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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 ended April 30, 2003
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 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)
(937) 276-3931
(Registrant's telephone number, including area code)
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 the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ]
At the close of business on June 11, 2003, the registrant had 10,694,295
shares of Common Stock, par value $.01 per share, outstanding.
REX STORES CORPORATION AND SUBSIDIARIES
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Condensed Balance Sheets...........................3
Consolidated Condensed Statements of Income.....................5
Consolidated Condensed Statements of Shareholders' Equity.......7
Consolidated Condensed Statements of Cash Flows.................8
Notes to Consolidated Condensed Financial Statements...........10
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations......................................14
Item 3. Quantitative and Qualitative Disclosures About
Market Risk....................................................18
Item 4. Controls and Procedures...........................................18
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders...............19
Item 6. Exhibits and Reports on Form 8-K..................................19
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
REX STORES CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
ASSETS
April 30 January 31 April 30
2003 2003 2002
(In Thousands)
Unaudited Unaudited
ASSETS:
Cash and cash equivalents $ 1,671 $ 1,380 $ 24,720
Accounts receivable, net 2,495 3,413 995
Synthetic fuel receivable 8,644 6,619 446
Merchandise inventory 161,588 142,063 116,902
Prepaid expenses and other 1,981 2,567 2,377
Future income tax benefits 10,350 10,350 12,614
--------- --------- ---------
Total current assets 186,729 166,392 158,054
PROPERTY AND EQUIPMENT, NET 133,780 134,563 137,962
OTHER ASSETS 2,437 1,656 --
FUTURE INCOME TAX BENEFITS 6,070 6,070 7,320
RESTRICTED INVESTMENTS 2,246 2,241 2,227
--------- --------- ---------
Total assets $ 331,262 $ 310,922 $ 305,563
========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $ 8,744 $ 13,451 $ --
Current portion of long-term debt 6,413 5,657 4,680
Current portion of deferred income
and deferred gain on sale and leaseback 11,422 11,107 11,486
Accounts payable, trade 57,855 27,417 37,710
Accrued income taxes 521 -- 2,258
Accrued payroll 3,957 6,750 3,700
3
Other current liabilities 8,315 8,669 9,021
--------- --------- ---------
Total current liabilities 97,227 73,051 68,855
--------- --------- ---------
LONG-TERM LIABILITIES:
Long-term mortgage debt 61,825 64,426 68,975
Deferred income 13,547 13,993 14,621
Deferred gain on sale and leaseback 198 348 796
--------- --------- ---------
Total long-term liabilities 75,570 78,767 84,392
--------- --------- ---------
SHAREHOLDERS' EQUITY:
Common stock 277 277 277
Paid-in capital 121,286 121,282 118,718
Retained earnings 160,778 157,640 138,892
Treasury stock (123,876) (120,095) (105,571)
--------- --------- ---------
Total shareholders' equity 158,465 159,104 152,316
--------- --------- ---------
Total liabilities and shareholders' equity $ 331,262 $ 310,922 $ 305,563
========= ========= =========
The accompanying notes are an integral part of
these unaudited consolidated condensed statements.
4
REX STORES CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
Unaudited
Three Months Ended
April 30
2003 2002
(In Thousands, Except Per Share Amounts)
NET SALES $95,411 $93,536
COSTS AND EXPENSES:
Cost of merchandise sold 67,573 66,282
Selling, general and administrative expenses 25,922 25,005
------- -------
Total costs and expenses 93,495 91,287
------- -------
INCOME FROM OPERATIONS 1,916 2,249
INVESTMENT INCOME 17 150
INTEREST EXPENSE (1,200) (1,583)
GAIN ON SALE OF REAL ESTATE 386 --
INCOME FROM LIMITED PARTNERSHIPS 3,064 4,636
------- -------
Income before provision for income taxes 4,183 5,452
PROVISION FOR INCOME TAXES 1,045 1,268
------- -------
NET INCOME $ 3,138 $ 4,184
======= =======
WEIGHTED AVERAGE SHARES OUTSTANDING-BASIC 10,939 12,297
======= =======
BASIC NET INCOME PER SHARE $ 0.29 $ 0.34
======= =======
5
WEIGHTED AVERAGE SHARES OUTSTANDING-DILUTED 12,632 14,814
======= =======
DILUTED NET INCOME PER SHARE $ 0.25 $ 0.28
======= =======
The accompanying notes are an integral part of
these unaudited consolidated condensed statements.
