfield Asheville
Spring Hill St. Joseph Goldsboro
Stuart Hendersonville
Tallahassee (2) Rocky Mount
Titusville Salisbury
Venice
8 <PAGE>
Store Locations (continued)
North Dakota: (2) Pennsylvania: (18) South Dakota: (2) Washington: (1)
Grand Forks Altoona Aberdeen Union Gap
Minot Bloomsburg Rapid City
Chambersburg West Virginia: (5)
Ohio: (15) Cranberry Tennessee: (7) Beckley
Ashtabula Erie (2) Bristol Bluefield
Beavercreek Greensburg Chattanooga Bridgeport
Dayton (2) Hanover Clarksville Morgantown
Defiance Hazleton Cleveland Vienna
Kettering Hermitage Johnson City
Lima Indiana Kingsport Wisconsin: (4)
Marion Johnstown Morristown Fond du Lac
Miamisburg Lower Burrell Janesville
New Philadelphia Meadville Texas: (12) Manitowac
Piqua New Castle Austin (2) Oshkosh
Sandusky Scranton Brownsville
St. Clairsville Wilkes-Barre Denton Wyoming: (2)
Springfield York Harlingen Casper
Wooster Longview Cheyenne
South Carolina: (9) Midland
Oklahoma: (1) Aiken Odessa
Enid Anderson San Angelo
Charleston Sherman
Florence Temple
Greenwood Victoria
Murrell's Inlet
Orangeburg Virginia: (1)
Rock Hill Danville
Sumter
</TABLE>
In fiscal 1997, the Company opened 35 new stores,
entering Maryland, Massachusetts, Montana, North Dakota and South
Dakota with two stores each and Minnesota with one store. The
Company also added six stores in New York, five stores in
Pennsylvania, three stores in Iowa, two stores each in Florida
and Georgia, and one store each in Alabama, Colorado, Michigan,
Mississippi, South Carolina and Texas.
The Company's operations are divided into regional
districts, containing from three to 12 stores whose managers
report to a district manager. The Company's 37 district managers
report to one of four regional vice presidents. Each store is
staffed with a full-time manager and assistant manager, commis-
sioned sales personnel and, in higher-traffic stores, seasonal
support personnel. Store managers are paid on a commission basis
and have the opportunity to earn bonuses based upon their store's
sales and gross margins. Sales personnel work on a commission
basis, or a combination of commissions and hourly wages.
9<PAGE>
The Company evaluates the performance of its stores on
a continuous basis and, based on an assessment of factors it
deems relevant, will close any store which is not adequately
contributing to Company profitability. The Company closed 12
stores during fiscal 1997. There were no store closings during
fiscal 1996 and 1995.
Personnel
The Company trains its employees to explain and
demonstrate to customers the use and operation of the Company's
merchandise and to develop good salesmanship practices. The
Company's in-house training program for new employees combines
on-the-job training with use of a detailed Company-developed
manual entitled "The REX Way." Sales personnel attend in-house
training sessions conducted by experienced salespeople or
manufacturers' representatives and receive sales, product and
other information in meetings with managers.
The Company also has a manager-in-training program that
consists of on-the-job training of the assistant manager at the
store. The Company's policy is to staff store management
positions with personnel promoted from within the Company and to
staff new stores with existing managers or assistant managers.
The Company believes it has an adequate number of available
managers and assistant managers to meet its planned expansion.
Services
Virtually all of the products sold by the Company carry
manufacturers' warranties and, except for its least expensive
items, the Company offers extended service contracts to customers
usually for an additional charge which typically provide one to
five years of extended warranty coverage. The Company offers
maintenance and repair services for most of the products which it
sells. These services are generally subcontracted to independent
repair firms.
The Company's return policy provides that any
merchandise may be returned for exchange or refund within seven
days of purchase if accompanied by original packaging material.
The Company accepts MasterCard, Visa and Discover. The
Company estimates that, during fiscal 1997, approximately 30% of
its total sales were made on these credit cards, and
approximately 15% were made on installment credit contracts
arranged through banks or independent finance companies which
bear the credit risk of these contracts.
10 <PAGE>
Distribution
The Company's stores are supplied by regional
distribution centers which consist of a 315,000 square foot
leased facility in Dayton, Ohio and a 180,000 square foot owned
facility in Pensacola, Florida, of which the Company leases
90,000 square feet to an outside company. The Company also
leases a 67,000 square foot auxiliary warehouse in Pensacola,
Florida. The Company has purchased land and plans to build a
150,000 square foot distribution center in Cheyenne, Wyoming in
fiscal 1998 at an approximate cost of $3.0 million.
The regional distribution centers reduce inventory
requirements at individual stores, while preserving the benefits
of volume purchasing and facilitating centralized inventory and
accounting controls. Virtually all of the Company's merchandise
is distributed through its distribution centers, with the
exception of major appliances which are often shipped directly by
the vendor to the retail location. All deliveries to stores are
made by independent contract carriers.
Management Information Systems
The Company has developed a computerized management
information system which operates an internally developed
software package. The Company's computer system provides
management with the information necessary to manage inventory by
stock keeping unit ("SKU"), monitor sales and store activity on a
daily basis, capture marketing and customer information, track
productivity by salesperson and control the Company's accounting
operations.
The host computer is integrated with the Company's
point-of-sale system which serves as the collection mechanism for
all sales activity. The combined system provides for next-day
review of inventory levels, sales by store and by SKU and
commissions earned, assists in cash management and enables
management to track merchandise from receipt at the distribution
center until time of sale.
Competition
The Company's business is characterized by substantial
competition. The Company's competitors include other specialty
electronics retailers, department stores, discount stores,
furniture stores, warehouse clubs and catalog showrooms. Some of
these competitors have greater financial and other resources than
the Company. Competition within the Company's industry is based
upon price, breadth of product selection, product quality and
customer service.
Facilities
One hundred and three of the Company's stores are
located in buildings owned by the Company, including two strip
shopping centers in Austin, Texas of 60,000 and 40,000 square
11<PAGE>
feet. The Company uses approximately 10,000 square feet in each
shopping center for a store and leases the remainder. The
Company also owns a 38,000 square foot shopping center in College
Station, Texas in which it does not operate a retail store. The
strip shopping centers are professionally managed by local real
estate management firms.
The remaining 119 stores operate on leased premises,
with the unexpired terms of the leases ranging from one year to
28 years, inclusive of options to renew, except for two month to
month leases. For fiscal 1997, the total net rent expense for
the Company's leased facilities was approximately $6,944,000.
To date, the Company has not experienced difficulty in
securing leases or purchasing sites for suitable locations for
its stores. The Company continues to remodel and upgrade
existing stores as appropriate. In addition, to minimize
construction costs, the Company has developed prototype formats
for new store construction.
Employees
At January 31, 1997, the Company had 140 hourly and
salaried employees and 949 sales employees. The Company also
employs additional personnel during peak selling seasons. None
of the Company's employees are represented by a labor union. The
Company considers its relationship with its employees to be
satisfactory.
Service Marks
The Company has registered its rights in its service
mark "REX" with the United States Patent and Trademark Office.
The Company is not aware of any adverse claims concerning its
service mark.
Item 2. Properties
The information required by this Item 2 is set forth in
Item 1 of this report under "Store Operations--Stores," "Store
Operations--Distribution" and "Facilities" and is incorporated
herein by reference.
Item 3. Legal Proceedings
The Company is involved in various legal proceedings
incidental to the conduct of its business. The Company believes
that these proceedings will not have a material adverse effect on
the financial condition or operations of the Company.
Item 4. Submission of Matters to a Vote of Security Holders
None.
12<PAGE>
Executive Officers of the Company
Set forth below is certain information about each of
the Company's executive officers.
