derivative
financial instruments, $1.1 million of stock based compensation expense and
non-cash items of $5.4 million, which consist of deferred income, the deferred
income tax provision, gain on disposal of real estate and property and
equipment, income from ethanol investments, and depreciation and amortization.
Cash was provided by a decrease in inventory of $25.6 million, primarily due to
store closings during fiscal year 2008 and our planned exit of the retail
business. Additionally, cash was provided by a decrease in other assets of $2.5
million, primarily a result of prepaid commissions related to extended service
contracts decreasing, reflecting our lower sales of this service. Accounts
payable decreased $8.6 million, primarily a result of lower levels of inventory
and our planned exit of the retail business. Other liabilities decreased $3.7
million, as accruals for variable incentive compensation decreased $2.2
million, a result of the decline in profitability. Income taxes refundable
increased $5.4 million as a result of a loss carryback created during fiscal
year 2008. Accounts receivable increased $2.3 million; this was primarily a
result of Levelland Hockley commencing production operations in fiscal year
2008.
Investing Activities
Net cash used in investing activities was $30.7 million for fiscal year 2009.
Capital expenditures in fiscal year 2009 totaled $35.7 million, the majority of
which was for the construction of One Earths ethanol plant. Cash of $4.8
million was provided by proceeds from the sale of real estate and property and
equipment.
Net cash used
in investing activities was $91.6 million for fiscal year 2008. Capital
expenditures in fiscal year 2008 totaled $101.3 million, all of which was for
the construction of ethanol plants. Cash of $1.3 million was provided by
proceeds from the sale of our partnership interests in synthetic fuel and $9.2
million was provided by proceeds from the sale of real estate and property and
equipment. We purchased a promissory note from Patriot for $0.9 million.
Financing Activities
Cash provided by financing activities was $28.2 million for fiscal year
2009. During fiscal year 2009, we borrowed $49.0 million in long term debt. One
Earth accounted for all of the borrowing as One Earth used loan proceeds to complete
construction of its ethanol plant. Repayments of debt totaled $20.4 million during
fiscal year 2009. Stock option exercises in fiscal year 2009 generated cash of
$6.0 million. During fiscal year 2009, we purchased approximately 0.6 million
shares of our common stock for $6.5 million in open market transactions.
Cash provided
by financing activities was $52.9 million for fiscal year 2008. During fiscal
year 2008, we borrowed $75.9 million in long term debt. Levelland Hockley and
One Earth accounted for $19.9 million and $56.0 million, respectively, of the
borrowing as they used loan proceeds to construct their ethanol plants.
Repayments of debt totaled $6.7 million during fiscal year 2008. Stock option
exercises in fiscal year 2008 generated cash of $1.5 million. During fiscal
year 2008, we purchased approximately 1.6 million shares of our common stock
for $17.7 million in open market transactions.
At January 31,
2010, we had a remaining authorization from our Board of Directors to purchase
482,701 shares of our common stock. All acquired shares will be held in
treasury for possible future use.
At January 31,
2010, we had approximately $138.1 million of debt outstanding at a weighted
average interest rate of 3.70%, with maturities from August 2011 to November
2015. During fiscal year 2009, we paid off $20.4 million of long-term mortgage
debt from scheduled repayments and early payoffs. During fiscal year 2008, we
paid off $6.7 million of long-term mortgage debt from scheduled repayments and
early payoffs.
Levelland Hockley Subsidiary Level Debt
On September
27, 2006, Levelland Hockley entered into a construction and term loan agreement
with Merrill Lynch Capital, now GE Business Financial Services, Inc. (GE),
for a principal sum of up to
41
$43.7 million
(including accrued interest). During the second quarter of fiscal year 2008,
pursuant to the terms of the construction loan agreement, Levelland Hockley
converted the construction loan into a permanent term loan. Beginning with the
first monthly payment date on June 30, 2008, payments are due in 59 equal
monthly payments of principal and accrued interest with the principal portion
calculated based on a 120 month amortization schedule. One final installment is
required on the maturity date (June 30, 2013) for the remaining unpaid
principal balance with accrued interest. The term loan bears interest at a
floating rate of 400 basis points above LIBOR (4.25%) at January 31, 2010.
Borrowings are secured by all assets of Levelland Hockley. This debt is
recourse only to Levelland Hockley and not to REX Stores Corporation or any of
its other subsidiaries.
As of January
31, 2010, approximately $37.2 million was outstanding on the term loan.