6
REX STORES CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY
Unaudited
Common Shares
----------------------------------- Total
Issued Treasury Paid-in Retained Shareholders
Shares Amount Shares Amount Capital Earnings Equity
(In Thousands)
Balance at
January 31, 2003 27,746 $277 (16,607) $(120,095) $121,282 $157,640 $159,104
Net income -- -- -- -- -- 3,138 3,138
Treasury stock
acquired -- -- (373) (3,836) -- -- (3,836)
Common stock
issued 3 -- 8 55 4 -- 59
------ ---- ------ -------- -------- -------- --------
Balance at
April 30, 2003 27,749 $277 (16,972) $(123,876) $121,286 $160,778 $158,465
====== ==== ====== ======== ======== ======== ========
The accompanying notes are an integral part of
these unaudited consolidated condensed statements.
7
REX STORES CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Unaudited
Three Months Ended
April 30
2003 2002
(In Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,138 $ 4,184
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization, net 1,031 1,087
Income of limited partnerships (3,064) (4,636)
(Gain) Loss on disposal of fixed assets (396) 253
Deferred income (131) (856)
Changes in assets and liabilities:
Accounts receivable 918 1,224
Merchandise inventory (19,525) (15,885)
Other current assets 585 175
Other long term assets (781) --
Accounts payable, trade 30,438 5,091
Other current liabilities (2,627) (1,569)
-------- --------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 9,586 (10,932)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (844) (253)
Proceeds from sale of partnership interest 1,040 4,636
Proceeds from sale of real estate and fixed assets 843 300
Restricted investments (5) (5)
-------- --------
NET CASH PROVIDED BY INVESTING ACTIVITIES 1,034 4,678
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in notes payable (4,707) (66)
Payments of long-term debt (1,845) (8,560)
Stock options exercised and related tax effects 4 2,020
Treasury stock issued 55 170
8
Treasury stock acquired (3,836) (2,031)
-------- --------
NET CASH USED IN FINANCING ACTIVITIES (10,329) (8,467)
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 291 (14,721)
CASH AND CASH EQUIVALENTS,
beginning of period 1,380 39,441
-------- --------
CASH AND CASH EQUIVALENTS,
end of period $ 1,671 $ 24,720
======== ========
The accompanying notes are an integral part of
these unaudited consolidated condensed statements.
9
REX STORES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
April 30, 2003
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 accounting principles generally accepted in the
United States of America 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 condensed 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, 2003
(fiscal 2002). The results of operations for the interim periods are not
necessarily indicative of the results to be expected for the year.
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 2002 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), management bonuses and the provision for income taxes. Any adjustments
pursuant to such estimates during the quarter were of a normal recurring nature.
Certain reclassifications have been made to prior year amounts to conform
with their fiscal 2003 presentation.
Interest expense of $1,200,000 for the quarter ended April 30, 2003 is net
of approximately $14,000 of interest capitalized. Total interest expense
approximated interest paid for the first quarter of fiscal 2003. Interest
expense of $1,583,000 for the quarter ended April 30, 2002 includes
approximately $248,000 for loan fee write-offs related to early termination
of mortgage loans resulting in actual interest paid of approximately $1,335,000.
The Company paid income taxes of approximately $225,000 and $465,000 for the
quarters ended April 30, 2003 and 2002, respectively.