Name Age Position(s)
Stuart Rose. . . . . . 42 Chairman of the Board and Chief Executive Officer*
Lawrence Tomchin . . . 69 President and Chief Operating Officer*
Douglas Bruggeman . . 36 Vice President-Finance and Treasurer
Edward Kress . . . . . 47 Secretary*
________________
*Also serves as a director of the Company.
Stuart Rose has been the Chairman of the Board and Chief
Executive Officer of the Company since its incorporation in 1984
as a holding company to succeed to the ownership of Rex Radio &
TV, Kelly & Cohen and Stereo Town. Prior to 1984, Mr. Rose was
Chairman of the Board and Chief Executive Officer of Rex Radio &
TV, which he founded in 1980 to acquire the stock of a
corporation which operated four retail stores.
Lawrence Tomchin has been the President and Chief Operating
Officer of the Company since 1990. From 1984 to 1990, he was the
Executive Vice President and Chief Operating Officer of the
Company. Mr. Tomchin has been a director of the Company since
1984. Mr. Tomchin was Vice President and General Manager of the
corporation which was acquired by Rex Radio & TV in 1980 and
served as Executive Vice President of Rex Radio & TV after the
acquisition.
Douglas Bruggeman has been Vice President - Finance and
Treasurer of the Company since 1989. From 1987 to 1989, Mr.
Bruggeman was the Manager of Corporate Accounting for the
Company. Mr. Bruggeman was employed with the accounting firm of
Ernst & Young prior to joining the Company in 1986.
Edward Kress has been the Secretary of the Company since 1984
and a director of the Company since 1985. Mr. Kress has been a
partner of the law firm of Chernesky, Heyman & Kress, counsel for
the Company, since 1988. From 1985 to 1988, Mr. Kress was a
member of the law firm of Smith & Schnacke. Mr. Kress has
practiced law in Dayton, Ohio since 1974.
13
<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, 1995 $16.50 $12.25
July 31, 1995 16.50 13.25
October 31, 1995 18.75 15.50
January 31, 1996 17.75 12.87
April 30, 1996 $15.88 $15.50
July 31, 1996 12.88 12.50
October 31, 1996 9.75 9.50
January 31, 1997 8.88 8.13
</TABLE>
As of April 15, 1997, there were 333 holders of record
of the Company's Common Stock, including shares held
in nominee or street name by brokers.
Dividend Policy
The Company's revolving credit agreement places restrictions on the payment
of dividends. The Company has not paid dividends in prior years.
14<PAGE>
Item 6. Selected Financial Data
<TABLE>
Five Year Financial Summary
<CAPTION>
January 31,
-------------------------------------------------
(In Thousands, Except
Per Share Amounts) 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Net sales $427,378 $442,217 $382,775 $298,171 $233,080
Net income $ 7,362 $ 14,573 $ 12,596 $ 8,632 $ 4,788
Net income per
common share $ 0.80 $ 1.56 $ 1.40 $ 1.10 $ 0.72
Total assets $248,034 $234,599 $192,616 $132,319 $ 88,599
Long-term debt,
of current
maturities $ 51,102 $ 32,590 $ 25,595 $ 10,879 $ 2,902
</TABLE>
15 <PAGE>
Quarterly Financial Data (Unaudited)
<TABLE>
<CAPTION>
Quarters Ended
(In Thousands Except Per Share Amounts)
April 30, July 31, October 31, January 31,
1996 1996 1996 1997
<S> <C> <C> <C> <C>
Net sales $97,383 $95,653 $90,543 $143,799
Cost of merchandise sold 72,503 70,931 67,990 106,343
Net income 1,756 1,475 252 3,879
Earnings per common
share $ 0.18 $ 0.15 $ 0.03 $ 0.44
</TABLE>
<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 $ 0.17 $ 0.27 $ 0.21 $ 0.91
</TABLE>
16<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 predominantly in small to medium
sized markets in the Midwest and Southeast under the trade name
"REX." Since acquiring its first four stores in 1980, the
Company has expanded into a national chain operating 222 stores
in 35 states. During fiscal 1996 and 1997, the Company expanded
into the western region of the United States by opening fourteen
stores in seven northwestern states.
The Company has focused on maintaining strict cost controls,
offering customers a broad selection of merchandise at "everyday
low prices" and expansion within small and medium sized markets
where its low cost structure and operating strategy enhance its
ability to become a dominant retailer.
During fiscal 1997, 1996 and 1995, the Company opened 35, 34
and 33 stores, respectively. The Company closed twelve stores in
fiscal 1997 and no stores were closed in fiscal 1996 and 1995.
Comparable store sales declined 17.5% and 5.4% in fiscal 1997 and
1996, respectively, and grew 5.5% in fiscal 1995. The decrease
in comparable store sales reflects an industry wide decline in
consumer demand for electronics and an intensely competitive
retail environment. The Company considers a store to be
comparable after it has been open six full fiscal quarters.
Comparable store sales comparisons do not include sales of
extended service contracts.
Extended Service Contracts
The Company's extended service contract revenues, net of sales
commissions, are deferred and amortized on a straight-line basis
over the life of the contracts after the expiration of applicable
manufacturers' warranty periods. Terms of coverage, including
the manufacturers' warranty periods, are usually for periods of
12 to 60 months. Extended service contract revenues represented
2.9%, 2.4% and 2.6% of net sales for fiscal 1997, 1996 and 1995,
respectively. Service contract costs are charged to operations
as incurred. Gross profit realized from extended service
contract revenues was $9.6 million, $8.3 million and $7.8 million
in fiscal 1997, 1996 and 1995, respectively.
17<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,
1997 1996 1995
<S> <C> <C> <C>
Net sales 100.0% 100.0% 100.0%
Cost of merchandise sold 74.4 74.1 74.7
----- ----- -----
Gross profit 25.6 25.9 25.3
Selling, general and
administrative expenses 21.5 19.4 19.4
----- ----- -----
Income from operations 4.1 6.5 5.9
Interest, net 1.3 1.1 .5
----- ----- -----
Income before income taxes 2.8 5.4 5.4
Provision for income taxes 1.1 2.1 2.1
----- ----- -----
Net income 1.7% 3.3% 3.3%
===== ===== =====
</TABLE>
Comparison of Fiscal Years Ended January 31, 1997 and 1996
Net sales in fiscal 1997 were $427.4 million, a 3.4% decrease
from the $442.2 million achieved in fiscal 1996. This decrease
was caused by a decline of 17.5% in comparable store sales,
partially offset by the net addition of 23 stores in fiscal 1997
and the first full year of sales for 34 stores opened in fiscal
1996. During fiscal 1997 the Company opened 35 stores and closed
12, while during fiscal 1996 the Company opened 34 stores and
closed none. The number of stores open at January 31, 1997 was
222 compared to 199 at January 31, 1996.
Gross profit of $109.6 million in fiscal 1997 (25.6% of net
sales) was 4.3% lower than the $114.6 million (25.9% of net sales)
recorded the prior year. The lower gross profit margin is
primarily due to competitive pressures and an increase in major
appliance and computer sales, which generally have a lower gross
profit margin. This was partially offset by an increase in
extended service contract revenues, which generally have a higher
gross profit margin.
18<PAGE>
Selling, general and administrative expenses for fiscal 1997
were $91.9 million (21.5% of net sales), a 5.7% increase over the
$86.0 million (19.4% of net sales) in fiscal 1996. The increase
in expense was primarily attributable to $3.5 million in
increased advertising costs, $1.5 million in increased occupancy
and depreciation costs and $1.7 million in increased operating
costs associated with more store locations in the current year.