Levelland Hockley is also subject to certain financial covenants under the loan
agreement, including required levels of EBITDAR, debt service coverage ratio
requirements, net worth requirements and other common covenants. Levelland
Hockley was in compliance with all covenants at January 31, 2010.
Levelland
Hockley paid approximately $3.5 million for various fees associated with the
construction and term loan agreement. These fees are recorded as prepaid loan
fees and will be amortized over the loan term. At January 31, 2010, the
Companys proportionate share of restricted assets related to Levelland Hockley
was approximately $13.2 million; Levelland Hockleys restricted assets total
approximately $23.6 million. Such assets may not be paid in the form of
dividends or advances to the parent company or other members of Levelland
Hockley per the terms of the loan agreement with GE.
One Earth Subsidiary Level Debt
In September
2007, One Earth entered into a $111,000,000 financing agreement consisting of a
construction loan agreement for $100,000,000 together with a $10,000,000
revolving loan and a $1,000,000 letter of credit with First National Bank of
Omaha. The construction loan was converted into a term loan on July 31, 2009 as
all of the requirements, for such conversion, of the construction and term loan
agreement were fulfilled. The term loan bears interest at variable interest
rates ranging from LIBOR plus 300 basis points to LIBOR plus 310 basis points
(3.3% to 3.4% at January 31, 2010). Beginning with the first quarterly payment
on October 8, 2009, payments are due in 20 quarterly payments of principal plus
accrued interest with the principal portion calculated based on a 120 month
amortization schedule. One final installment will be required on the maturity
date (July 31, 2014) for the remaining unpaid principal balance with accrued
interest. This debt is recourse only to One Earth and not to REX Stores Corporation
or any of its other subsidiaries.
Borrowings are
secured by all property of One Earth. As of January 31, 2010, approximately
$98.0 million was outstanding on the term loan. One Earth is also subject to
certain financial covenants under the loan agreement, including required levels
of EBITDA, debt service coverage ratio requirements, net worth requirements and
other common covenants. One Earth was in compliance with all covenants at
January 31, 2010. One Earth has paid approximately $1,364,000 in financing
costs. These costs are recorded as prepaid loan fees and will be amortized over
the loan term. At January 31, 2010, our proportionate share of restricted
assets related to One Earth was approximately $47.9 million. One Earths
restricted assets total approximately $65.0 million. Such assets may not be
paid in the form of dividends or advances to the parent company or other
members of One Earth per the terms of the loan agreement with First National
Bank of Omaha.
One Earth has
no outstanding borrowings on the $10,000,000 revolving loan as of January 31,
2010.
On a
consolidated basis, approximately 24.8% of our net assets are restricted as of
January 31, 2010.
42
Tabular Disclosure of Contractual Obligations
In the
ordinary course of business, we enter into agreements under which we are
obligated to make legally enforceable future cash payments. These agreements
include obligations related to purchasing inventory, mortgaging and interest rate
management.
The following
table summarizes by category expected future cash outflows associated with
contractual obligations in effect as of January 31, 2010 (amounts in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payment due by period
|
|
|
|
|
|
Contractual
Obligations
|
|
Total
|
|
Less
than 1
Year
|
|
1-3
Years
|
|
3-5
Years
|
|
More than
5 Years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease obligations (a)
|
|
$
|
2,579
|
|
$
|
924
|
|
$
|
1,262
|
|
$
|
393
|
|
$
|
|
|
Long-term debt obligations
|
|
|
138,120
|
|
|
12,831
|
|
|
29,881
|
|
|
95,033
|
|
|
375
|
|
Interest on variable rate
debt (b)
|
|
|
18,050
|
|
|
5,214
|
|
|
8,770
|
|
|
4,066
|
|
|
|
|
Interest on fixed rate
debt
|
|
|
621
|
|
|
183
|
|
|
279
|
|
|
144
|
|
|
15
|
|
Other (c)
|
|
|
255
|
|
|
255
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total (d)
|
|
$
|
159,625
|
|
$
|
19,407
|
|
$
|
40,192
|
|
$
|
99,636
|
|
$
|
390
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Amounts
include minimum rentals of $0.5 million related to a warehouse location we no
longer operate. We recognized expense related to the minimum rentals in
fiscal years 2008 and 2009. We expect to pay these minimum rentals during
fiscal years 2010 and 2011.
|
|
|
|
|
(b)
|
The interest
rates effective as of January 31, 2010 for variable rate loans were used to
calculate future payments of interest on variable rate debt.
|
|
|
|
|
(c)
|
Amounts
represent construction and related commitments of One Earth for construction
of its ethanol producing plant.