Note 3. Recently Issued Accounting Standards
In April 2003, the Financial Accounting Standards Board (FASB) issued
Statement No. 149, "Amendments of Statement 133 on Derivative Instruments and
Hedging Activities" which amends and clarifies financial accounting and
reporting for derivative instruments, including certain derivative instruments
embedded in other contracts and for hedging activities under Statement 133,
"Accounting for Derivative Instruments and Hedging Acitivities." This Statement
is effective for contracts and hedging relationships entered into or modified
after June 30, 2003, and should be applied prospectively. The Company will
adopt the Statement, as required, but does not expect the adoption to have a
material impact on its financial statements.
In May 2003, the FASB issued Statement No. 150, "Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity"
which establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liablities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability (or an asset in some circumstances). Many of these previous
instruments were previously classified as equity. This Statement is effective
for all financial instruments entered into or modified after May 31, 2003, and
otherwise is effective at the first interim period beginning after
June 15, 2003. The Company will adopt the Statement, as required, but does not
expect the adoption to have a material impact on its financial statements.
10
Note 4. Stock Option Plans
The Company has stock-based compensation plans under which stock options
are granted to officers and key employees at the market price on the date of the
grant.
The following summarizes options granted, exercised and canceled or expired
during the three months ended April 30, 2003:
Outstanding at January 31, 2003 ($3.61 to $16.04 per share)........ 6,735,594
Exercised ($4.61 to $8.01 per share)............................... (10,650)
Canceled or expired ($5.11 to $14.745 per share)................... (17,600)
---------
Outstanding at April 30, 2003 ($3.61 to $16.04 per share).......... 6,707,344
=========
Pursuant to SFAS No. 123, "Accounting for Stock-Based Compensation," the
Company has elected to account for its employee stock option plans under APB
Opinion No. 25, "Accounting for Stock Issued to Employees," which recognizes
expense based on the intrinsic value at date of grant. As stock options have
been issued with exercise prices equal to grant date fair value, no compensation
cost has resulted. Had compensation cost for all options granted been determined
based on the fair value at grant date consistent with SFAS No. 123, the
Company's net earnings and earnings per share would have been as follows:
Three Months Ended
April 30
------------------
2003 2002
------ ------
Net Income As Reported $3,138 $4,184
Compensation Cost 734 871
Pro forma 2,404 3,313
Basic net income per share As Reported $ 0.29 $ 0.34
Compensation Cost .07 .07
Pro forma 0.22 0.27
Diluted net income per share As Reported $ 0.25 $ 0.28
Compensation Cost .06 .06
Pro forma 0.19 0.22
The assumptions used to calculate the fair value of options granted are
evaluated and revised, as necessary to reflect market conditions and experience.
11
Note 5. Net Income Per Share
The following table reconciles the basic and diluted net income per share
computation for each period presented:
April 30, 2003
-----------------------
Three Months Ended
-----------------------
Per
Income Shares Share
------ ------ -----
Basic net income per share $3,138 10,939 $0.29
=====
Effect of stock options 1,693
------ ------
Diluted net income per share $3,138 12,632 $0.25
====== ====== =====
April 30, 2002
-----------------------
Three Months Ended
-----------------------
Per
Income Shares Share
------ ------ -----
Basic net income per share $4,184 12,297 $0.34
=====
Effect of stock options 2,517
------ ------
Diluted net income per share $4,184 14,814 $0.28
====== ====== =====
For the three months ended April 30, 2003, a total of 341,936 shares
subject to outstanding options were not included in the common
12
equivalent shares outstanding calculation as the exercise prices were above the
average trading price of the Company's common stock for that period.
On February 11, 2002, the Company effected a 3-for-2 stock split. All per
share data shown above has been retroactively restated to reflect this split.
Note 6. Synthetic Fuel
Net income for the first quarter ended April 30, 2003 reflects
approximately $3.1 million of pre-tax investment income from the sales of the
Company's entire Partnership interest in a synthetic fuel limited partnership.
The Internal Revenue Service is presently auditing this limited partnership.
Approximately $1.8 million of the payment due the Company and reported as income
during the fiscal 2003 first quarter relating to sales of certain portions of
the limited partnership interest is being held in escrow pending the results of
the IRS audit. Subsequent payments relating to certain of these sales will also
be held in escrow pending the results of the IRS audit. The timing of the
completion of the audit has not been determined.