Payroll costs decreased by $800,000 due to a reduction in direct
selling costs resulting from the decline in sales. The increase
in selling, general and administrative expenses as a percentage
of net sales is primarily the result of the decline in comparable
store sales.
Income from operations was $17.7 million (4.1% of net sales)
in fiscal 1997, a 38.1% decrease from $28.6 million (6.5% of net
sales) for fiscal 1996. This decline was primarily due to the
17.5% decline in comparable store sales and the increased
selling, general and administrative expenses associated with more
store locations.
Interest expense increased to $5.6 million in fiscal 1997 from
$4.7 million in fiscal 1996. The increase in interest expense is
primarily attributable to additional mortgage debt associated
with more Company owned store locations (average outstanding
borrowings of approximately $40.8 million in fiscal 1997 compared
to $31.5 million in fiscal 1996) and an increase of approximately
$3.4 million in the average outstanding borrowings on the
revolving line of credit.
The effective tax rate was 39.5% for fiscal 1997 and 1996.
As a result of the foregoing, net income for fiscal 1997 was
$7.4 million, a 49.5% decrease from $14.6 million in fiscal 1996.
Comparison of Fiscal Years Ended January 31, 1996 and 1995
Net sales in fiscal 1996 were $442.2 million, a 15.5% increase
over the $382.8 million achieved in fiscal 1995. The increase
was due to the addition of 34 stores during the year and the
first full year of sales for 33 stores opened during fiscal 1995,
partially offset by a decline of 5.4% in comparable store sales
during the year. No stores were closed in fiscal 1996 and 1995.
The number of stores open at January 31, 1996 was 199 compared to
165 at January 31, 1995.
Gross profit of $114.6 million in fiscal 1996 (25.9% of net
sales) was 18.5% higher than the $96.7 million of gross profit
(25.3% of net sales) recorded the prior year. The improved gross
19<PAGE>
profit margin in fiscal 1996 was primarily the result of lower
merchandise cost on certain products due to opportunistic
purchasing. This was partially offset by an increase in major
appliance and computer sales which generally have a lower gross
profit margin. Extended service contract revenues, which
generally have a higher gross profit margin, also declined as a
percent of net sales.
Selling, general and administrative expenses for fiscal 1996
were $86.0 million (19.4% of net sales), a 15.9% increase over
the $74.2 million (19.4% of net sales) in fiscal 1995. The
increase in expense was primarily attributable to $5.1 million of
higher payroll costs related to the increased number of stores
and increased sales, $3.7 million of increased advertising costs
and $2.9 million of higher depreciation, occupancy and other
operating costs associated with more store locations. As a
percentage of net sales, selling, general and administrative
expenses were consistent between years.
Income from operations was $28.6 million (6.5% of net sales)
in fiscal 1996, a 27.2% increase over $22.5 million (5.9% of net
sales) for fiscal 1995. This improvement was primarily a result
of increased sales volume and an improved gross profit margin
resulting from opportunistic purchasing.
Interest expense increased to $4.7 million in fiscal 1996 from
$1.9 million in fiscal 1995. The increase in interest expense
was primarily attributable to additional mortgage debt associated
with more Company owned store locations (average outstanding
borrowings of approximately $31.5 million in fiscal 1996 compared
to $14.3 million in fiscal 1995) and an increase of
approximately $10.3 million in the average outstanding borrowings
on the revolving line of credit to support higher inventory
levels associated with store expansion and opportunistic
purchasing.
The effective tax rate was 39.5% for fiscal 1996 and 1995.
As a result of the foregoing, net income for fiscal 1996 was
$14.6 million, a 15.7% increase over $12.6 million for fiscal
1995.
Liquidity and Capital Resources
The Company's primary sources of financing have been cash flow
provided by net income, mortgages on owned property, borrowings
under its revolving line of credit and in fiscal 1995, the
proceeds from a public offering of Common Stock.
Net cash provided by operating activities was $10.9 million
for fiscal 1997. Operating cash flow was primarily provided by
net income of $7.4 million and $3.2 million of deferred income
from sales of extended service contracts. Cash was also provided
by a decrease in inventory of $11.5 million, offset by a decrease
in accounts payable of $8.3 million and a decrease in other
liabilities of $3.7 million.
20<PAGE>
At January 31, 1997, working capital was $80.2 million
compared to $80.0 million at January 31, 1996. The ratio of
current assets to current liabilities was 2.1 to 1 at January 31,
1997 and 1996.
Capital expenditures in fiscal 1997 totaled $23.4 million and
were primarily associated with the opening of 35 stores.
During fiscal 1997, the Company purchased 854,000 shares of
its common stock for $7.5 million. Subsequent to the end of
fiscal 1997 and through March 26, 1997, the Company purchased
375,000 shares of its common stock for $3.1 million. The Company
is authorized by its Board of Directors to purchase an additional
788,700 shares of its common stock and all shares purchased will
be held in treasury for possible future use.
The Company has a revolving credit agreement with seven banks
through July 31, 2000, with interest at prime or LIBOR plus
1.875%. Amounts available for borrowing are equal to the lesser
of (i) $100 million for the months of January through June and
$150 million for the months of July through December or (ii) the
sum of specified percentages of eligible accounts receivable and
eligible inventories, as defined. Amounts available for
borrowing are reduced by any letter of credit commitments
outstanding.
At January 31, 1997, borrowings of $12.1 million were
outstanding at an average interest rate of 7.38%. A total of
approximately $73.0 million was available at January 31, 1997.
Borrowing levels vary during the course of a year based on the
Company's seasonal working capital needs. The maximum direct
borrowings outstanding during fiscal 1997 were approximately
$42.9 million, which existed immediately prior to the Christmas
selling season due to the build-up of seasonal inventory
requirements. The weighted average interest rate was 8.96% for
fiscal 1997. The revolving credit agreement contains restrictive
covenants which require the Company to maintain specified levels
of consolidated tangible net worth and limit capital expenditures
and the incurrence of additional indebtedness. The revolving
credit agreement also places restrictions on common stock
repurchases and the payment of dividends.
At January 31, 1997, the Company had approximately $54.2
million of mortgage debt outstanding (including $21.9 million
obtained in fiscal 1997 from mortgaging 34 stores) at a weighted
average interest rate of 8.96%, with maturities from 2000 to 2012.
Seasonality and Quarterly Fluctuations
The Company's business is seasonal. As is the case with many
other retailers, the Company's net sales and net income are
greatest in its fourth fiscal quarter, which includes the
Christmas selling season. The fourth fiscal quarter accounted
for 33.6% and 36.9% of net sales and 52.7% and 58.6% of net
21<PAGE>
income in fiscal 1997 and 1996, respectively. Year to year
comparisons of quarterly results of operations and comparable
store sales can be affected by a variety of factors, including
the duration of the holiday selling season, weather conditions
and the timing of new store openings.
The following table provides certain unaudited financial
information for the Company for each of the quarters in fiscal
1997 and 1996.
<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 1997
Net sales $97,383 22.8% $95,653 22.4% $90,543 21.2% $143,799 33.6%
Income from
operations 4,082 23.0 3,883 21.9 1,760 10.0 7,981 45.1
Net income 1,756 23.9 1,475 20.0 252 3.4 3,879 52.7
Fiscal 1996
Net sales $87,427 19.8% $96,458 21.8% $94,914 21.5% $163,418 36.9%
Income from
operations 3,183 11.1 5,145 18.0 4,652 16.3 15,620 54.6
Net income 1,574 10.8 2,513 17.3 1,942 13.3 8,544 58.6
</TABLE>
Recently Issued Accounting Standards
In the first quarter of fiscal 1997, the Company adopted the
provisions of Statement of Financial Accounting Standards (SFAS)
No. 121 "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of," which addresses the
identification and measurement of asset impairments and requires
recognition of impairment losses on long-lived assets when book
values exceed expected future cash flows. The application of
this standard did not have a material impact on the Company's
financial position or results of operations.