|
|
|
|
|
(d)
|
We are not
able to determine the likely settlement period for uncertain tax positions,
accordingly $2,338,000 of uncertain tax positions and related interest and
penalties have been excluded from the table above. We are not able to
determine the likely settlement period, if any, for interest rate swaps,
accordingly $5,884,000 of liabilities for derivative financial instruments
have been excluded from the table above. We are not able to determine the
likely settlement period, if any, for forward grain purchase contracts totalling
5,762,000 bushels of grain, accordingly the amounts associated with these contracts
have been excluded from the table above.
|
Seasonality and Quarterly Fluctuations
The impact of
seasonal and quarterly fluctuations has not been material to our results of
operations for the past three fiscal years.
Impact of Inflation
The impact of
inflation has not been material to our results of operations for the past three
fiscal years.
Critical Accounting Policies
We believe the
application of the following accounting policies, which are important to our
financial position and results of operations, require significant assumptions,
judgments and estimates on the part of
43
management. We
base our assumptions, judgments, and estimates on historical experience,
current trends and other factors that management believes to be relevant at the
time our consolidated financial statements are prepared. On a regular basis,
management reviews the accounting policies, assumptions, estimates and
judgments to ensure that our financial statements are presented in accordance
with generally accepted accounting principles (GAAP). However, because future
events and their effects cannot be determined with certainty, actual results
could differ from our assumptions and estimates, and such differences could be
material. Further, if different assumptions, judgments and estimates had been
used, the results could have been different and such differences could be
material. For a summary of all of our accounting policies, including the
accounting policies discussed below, see Note 1 of the Notes to the
Consolidated Financial Statements. Management believes that the following
accounting policies are the most critical to aid in fully understanding and
evaluating our reported financial results, and they require managements most
difficult, subjective or complex judgments, resulting from the need to make
estimates about the effect of matters that are inherently uncertain.
Revenue Recognition
We recognize sales from the production of ethanol and distillers grains
when title transfers to customers, generally upon shipment from our plant.
Shipping and handling charges to ethanol customers are included in net sales
and revenue.
We include
income from our real estate leasing activities in net sales and revenue. We
account for these leases as operating leases. Accordingly, minimum rental
revenue is recognized on a straight-line basis over the term of the lease.
We sold retail
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. Contract revenues and 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. We retain the obligation to perform warranty service and such costs
are charged to operations as incurred. All related revenue and expense is
classified in discontinued operations.
We recognized
income from synthetic fuel partnership sales as the synthetic fuel was produced
and sold except for operations at the Gillette facility as we do not believe
that collection of our proceeds for production occurring subsequent to
September 30, 2006 is reasonably assured from that plant. See Note 5 of the
Notes to the Consolidated Financial Statements for a further discussion of
synthetic fuel partnership sales.
Investments
The method of accounting applied to
long-term investments, whether consolidated, equity or cost, involves an
evaluation of the significant terms of each investment that explicitly grant or
suggest evidence of control or influence over the operations of the investee
and also includes the identification of any variable interests in which we are
the primary beneficiary. The evaluation of consolidation under ASC 810
Consolidation is complex and requires judgments to be made. We consolidate
the results of two majority owned subsidiaries, Levelland Hockley and One
Earth, on a one month lag. See Note 6 of the Notes to the Consolidated
Financial Statements for a further discussion of the acquisitions of Levelland
Hockley and One Earth. Investments in businesses that we do not control, or
maintain a majority voting interest or maintain a primary beneficial interest,
but for which we have the ability to exercise significant influence over
operating and financial matters, are accounted for using the equity method.
Investments in which we do not have the ability to exercise significant
influence over operating and financial matters are accounted for using the cost
method.
Investments in
debt securities are considered held to maturity, available for sale, or
trading securities under ASC 320,
Investments-Debt
and Equity Securities
. Under ASC 320, held to maturity securities
are required to be carried at their cost; while available-for-sale securities
are required to be carried at their fair value, with unrealized gains and
losses, net of income taxes, that are considered
44
temporary in
nature recorded in accumulated other comprehensive income (loss) in the
accompanying consolidated balance sheets. The fair values of our investments in
debt securities are determined based upon market quotations and various
valuation techniques, including discounted cash flow analysis.
We
periodically evaluate our investments for impairment due to declines in market
value considered to be other than temporary. Such impairment evaluations
include, in addition to persistent, declining market prices, general economic
and company-specific evaluations. If we determine that a decline in market
value is other than temporary, then a charge to earnings is recorded in the accompanying
Consolidated Statements of Operations for all or a portion of the unrealized
loss, and a new cost basis in the investment is established.