On September 5, 2002, the Company closed on its purchase of a plant located
in Gillette, Wyoming designed and constructed for the production of synthetic
fuel, which qualifies for tax credits under Section 29 of the Internal Revenue
Code. The Company has obtained a Private Letter Ruling from the IRS which would
allow the disassembly, and reconstruction, of the facility at a yet to be
determined host site. The Company has executed a letter of intent with a
potential partner as to the relocation and commercialization of the plant and
limiting the Company's maximum financial investment in the venture. If the plant
cannot be relocated on terms acceptable to the Company, the Company is obligated
to remove the plant from its existing site at a currently estimated cost to the
Company of up to $2.3 million, including related expenses. Through
April 30, 2003, approximately $500,000 had been spent on this project, with an
additional $1.8 million being held in escrow to guarantee the Company's future
performance. The total of $2.3 million is classified as a long-term asset on
the balance sheet. While this acquisition may result in the future production
of synthetic fuel, there can be no assurances that this facility will ever
be placed into commercial operation.
13
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
We are a specialty retailer in the consumer electronics/appliance industry.
As of April 30, 2003 we operated 252 stores in 37 states, predominantly in small
to medium-sized markets under the trade name "REX".
Fiscal Year
All references in this report to a particular fiscal year are to REX's
fiscal year ended January 31. For example, "fiscal 2003" means the period
February 1, 2003 to January 31, 2004.
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:
Three Months Ended
April 30
2003 2002
Net sales 100.0% 100.0%
Cost of merchandise sold 70.8 70.9
----- -----
Gross profit 29.2 29.1
Selling, general and administrative expenses 27.2 26.7
----- -----
Income from operations 2.0 2.4
Investment income -- 0.2
Interest expense (1.2) (1.7)
Gain on sale of real estate 0.4 --
Income from limited partnerships 3.2 4.9
----- -----
Income before provision for income taxes 4.4 5.8
Provision for income taxes 1.1 1.3
----- -----
Net income 3.3% 4.5%
===== =====
14
Comparison of Three Months Ended April 30, 2003 and 2002
Net sales in the first quarter ended April 30, 2003 were $95.4 million
compared to $93.5 million in the prior year's first quarter, representing an
increase of $1.9 million or 2.0%. This increase was due to an increase of 4.8%
in comparable store sales, offset by a net reduction of three stores since the
end of the first quarter of last fiscal year.
The increase in comparable store sales was primarily due to an increase
in the television category which positively impacted comparable store sales
by 9.4%. This increase was primarily caused by strong demand for high
definition ready large screen televisions. All other major product categories
negatively impacted comparable store sales, with the audio category impact
being 2.0%, the other category being 1.1%, the appliance category being 0.8%,
and the video category being 0.7%.
As of April 30, 2003, we had 252 stores compared to 255 stores one year
earlier. We did not open or close any stores during the first quarter of fiscal
2003. There were no stores opened and seven closed during the first quarter of
fiscal 2002.
Gross profit of $27.8 million (29.2% of net sales) in the first quarter of
fiscal 2003 was 2.1% higher than the $27.3 million (29.1% of net sales)
recorded in the first quarter of fiscal 2002. We had a slight increase in gross
profit margin on merchandise sold primarily as a result of a continuing shift
in sales toward higher gross profit margin products. This was partially offset
by recognizing a lower amount of income from sales of extended warranties,
which generally have a higher gross profit margin.
Selling, general and administrative expenses for the quarter ended April
30, 2003 were $25.9 million (27.2% of net sales), a 3.7% increase from $25.0
million (26.7% of net sales) for the first quarter of fiscal 2002. The increase
in expenditures primarily relates to increased television advertising and
increased commissioning cost to the sales staff, partially offset by lower
occupancy and other administrative cost for the store operations.