The Company adopted the provisions of SFAS No. 123 "Accounting
for Stock-Based Compensation" in fiscal 1997, which established
new accounting and disclosure requirements for stock-based
employee compensation plans. The Company adopted this standard
by continuing to follow the accounting prescribed by APB Opinion
No. 25 "Accounting for Stock Issued to Employees" and presenting
the required pro forma disclosures. Therefore, the application
of this standard did not have a material impact on the Company's
financial position or results of operations.
22<PAGE>
Item 8. Financial Statements and Supplementary Data
REX STORES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JANUARY 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
ASSETS (In Thousands)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 3,959 $ 685
Short-term investments 1,645 1,525
Accounts receivable, net of allowance for doubtful
accounts of $376 and $638 in 1997 and 1996,
respectively (Note 4) 1,477 1,604
Merchandise inventory (Note 4) 135,033 146,566
Prepaid expenses and other 2,219 1,825
Future income tax benefits 5,544 3,818
-------- --------
Total current assets 149,877 156,023
PROPERTY AND EQUIPMENT, NET (Notes 1, 4 and 5) 89,638 70,307
FUTURE INCOME TAX BENEFITS 8,519 8,269
-------- --------
Total assets $248,034 $234,599
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable (Note 4) $ 12,142 $ 9,327
Current portion of long-term debt (Note 5) 3,131 2,050
Current portion of deferred income and deferred
gain on sale and leaseback (Notes 2 and 7) 10,844 9,083
Accounts payable, trade 31,265 39,525
Accrued income taxes 1,077 4,121
Accrued payroll 4,866 5,614
Other current liabilities 6,401 6,287
-------- --------
Total current liabilities 69,726 76,007
LONG-TERM LIABILITIES:
Long-term debt (Note 5) 51,102 32,590
Deferred income (Note 2) 18,279 16,506
Deferred gain on sale and leaseback (Note 7) 6,207 7,150
-------- --------
Total long-term liabilities 75,588 56,246
COMMITMENTS AND CONTINGENCIES (Notes 7 and 9)
SHAREHOLDERS' EQUITY (Notes 3, 4 and 6):
Common stock, 45,000 shares authorized, 9,602
and 9,521 shares issued, at par 96 95
Paid-in capital 57,229 56,732
Retained earnings 56,763 49,401
Treasury stock, 1,388 and 534 shares (11,368) (3,882)
-------- --------
Total shareholders' equity 102,720 102,346
-------- --------
Total liabilities and shareholders' equity $248,034 $234,599
======== ========
</TABLE>
[FN] The accompanying notes to consolidated financial statements
are an integral part of these consolidated balance sheets.
23<PAGE>
REX STORES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED JANUARY 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
(In Thousands,
Except Per Share Amounts)
<S> <C> <C> <C>
NET SALES $427,378 $442,217 $382,775
-------- -------- --------
COSTS AND EXPENSES:
Cost of merchandise sold 317,767 327,636 286,073
Selling, general and
administrative expenses 91,905 85,981 74,216
-------- -------- --------
Total costs and expenses 409,672 413,617 360,289
-------- -------- --------
INCOME FROM OPERATIONS 17,706 28,600 22,486
INVESTMENT INCOME 85 182 229
INTEREST EXPENSE 5,624 4,707 1,899
-------- -------- --------
INCOME BEFORE PROVISION FOR
INCOME TAXES 12,167 24,075 20,816
PROVISION FOR INCOME TAXES 4,805 9,502 8,220
-------- -------- --------
NET INCOME $ 7,362 $ 14,573 $ 12,596
======== ======== ========
WEIGHTED AVERAGE NUMBER OF
COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING 9,219 9,365 9,014
-------- -------- --------
NET INCOME PER SHARE $ 0.80 $ 1.56 $ 1.40
======== ======== ========
</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 CASH FLOWS
FOR THE YEARS ENDED JANUARY 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
(In Thousands)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $ 7,362 $ 14,573 $ 12,596
Adjustments to reconcile
net income to net cash
provided by (used in)
operating activities-
Depreciation and amortization, net 2,943 2,357 1,559
Deferred income 3,221 4,415 3,770
Future income tax benefits (2,054) (1,608) (1,207)
Accounts receivable 127 (527) (403)
Merchandise inventory 11,533 (31,219) (40,385)
Other current assets (323) (361) (281)
Accounts payable, trade (8,260) 6,230 5,271
Other current liabilities (3,678) 2,098 3,123
------- ------- -------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 10,871 (4,042) (15,957)
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Short-term investments (120) 30 (925)
Capital expenditures (23,448) (23,080) (28,101)
Capital disposals 552 43 120
------- ------- -------
NET CASH USED IN INVESTING ACTIVITIES (23,016) (23,007) (28,906)
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in note payable 2,815 9,327 -
Proceeds from long-term debt 21,911 9,201 16,885
Payments of long-term debt (2,318) (1,836) (981)
Common stock issued 497 643 20,907
Treasury stock issued (acquired) (7,486) (2,264) 297
------- ------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES 15,419 15,071 37,108
------- ------- -------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 3,274 (11,978) (7,755)
CASH AND CASH EQUIVALENTS,
beginning of year 685 12,663 20,418
------- ------- --------
CASH AND CASH EQUIVALENTS,
end of year $ 3,959 $ 685 $ 12,663
======= ======= ========
</TABLE>
[FN] The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements.
25<PAGE>
REX STORES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED JANUARY 31, 1997, 1996 AND 1995
<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, 1994 8,027 $80 460 $ 1,915 $35,197 $22,232
Net income - - - - - 12,596
Common stock
issued 1,393 14 (88) (297) 20,893 -
----- --- ----- ------- ------- -------
BALANCE,
January 31, 1995 9,420 94 372 1,618 56,090 34,828
Net income - - - - - 14,573
Treasury stock
acquired - - 162 2,264 - -
Common stock
issued 101 1 - - 642 -
----- --- ----- ------- ------- -------
BALANCE,
January 31, 1996 9,521 95 534 3,882 56,732 49,401
Net income - - - - - 7,362
Treasury stock
acquired - - 854 7,486 - -
Common stock
issued 81 1 - - 497 -
----- --- ----- ------- ------- -------
BALANCE,
January 31, 1997 9,602 $96 1,388 $11,368 $57,229 $56,763
===== === ===== ======= ======= =======
</TABLE>
[FN]
The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements
26<PAGE>
REX STORES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JANUARY 31, 1997 AND 1996
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-
(a) Principles of Consolidation--The accompanying financial
statements consolidate the operating results and financial
position of REX Stores Corporation and its wholly-owned
subsidiaries (the Company). All significant intercompany
balances and transactions have been eliminated. The Company
operates 222 retail consumer electronics and appliance stores
under the REX name in 35 states, predominantly in the Midwest
and Southeast.
(b) Net Income Per Share--Net income per share is computed
using the weighted average number of common and common equivalent shares
outstanding during the period. Fully-diluted earnings per
share do not differ significantly from primary earnings per
share.
(c) Cash Equivalents and Short-term Investments--Cash
equivalents are principally short-term investments with
original maturities of less than three months. Short-term
investments, which are principally marketable securities, are
stated at cost plus accrued interest, which approximates
market. The carrying amount of cash equivalents and short-term
investments is a reasonable estimate of fair value.
Investments at January 31, 1997 and 1996 are restricted by two
states to cover possible future claims under product service
contracts.
(d) Merchandise Inventory--Substantially all inventory is
valued at the lower of average cost or market, which
approximates cost on a first-in, first-out (FIFO) basis,
including certain costs associated with purchasing,
warehousing and transporting merchandise. The inventory of an
acquired subsidiary, Kelly & Cohen Appliances, Inc. (K&C), is
valued at the lower of last-in, first-out (LIFO) or market.
The K&C inventory value using the FIFO method ($38,437,000 and
$41,880,000 at January 31, 1997 and 1996, respectively)
approximates the LIFO value in all years presented. Five
suppliers accounted for approximately 62% of the Company's
purchases in 1997.
27<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 12 years for fixtures and equipment.
Leasehold improvements are depreciated over 10-12
years. The components of cost at January 31, 1997 and 1996
are as follows:
<TABLE>
<CAPTION>
1997 1996
(In thousands)
<S> <C> <C>
Land $ 23,530 $18,452
Buildings and improvements 53,890 40,492
Fixtures and equipment 14,386 12,294
Leasehold improvements 9,409 7,740
-------- -------
101,215 78,978
Less: accumulated depreciation (11,577) (8,671)
-------- -------
$ 89,638 $70,307
======== =======
</TABLE>
In the first quarter of fiscal 1997, the Company adopted the
provisions of Statement of Financial Accounting Standards (SFAS)
No. 121 "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of," which addresses the
identification and measurement of asset impairments and requires
recognition of impairment losses on long-lived assets when book
values exceed expected future cash flows. The application of
this standard did not have a material impact on the Company's
financial position or results of operations.
(f) Interest Cost--Interest expense of $5,624,000, $4,707,000
and $1,899,000 for the years ended January 31, 1997, 1996 and
1995, respectively, is net of approximately $193,000, $207,000
and $182,000 of interest capitalized related to store
construction. Total interest expense approximates interest paid
for all years presented.
(g) Loan Acquisition Costs--Direct expenses and fees associated
with obtaining notes payable or long-term debt are capitalized
and amortized to interest expense over the life of the loan.
(h) Advertising Costs--Advertising costs are expensed as
incurred. Advertising expense was approximately $33,473,000,
$29,989,000 and $26,241,000 in 1997, 1996 and 1995, respectively.
(i) Store Opening and Closing Costs--Store opening costs are
expensed as incurred. The costs associated with closing stores
are accrued when the decision is made to close a location.
28<PAGE>
(j) Use of Estimates--The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from
those estimates.
(k) Reclassifications--Certain reclassifications have been made
to prior year financial statements to conform with the
classifications used in the 1997 financial statements.
(2) DEFERRED INCOME ON SERVICE CONTRACTS-
The Company sells product service contracts covering periods
beyond the normal manufacturers' warranty periods, usually with
terms of coverage (including manufacturers' warranty periods) of
between 12 to 60 months. Revenues net of sales commissions are
deferred and amortized on a straight-line basis over the life of
the contracts after the expiration of applicable manufacturers'
warranty periods. Service contract costs are charged to
operations as incurred.
(3) COMMON STOCK TRANSACTIONS-
During the years ended January 31, 1997 and 1996, the Company
purchased 854,000 and 162,000 shares of its common stock for $7.5
million and $2.3 million, respectively. Subsequent to January
31, 1997 and through March 26, 1997, the Company purchased
375,000 shares of its common stock for $3.1 million. The Company
is authorized by its Board of Directors to purchase an additional
788,700 shares of its common stock and all shares purchased will
be held in treasury for possible future use.
On June 2, 1994, the Company completed the sale of 1.3 million
shares of common stock under a Form S-3 registration statement
and received net proceeds of $19.8 million. On July 1, 1994, the
Company sold an additional 13,333 shares pursuant to the over
allotment option and received net proceeds of approximately
$203,000.
29<PAGE>
(4) REVOLVING LINE OF CREDIT-
The Company has a revolving credit agreement with seven banks
which expires July 31, 2000. Under the terms of the agreement,
available revolving credit borrowings are equal to the lesser of:
(i) $100 million for the months of January through June and $150
million for the months of July through December or (ii) the sum
of specific percentages of eligible accounts receivable and
eligible inventories, as defined. Borrowings available are
reduced by any letter of credit commitments outstanding.
Outstanding borrowings under the revolving credit agreement
totaled $12,142,000 and $9,327,000 at January 31, 1997 and 1996,
respectively. The carrying amount of the borrowings at January
31, 1997 and 1996 approximates fair value as the revolving credit
agreement bears a current market rate of interest. At January
31, 1997, a total of approximately $73.0 million was available
for borrowings under the revolving credit agreement.
The interest rate charged on borrowings is prime or LIBOR plus
1.875% and commitment fees of 1/4% are payable on the unused
portion. The weighted average interest rate on borrowings
outstanding at January 31, 1997 was 7.38%. Borrowings are
secured by certain fixed assets, accounts receivable and
inventories.
The revolving credit agreement contains restrictive covenants
which require the Company to maintain specified levels of
consolidated tangible net worth and limit capital expenditures
and the incurrence of additional indebtedness. The revolving
credit agreement also places restrictions on the amount of common
stock repurchases and the payment of dividends.
(5) LONG-TERM DEBT-
Long-term debt consists of notes payable secured by certain land,
buildings and leasehold improvements. Interest rates range from
7.50% to 9.95%. Principal and interest are payable monthly over
terms which generally range from 10 to 15 years. Substantially
all of the notes payable require balloon payments at the end of
the scheduled term.
Maturities of long-term debt are as follows (in thousands):
<TABLE>
<CAPTION>
Year Ending
January 31, Amount
<S> <C>
1998 $ 3,131
1999 3,127
2000 3,259
2001 4,143
2002 6,229
2003 and thereafter 34,344
-------
$54,233
=======
30<PAGE>
The fair value of the Company's long-term debt at January 31,
1997 and 1996 was approximately $56.1 million and $35.9 million,
respectively. The fair value was estimated based on rates
available to the Company for debt with similar terms and
maturities.
(6) EMPLOYEE BENEFITS-
Stock Option Plans--Effective June 2, 1995, the Company adopted
the REX Stores Corporation 1995 Omnibus Stock Incentive Plan (the
Omnibus Plan), which amended and restated the 1994 Incentive
Stock Option Plan. Under the Omnibus Plan, the Company may grant
to officers and key employees awards in the form of incentive
stock options, non-qualified stock options, stock appreciation
rights, restricted stock, other stock-based awards and cash
incentive awards. The Omnibus Plan also provides for yearly
grants of non-qualified stock options to directors who are not
employees of the Company. The exercise price of each stock based
award must be at least 100% of the fair market value of the
Company's common stock on the date of grant. A maximum of
2,000,000 shares of common stock are authorized for issuance
under the Omnibus Plan and at January 31, 1997, 641,257 shares
remained available for issuance. At January 31, 1997, 227,705
stock options also remained outstanding under the 1984 Incentive
Stock Option Plan which expired in fiscal 1995.
In November 1989, non-qualified executive stock options were
issued to two key executives under a separate plan for 600,000
shares at the then-current market price of $3.38 per share. No
additional shares are available for grant under this plan. At
January 31, 1997, 512,079 of these options remained outstanding
and exercisable.