Interest expense was $1.2 million (1.2% of net sales) for the first quarter
of fiscal 2003 versus $1.6 million (1.7% of net sales) for the first quarter of
fiscal 2002. The prior year interest expense includes a charge of approximately
$250,000 for early extinguishment of mortgage loans of $7.0 million. Mortgage
interest was also reduced from the prior year due to lower outstanding
borrowings and on average lower interest rates on the variable rate mortgage
loans.
During the first quarter of fiscal 2003, we sold one property for a gain of
approximately $386,000. We had previously closed this store and leased it to an
outside party.
15
Results for the first quarter of fiscals 2003 and 2002 also reflect the
impact of our equity investment in two limited partnerships which produce
synthetic fuels. We are limited partners in both partnerships and do not
control the production levels of the facilities. Effective February 1, 1999,
we entered into an agreement to sell a portion of our investment in one of the
limited partnerships, which resulted in the reduction in our ownership interest
from 30% to 17%. Effective July 31, 2000, we sold an additional portion of our
ownership interest in that partnership, reducing our ownership percentage from
17% to 8%. Effective May 31, 2001, we sold our remaining 8% ownership interest.
We expect to receive payments from the sales on a quarterly basis through 2007,
which will range from 74.25% to 82.5% of the federal income tax credits
attributable to the interest sold. This partnership is currently being audited
by the Internal Revenue Service. Proceeds related to the July 31, 2000 and
May 31, 2001 sales are now being put into escrow pending the results of the
audit. The amount to be held in escrow is approximately $8.2 million at
April 30, 2003. All proceeds have been reported as income whether received or
put into escrow. Below is a table summarizing the income from the sales, net
of certain expenses. The lower income for the current year generally
reflects lower production levels compared to the previous year.
Three Months Ended
April 30
2003 2002
(In Thousands)
February 1, 1999 sale $1,222 $1,850
July 31, 2000 sale 958 1,350
May 31, 2001 sale 884 1,436
------ ------
$3,064 $4,636
====== ======
Our effective tax rate was 25.0% and 23.3% for the first quarter of fiscals
2003 and 2002, respectively, after reflecting our share of federal income tax
credits earned by the limited partnerships under Section 29 of the Internal
Revenue Code.
As a result of the foregoing, net income for the first quarter of fiscal
2003 was $3.1 million, a 25% decrease from $4.2 million for the first quarter of
fiscal 2002.
Liquidity and Capital Resources
Net cash provided by operating activities was $9.6 million for the first
quarter of fiscal 2003, compared to usage $10.9 million for the first quarter of
fiscal 2002. For the first quarter of fiscal 2003, cash was provided by net
income of $3.1 million, adjusted for the impact
16
of a $3.1 million gain on our installment sales of the limited partnership
interest, $396,000 gain on the sale of real estate and non-cash items of
approximately $900,000 which consisted of deferred income and depreciation and
amortization. The primary source of cash was an increase in accounts payable of
$30.4 million due to timing of inventory purchases and terms of payments with
manufacturers. Cash was also provided by a decrease in accounts receivable of
$918,000 and other assets of $585,000. The primary use of cash was an increase
in inventory of $19.5 million due to seasonal air conditioner purchases and
other inventory purchases. Other uses of cash was a decrease in other
liabilities of $2.6 million and an increase in other long-term assets of
$781,000.
At April 30, 2003, working capital was $89.5 million compared to $93.3
million at January 31, 2003. The ratio of current assets to current liabilities
was 1.9 to 1 at April 30, 2003 and 2.3 to 1 at January 31, 2003.
We received proceeds of approximately $1.0 million for installment sales of
a portion of our ownership interest in a limited partnership and $843,000 from
the sale of a closed store location during the first quarter of fiscal 2003. We
had capital expenditures of approximately $844,000 during the first quarter of
fiscal 2003, primarily for the addition to the warehouse in Dayton, Ohio.