The Company accounts for its stock-based compensation plans under
APB Opinion No. 25, "Accounting for Stock Issued to Employees",
under which no compensation cost has been recognized. Had
compensation cost for these plans been determined at fair value
consistent with SFAS No. 123, "Accounting for Stock-Based
Compensation", the Company's net income and earnings per share
would have been reduced to the following pro forma amounts:
</TABLE>
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Net income (000's): As reported $7,362 $14,573
Pro forma $5,932 $13,923
Earnings per share: As reported $ 0.80 $ 1.56
Pro forma $ 0.72 $ 1.54
</TABLE>
The fair values of options granted were estimated as of the date
of grant using a Black-Scholes option pricing model with the
following weighted average assumptions used for grants in fiscal
31<PAGE>
1997 and 1996: risk-free interest rate of 6.3%, expected
volatility of 46.7% and an expected life of 5 years. In
accordance with the provisions of SFAS No. 123, the fair value
method of accounting was not applied to options granted prior to
February 1, 1995 in estimating the pro forma amounts. Therefore,
the pro forma effect on net income and earnings per share may not
be representative of that to be expected in future years.
The following summarizes stock option activity for the years
ended January 31, 1997, 1996 and 1995:
<TABLE>
<CAPTION>
1997 1996 1995
Weighted Weighted Weighted
Average Average Average
Shares Exercise Shares Exercise Shares Exercise
(000's) Price (000's) Price (000's) Price
<S> <C> <C> <C> <C> <C> <C>
Outstanding
at beginning
of year 2,069 $11.60 1,422 $ 9.93 1,497 $ 8.78
Granted 202 15.47 768 13.90 100 17.22
Exercised (81) 5.34 (101) 4.32 (167) 3.94
Canceled or
expired (71) 14.62 (20) 14.07 (8) 10.90
----- ------ ----- ------- ----- -------
Outstanding at
end of year 2,119 $12.15 2,069 $ 11.60 1,422 $ 9.93
===== ====== ===== ======= ===== =======
Exercisable at
end of year 1,143 $10.37 997 $ 8.67 862 $ 6.42
===== ====== ===== ======= ===== =======
Weighted
average fair
value of
options
granted $8.30 $9.02
===== =====
</TABLE>
Price ranges and other information for stock options outstanding as of
January 31, 1997 were as follows:
<TABLE>
<CAPTION> Outstanding Exercisable
Weighted
Weighted Average Weighted
Range of Shares Average Remaining Shares Average
Exercise Prices (000's) Exercise Life (000's) Exercise
Price Price
<S> <C> <C> <C> <C> <C>
$3.38 512 $ 3.38 2.8 yrs. 512 $ 3.38
$6.38 to $7.56 98 6.77 0.7 yrs. 86 6.73
$13.00 to $18.98 1,509 15.48 6.6 yrs. 545 17.52
----- ------ ------- ----- ------
2,119 $12.15 5.4 yrs. 1,143 $10.37
===== ====== ======= ===== ======
</TABLE>
32<PAGE>
On February 26, 1997, the Company's Board of Directors approved a
re-pricing of 362,035 stock options, with exercise prices ranging
from $13.00 to $18.98 per share, to the market price as of the
date of approval of $8.13 per share. Stock options held by
employees who are members of the Board of Directors and stock
options held by Non-Employee Directors were not re-priced.
Profit Sharing Plan--The Company has a qualified, noncontributory
profit sharing plan covering full-time employees who meet certain
eligibility requirements. The Plan also allows 401(k) savings
contributions by participants with certain Company matching
contributions. Aggregate contributions to the Plan are determined
annually by the Board of Directors and are not to exceed 15% of
total compensation paid to all participants during such year.
The Company contributed matching amounts of approximately
$28,000, $36,000 and $32,000 for the years ended
January 31, 1997, 1996 and 1995, respectively, under the Plan.
(7) LEASES AND COMMITMENTS-
The Company is committed under operating leases for certain
warehouse and retail store locations. The lease agreements are
for varying terms through 2007 and contain renewal options for
additional periods. Real estate taxes, insurance and maintenance
costs are generally paid by the Company. Contingent rentals
based on sales volume are not significant. Certain leases
contain scheduled rent increases and rent expense is recognized
on a straight-line basis over the term of the leases.
On August 30, 1989, the Company completed a transaction for the
sale and leaseback of 75 of its stores and three warehouse
facilities under an initial 15-year lease term. This transaction
resulted in pre-tax financial statement gain of $15.6 million
(net of expenses), which was deferred and is being amortized as a
reduction to lease expense over the term of the leases. The
unamortized deferred gain at January 31, 1997 was approximately
$7.2 million.
The following is a summary of rent expense under these operating
leases (in thousands):
<TABLE>
<CAPTION>
Years ended Minimum Gain Sublease
January 31, Rentals Amortization Income Total
<S> <C> <C> <C> <C>
1997 $9,076 $(629) $(1,503) $6,944
1996 8,383 (405) (1,475) 6,503
1995 7,767 (367) (1,198) 6,202
</TABLE>
33<PAGE>
Future minimum annual rentals and gain amortization on non-cancelable
leases as of January 31, 1997 are as follows (in thousands):
<TABLE>
<CAPTION>
Minimum Gain
Years ended January 31, Rentals Amortization
<S> <C> <C>
1998 $ 8,490 $ 943
1999 7,997 943
2000 7,367 943
2001 6,806 943
2002 6,006 943
2003 and thereafter 13,661 2,435
------- ------
$50,327 $7,150
======= ======
</TABLE>
(8) INCOME TAXES -
The provision for income taxes for the years ended January 31, 1997, 1996
and 1995 consists of the following (in thousands):
<TABLE>
<CAPTION>
Years Ended January 31,
1997 1996 1995
<S> <C> <C> <C>
Federal:
Current $5,803 $9,264 $7,969
Deferred (1,824) (1,358) (1,129)
------ ------ ------
3,979 7,906 6,840
------ ------ ------
State and Local:
Current 1,056 1,846 1,438
Deferred (230) (250) (58)
------ ------ ------
826 1,596 1,380
------ ------ ------
$4,805 $9,502 $8,220
====== ====== ======
</TABLE>
34<PAGE>
The tax effects of significant temporary differences representing
deferred tax assets and liabilities are as follows:
<TABLE>
<CAPTION>
January 31,
1997 1996
<S> <C> <C>
Assets:
Deferral of service contract income $ 9,933 $ 8,806
Sale and leaseback deferred gain 2,502 2,723
Accrued liabilities 957 -
Other items 3,117 2,945
------- -------
16,509 14,474
Liabilities:
Inventory accounting (1,064) (1,064)
Depreciation (1,332) (1,285)
Other items (50) (38)
------- ------
(2,446) (2,387)
Total net future income tax benefits $14,063 $12,087
======= =======
</TABLE>
The Company paid income taxes of $9,801,000, $10,100,000 and
$6,854,000 in the years ended January 31, 1997, 1996 and 1995,
respectively.
The effective income tax rate on consolidated pre-tax income
differs from the Federal income tax statutory rate as follows:
<TABLE>
<CAPTION>
Years Ended January 31,
1997 1996 1995
<S> <C> <C> <C>
Federal income tax at statutory rate 35.0% 35.0% 35.0%
State and local taxes, net of federal
tax benefit 4.1 4.2 4.3
Other .4 .3 .2
----- ----- -----
39.5% 39.5% 39.5%
===== ===== =====
</TABLE>
(9) CONTINGENCIES-
The Company is involved in various legal actions arising in the
normal course of business. After taking into consideration legal
counsels' evaluation of such actions, management is of the
opinion that their outcome will not have a significant effect on
the Company's consolidated financial statements.
35<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, 1997 and 1996, and the related
consolidated statements of income, shareholders' equity and cash
flows for each of the three fiscal years in the period ended
January 31, 1997. These consolidated financial statements and
the schedule referred to below are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these consolidated financial statements and the
schedule based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial
position of REX Stores Corporation and subsidiaries as of January
31, 1997 and 1996, and the results of their operations and their
cash flows for each of the three fiscal years in the period ended
January 31, 1997, in conformity with generally accepted
accounting principles.
Our audits were made for the purpose of forming an opinion on
the basic consolidated financial statements taken as a whole.
The schedule listed under Part IV, Item 14(a)(2) is presented for
purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic consolidated
financial statements. This schedule has been subjected to the
auditing procedures applied in our audits of the basic
consolidated financial statements and, in our opinion, fairly
states in all material respects the financial data required to be
set forth therein in relation to the basic consolidated financial
statements taken as a whole.
Cincinnati, Ohio
March 26, 1997 Arthur Andersen LLP
36<PAGE>
REX STORES CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED JANUARY 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
(In Thousands)
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>
1997
Allowance for doubtful
accounts $638 $146 $408 $376
==== ==== ==== ====
1996
Allowance for doubtful
accounts $784 $287 $433 $638
==== ==== ==== ====
1995
Allowance for doubtful
accounts $643 $475 $334 $784
==== ==== ==== ====
</TABLE>
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
37<PAGE>
PART III
Item 10. Directors and Executive Offices of the Registrant
The information required by this Item 10 is incorporated
herein by reference to the Company's Proxy Statement for its Annual
Meeting of Shareholders on June 6, 1997, except for certain
information concerning the executive officers of the Company which
is set forth in Part I of this report.
Item 11. Executive Compensation
The information required by this Item 11 is set forth in the
Company's Proxy Statement for its Annual Meeting of Shareholders on
June 6, 1997 and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The information required by this Item 12 is set forth in the
Company's Proxy Statement for its Annual Meeting of Shareholders on
June 6, 1997 and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
The information required by this Item 13 is set forth in the
Company's Proxy Statement for its Annual Meeting of Shareholders on
June 6, 1997 and is incorporated herein by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
(a)(1) Financial Statements.
The following consolidated financial statements of the Company
and its subsidiaries are incorporated by reference as part of this
report at Item 8 hereof.
Consolidated Balance Sheets as of January 31, 1997 and 1996
Consolidated Statements of Income for the years ended January 31,
1997, 1996 and 1995
Consolidated Statements of Cash Flows for the years ended
January 31, 1997, 1996 and 1995
Consolidated Statements of Shareholders' Equity for the years
ended January 31, 1997, 1996 and 1995
Notes to Consolidated Financial Statements
Report of Independent Public Accountants
(a)(2) Financial Statement Schedules.
38<PAGE>
The following financial statement schedule is incorporated by
reference as part of this report at Item 8 hereof.
Schedule II - Valuation and Qualifying Accounts
All other schedules are omitted because they are not applicable
or not required, or because the required information is included in
the consolidated financial statements or notes thereto.
(a)(3) Exhibits.
See Exhibit Index at page 41 of this report.
Management Contracts and Compensatory Plans and Arrangements
Employment Agreement dated September 1, 1995 between Rex Radio
and Television, Inc. and Stuart Rose -- Form 10-Q for quarter
ended October 31, 1995, exhibit 10(a).
Employment Agreement dated September 1, 1995 between Rex Radio
and Television, Inc. and Lawrence Tomchin -- Form 10-Q for
quarter ended October 31, 1995, exhibit 10(b).
Executive Stock Option dated September 22, 1993 to Stuart Rose
-- Form 10-Q for quarter ended October 31, 1993, exhibit 10(a).
Executive Stock Option dated September 22, 1993 to Lawrence
Tomchin -- Form 10-Q for quarter ended October 31, 1993, exhibit 10(b).
Executive Stock Option dated November 20, 1989 to Stuart Rose
-- Form 10-Q for quarter ended October 31, 1989, exhibit 6.3.
Executive Stock Option dated November 20, 1989 to Lawrence
Tomchin -- Form 10-Q for quarter ended October 31, 1989, exhibit 6.4.
Subscription Agreement dated December 1, 1989 from Stuart Rose
-- Form 10-Q for quarter ended October 31, 1989, exhibit 6.5.
Subscription Agreement dated December 1, 1989 from Lawrence
Tomchin -- Form 10-Q for quarter ended October 31, 1989, exhibit 6.6.
1984 Incentive Stock Option Plan -- Form 10-K for fiscal year
ended January 31, 1992, exhibit 10(a).
1995 Omnibus Stock Incentive Plan -- Post-effective amendment
No. 1 to Form S-8 registration statement (No. 33-81706),
exhibit 4(c).
(b) Reports on Form 8-K.
No reports on Form 8-K were filed by the Company during the
quarter ended January 31, 1997.
39<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 16, 1997
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
Signature Capacity Date
STUART ROSE Chairman of the Board )
Stuart Rose and Chief Executive )
Officer (principal )
executive officer) )
)
DOUGLAS BRUGGEMAN Vice President-Finance )
Douglas Bruggeman and Treasurer (principal )
financial and accounting )
officer) )
)
LAWRENCE TOMCHIN* Director )
Lawrence Tomchin )
)
) April 16, 1997
EDWARD KRESS Director )
Edward Kress )
)
)
ROBERT DAVIDOFF* Director )
Robert Davidoff )
)
)
TIBOR FABIAN* Director )
Tibor Fabian )
)
)
LEE FISHER* Director )
Lee Fisher )
*By STUART ROSE
(Stuart Rose, Attorney-in-Fact)
40 <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)
4(f) Parent Pledge Agreement as amended and restated
through July 31, 1995 (incorporated by reference
to Exhibit 4(f) to Form 10-Q for quarter ended
July 31, 1995, File No. 0-13283)
41<PAGE>
4(g) Parent General Security Agreement as amended and
restated through July 31, 1995 (incorporated by
reference to Exhibit 4(g) to Form 10-Q for quarter
ended July 31, 1995, File No. 0-13283)
Pursuant to Item 601(b)(4)(iii)(A) of Regulation
S-K, the registrant has not filed as an exhibit to
this Form 10-K certain instruments with respect to
long-term debt where the total amount of
securities authorized thereunder does not exceed
10% of the total assets of the registrant and its
subsidiaries on a consolidated basis. The
registrant agrees to furnish a copy of such
instruments to the Commission upon request.
(10) Material contracts:
10(a) Employment Agreement dated September 1, 1995
between Rex Radio and Television, Inc. and Stuart
Rose (incorporated by reference to Exhibit 10(a)
to Form 10-Q for quarter ended October 31, 1995,
File No. 0-13283)
10(b) Employment Agreement dated September 1, 1995
between Rex Radio and Television, Inc. and
Lawrence Tomchin (incorporated by reference to
Exhibit 10(b) to Form 10-Q for quarter ended
October 31, 1995, File No. 0-13283)
10(c) Executive Stock Option dated September 22, 1993
granting Stuart Rose an option to purchase 300,000
shares of registrant's Common Stock (incorporated
by reference to Exhibit 10(a) to Form 10-Q for
quarter ended October 31, 1993, File No. 0-13283)
10(d) Executive Stock Option dated September 22, 1993
granting Lawrence Tomchin an option to purchase
150,000 shares of registrant's Common Stock
(incorporated by reference to Exhibit 10(b) to
Form 10-Q for quarter ended October 31, 1993, File
No. 0-13283)
10(e) Executive Stock Option dated November 20, 1989
granting Stuart Rose an option to purchase 300,000
shares of registrant's Common Stock (incorporated
by reference to Exhibit 6.3 to Form 10-Q for
quarter ended October 31, 1989, File No. 0-13283)
10(f) Executive Stock Option dated November 20, 1989
granting Lawrence Tomchin an option to purchase
300,000 shares of registrant's Common Stock
(incorporated by reference to Exhibit 6.4 to Form
10-Q for quarter ended October 31, 1989, File No.