Cash used in financing activities totaled approximately $10.3 million for
the first quarter of fiscal 2003. Cash was used to reduce borrowings on the line
of credit by $4.7 million and for scheduled payments on mortgage debt of
approximately $1.8 million. Cash of approximately $3.8 million was used to
acquire 372,500 shares of our common stock. Subsequent to the close of the first
quarter we acquired an additional 97,170 shares of our common stock. We
currently have approximately 260,480 authorized shares remaining under the
authorized stock buy-back program.
Recently Issued Accounting Standards
In April 2003, the Financial Accounting Standards Board (FASB) issued
Statement No. 149, "Amendments of Statement 133 on Derivative Instruments and
Hedging Activities" which amends and clarifies financial accounting and
reporting for derivative instruments, including certain derivative instruments
embedded in other contracts and for hedging activities under Statement 133,
"Accounting for Derivative Instruments and Hedging Acitivities." This Statement
is effective for contracts and hedging relationships entered into or modified
after June 30, 2003, and should be applied prospectively. The Company will
adopt the Statement, as required, but does not expect the adoption to have a
material impact on its financial statements.
In May 2003, the FASB issued Statement No. 150, "Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity"
which establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liablities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability (or an asset in some circumstances). Many of these previous
instruments were previously classified as equity. This Statement is effective
for all financial instruments entered into or modified after May 31, 2003, and
otherwise is effective at the first interim period beginning after
June 15, 2003. The Company will adopt the Statement, as required, but does not
expect the adoption to have a material impact on its financial statements.
17
Forward-Looking Statements
This Form 10-Q contains or may contain forward-looking statements as
defined in the Private Securities Litigation Reform Act of 1995. The words
"believes", "estimates", "plans", "expects", "intends", "anticipates" and
similar expressions as they relate to the Company or its management are intended
to identify such forward-looking statements. Forward-looking statements are
inherently subject to risks and uncertainties. Factors that could cause actual
results to differ materially from those in the forward-looking statements are
set forth in Exhibit 99(a) to the Company's Annual Report on Form 10-K for the
fiscal year ended January 31, 2003 (File No. 0-13283).
Item 3. Quantitative and Qualitative Disclosures About Market Risk
No material changes since January 31, 2003.
Item 4. Controls and Procedures
Within 90 days prior to the filing date of this report, the Company carried
out an evaluation, under the supervision and with the participation of the
Company's management, including the Company's Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures. Based on that evaluation, the
Chief Executive Officer and Chief Financial Officer concluded that the Company's
disclosure controls and procedures are effective to ensure that information
required to be disclosed by the Company in the reports that it files or submits
under the Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission's rules and forms.
There were no significant changes in the Company's internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of their evaluation.
18
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
The annual meeting of shareholders of REX Stores Corporation was held on
May 29, 2003, at which the following matter was submitted to a vote of
shareholders:
1. Election of six directors.
Nominee For Withheld
Stuart Rose 7,413,451 2,858,387
Lawrence Tomchin 7,479,091 2,792,747
Robert Davidoff 8,895,495 1,376,343
Edward Kress 7,412,982 2,858,856
Lee Fisher 8,930,061 1,341,777
Charles Elcan 8,930,395 1,341,443
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits. The following exhibits are filed with this report:
99.1 Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
(b) Reports on Form 8-K. No reports on Form 8-K were filed during the
quarter ended April 30, 2003.
19
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, 2003 STUART A. ROSE
Stuart A. Rose
Chairman of the Board
(Chief Executive Officer)
June 12, 2003 DOUGLAS L. BRUGGEMAN
Douglas L. Bruggeman
Vice President, Finance and Treasurer
(Chief Financial Officer)
20
CERTIFICATIONS
I, Stuart A. Rose, certify that:
1. I have reviewed this quarterly report on Form 10-Q of REX Stores
Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: June 12, 2003
STUART A. ROSE
Stuart A. Rose
Chairman of the Board and
Chief Executive Officer
21
I, Douglas L. Bruggeman, certify that:
1. I have reviewed this quarterly report on Form 10-Q of REX Stores
Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: June 12, 2003
DOUGLAS L. BRUGGEMAN
Douglas L. Bruggeman
Vice President, Finance and Treasurer
Chief Financial Officer
22