0-13283)
42<PAGE>
10(g) Subscription Agreement dated December 1, 1989 from
Stuart Rose to purchase 300,000 shares of
registrant's Common Stock (incorporated by
reference to Exhibit 6.5 to Form 10-Q for quarter
ended October 31, 1989, File No. 0-13283)
10(h) Subscription Agreement dated December 1, 1989 from
Lawrence Tomchin to purchase 140,308 shares of
registrant's Common Stock (incorporated by
reference to Exhibit 6.6 to Form 10-Q for quarter
ended October 31, 1989, File No. 0-13283)
10(i) 1984 Incentive Stock Option Plan, as amended
effective February 6, 1992 (incorporated by
reference to Exhibit 10(a) to Form 10-K for fiscal
year ended January 31, 1992, File No. 0-13283)
10(j) 1995 Omnibus Stock Incentive Plan, as amended and
restated effective June 2, 1995 (incorporated by
reference to Exhibit 4(c) to Post-Effective
Amendment No. 1 to Form S-8 Registration Statement
No. 33-81706)
10(k) Real Estate Purchase and Sale Agreement (the
"Agreement") dated March 8, 1989 between
registrant as Guarantor, four of its subsidiaries
(Rex Radio and Television, Inc., Stereo Town,
Inc., Kelly & Cohen Appliances, Inc., and Rex
Radio Warehouse Corporation) as Sellers and
Holman/Shidler Investment Corporation as Buyer
(incorporated by reference to Exhibit (b)(5)(1) to
Amendment No. 1 to Schedule 13E-4 filed March 15,
1989, File No. 5-35828)
The Table of Contents to the Agreement lists
Exhibits A through P to the Agreement. Each of
the following listed Exhibits to the Agreement is
incorporated herein by reference as indicated
below. The registrant will, upon request of the
Commission, provide any of the additional Exhibits
to the Agreement.
10(l) Form of Full Term Lease (incorporated by reference
to Exhibit (b)(5)(2) to Amendment No. 1 to
Schedule 13E-4 filed March 15, 1989, File No. 5-35828)
10(m) Form of Divisible Lease (incorporated by reference
to Exhibit (b)(5)(3) to Amendment No. 1 to
Schedule 13E-4 filed March 15, 1989, File No. 5-35828)
43<PAGE>
10(n) Form of Terminable Lease (incorporated by
reference to Exhibit (b)(5)(4) to Amendment No. 1
to Schedule 13E-4 filed March 15, 1989, File No.
5-35828)
10(o) Continuing Lease Guaranty (incorporated by
reference to Exhibit (b)(5)(5) to Amendment No. 1
to Schedule 13E-4 filed March 15, 1989, File No.
5-35828)
10(p) Agreement Regarding Leases and Amending Amended
and Restated Real Property Purchase and Sale
Agreement dated May 17, 1990 among Shidler/West
Finance Partners I (Limited Partnership); Rex
Radio and Television, Inc., Stereo Town, Inc.,
Kelly & Cohen Appliances, Inc. and Rex Radio
Warehouse Corporation; and registrant
(incorporated by reference to Exhibit (a)(10) to
Form 10-Q for quarter ended April 30, 1990, File
No. 0-13283)
10(q) Lease dated December 12, 1994 between Stuart
Rose/Beavercreek, Inc. and Rex Radio and
Television, Inc. (incorporated by reference to
Exhibit 10(q) to Form 10-K for fiscal year ended
January 31, 1995, File No. 0-13283)
(21) Subsidiaries of the registrant:
21(a) Subsidiaries of registrant . . . . . . . . . . . . . . . . 45
(23) Consents of experts and counsel:
23(a) Consent of Arthur Andersen LLP to use its report
dated March 26, 1997 included in this annual
report on Form 10-K into registrant's Registration
Statements on Form S-8 (Registration Nos. 33-3836,
33-81706 and 33-62645) . . . . . . . . . . . . . . . . . . 46
(24) Power of attorney:
Powers of attorney of each person who signed this
report on Form 10-K on behalf of another pursuant
to a power of attorney . . . . . . . . . . . . . . . . 47-50
(27) Financial data schedule:
Financial data schedule . . . . . . . . . . . . . . . . . 51
44
EXHIBIT 21(a)
SUBSIDIARIES OF REX STORES CORPORATION
State of
Name Incorporation
Rex Radio and Television, Inc. Ohio
Stereo Town, Inc. Georgia
Kelly & Cohen Appliances, Inc. Ohio
Rex Kansas, Inc.(1) Kansas
AVA Acquisition Corp.(2) Delaware
A.V. Compadres, Inc.(2) Ohio
____________________
(1) Wholly-owned subsidiary of Rex Radio and Television, Inc.
(2) Non-operating subsidiary
45
EXHIBIT 23(a)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report included in this Form 10-K into the Company's previously filed
Registration Statements on Form S-8 (No. 33-3836, No. 33-81706 and No.
33-62645).
Cincinnati, Ohio, Arthur Andersen LLP
April 16, 1997
46
Exhibit 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, in his
capacity as a director and/or officer of REX Stores Corporation,
a Delaware corporation (the "Company"), hereby constitutes and
appoints Stuart A. Rose and Edward M. Kress, and each or any one
of them, his true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign the
Company's Annual Report on Form 10-K for the fiscal year ended
January 31, 1997 and to sign any and all amendments thereto, and
to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange
Commission, granting unto such attorneys-in-fact and agents, and
any one of them, full power and authority to do and perform each
and every act and thing requisite and necessary to be done, as
fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that such
attorneys-in-fact and agents or any one of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this
instrument as of April 14, 1997.
LAWRENCE TOMCHIN
Lawrence Tomchin
47
<PAGE>
Exhibit 24.2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, in his
capacity as a director and/or officer of REX Stores Corporation,
a Delaware corporation (the "Company"), hereby constitutes and
appoints Stuart A. Rose, Lawrence Tomchin and Edward M. Kress,
and each or any one of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any
and all capacities, to sign the Company's Annual Report on Form
10-K for the fiscal year ended January 31, 1997 and to sign any
and all amendments thereto, and to file the same, with all
exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto such
attorneys-in-fact and agents, and any one of them, full power and
authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and
confirming all that such attorneys-in-fact and agents or any one
of them, or their or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this
instrument as of April 14, 1997.
ROBERT DAVIDOFF
Robert Davidoff
48
<PAGE>
Exhibit 24.3
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, in his
capacity as a director and/or officer of REX Stores Corporation,
a Delaware corporation (the "Company"), hereby constitutes and
appoints Stuart A. Rose, Lawrence Tomchin and Edward M. Kress,
and each or any one of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any
and all capacities, to sign the Company's Annual Report on Form
10-K for the fiscal year ended January 31, 1997 and to sign any
and all amendments thereto, and to file the same, with all
exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto such
attorneys-in-fact and agents, and any one of them, full power and
authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and
confirming all that such attorneys-in-fact and agents or any one
of them, or their or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this
instrument as of April 14, 1997.
TIBOR FABIAN
Tibor Fabian
49
<PAGE>
Exhibit 24.4
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, in his
capacity as a director and/or officer of REX Stores Corporation,
a Delaware corporation (the "Company"), hereby constitutes and
appoints Stuart A. Rose, Lawrence Tomchin and Edward M. Kress,
and each or any one of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any
and all capacities, to sign the Company's Annual Report on Form
10-K for the fiscal year ended January 31, 1997 and to sign any
and all amendments thereto, and to file the same, with all
exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto such
attorneys-in-fact and agents, and any one of them, full power and
authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and
confirming all that such attorneys-in-fact and agents or any one
of them, or their or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this
instrument as of April 14, 1997.
LEE FISHER
Lee Fisher
50
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<NAME> REX STORES CORPORATION
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0
0
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