Vendor Allowances
Vendors often funded, up front, certain advertising costs and exposure to
general changes in pricing to customers due to technological change. Allowances
were deferred as received from vendors and recognized into income as an offset
to the cost of merchandise sold when the related product was sold. All such
allowances were used in the wind down of the Companys retail business during
fiscal year 2009. Advertising costs were expensed as incurred.
Inventory Reserves
Inventory is recorded at the lower of cost or market, net of reserves
established for estimated net realizable value. The market value of inventory
is often dependent upon fluctuating commodity prices. If these estimates are
inaccurate, we may be exposed to market conditions that require an additional
reduction in the value of certain inventories affected. We provide an inventory
reserve, which is treated as a permanent write down of inventory, for inventory
items that have a cost greater than net realizable value. The inventory reserve
was approximately $0.6 million and $3.3 million at January 31, 2010 and January
31, 2009, respectively. Fluctuations in the inventory reserve generally relate
to the levels and composition of such inventory at a given point in time.
Assumptions we use to estimate the necessary reserve have not significantly
changed over the last three fiscal years other than we no longer provide a
reserve for obsolete retail inventory as this inventory was liquidated during
fiscal year 2009. The assumptions we currently use include our estimates of the
selling prices of ethanol and distillers grains.
Financial Instruments
Forward grain purchase and ethanol
sale contracts are accounted for under the normal purchases and normal sales
scope exemption of ASC 815,
Derivatives and
Hedging
because these arrangements are for purchases of grain and
sales of ethanol that will be delivered in quantities expected to be used by us
over a reasonable period of time in the normal course of business. We use
derivative financial instruments to manage our balance of fixed and variable
rate debt. We do not hold or issue derivative financial instruments for trading
or speculative purposes. Interest rate swap agreements involve the exchange of
fixed and variable rate interest payments and do not represent an actual
exchange of the notional amounts between the parties. Our swap agreements were
not designated for hedge accounting pursuant to ASC 815. The interest rate
swaps are recorded at their fair values and the changes in fair values are
recorded as gain or loss on derivative financial instruments in the
accompanying Consolidated Statements of Operations.
Income Taxes
Income taxes are recorded based on the current year amounts payable or
refundable, as well as the consequences of events that give rise to deferred
tax assets and liabilities based on differences in how those events are treated
for tax purposes, net of valuation allowances. We base our estimate of deferred
tax assets and liabilities on current tax laws and rates and other expectations
about future outcomes. Changes in existing regulatory tax laws and rates and
future business results may affect the amount of deferred tax liabilities or
the valuation of deferred tax assets over time. We have established valuation
allowances for certain state net operating loss carryforwards and other
deferred tax assets. We determined that it is more likely than not that we will
be able to generate sufficient taxable income in future years to allow for the
full utilization of the AMT credit carryforward and other deferred tax assets
45
other than
those reserved. In determining the need for a valuation allowance, we have
assumed that our ethanol plants and real estate assets will begin generating
taxable income by fiscal year 2011. We are projecting that the operations of
One Earth that began in fiscal year 2009 will also be profitable and that in
future years, Levelland Hockley will show improved financial results over the
current year. We are assuming that we will be relatively successful in our real
estate marketing efforts. In addition, we have considered the fact that our AMT
credit carryforward has an indefinite life. In general, we have used
approximately $16.0 million as the assumed average of future years pre-tax
income. We believe our assumed target level of earnings is reasonable based
upon expectations of real estate rental income and ethanol plant operating
income. In addition, we considered other positive factors in our assessment.
Although during fiscal years 2008 and 2009 we realized a taxable loss,
historically, we have generated cumulative profitability over the past several
years and expect to begin producing taxable income by fiscal year 2011 through
our ethanol and real estate operations. In addition, we have significant
financial resources to deploy in future income producing activities.
The valuation
allowance was approximately $0.6 million at both January 31, 2010 and January
31, 2009. Should estimates of future income differ significantly from our prior
estimates, we could be required to make a material change to our deferred tax
valuation allowance. The primary assumption used to estimate the valuation
allowance has been estimates of future state taxable income. Such estimates can
have material variations from year to year based upon expected levels of income
from our ethanol plants, leasing income and gains on real estate sales. Factors
that could negatively affect future taxable income include adverse changes in
the commercial real estate market and the ethanol crush spread. Our accounting
for deferred tax consequences represents managements best estimate of future
events that can be appropriately reflected in the accounting estimates.
We adopted the
provisions of ASC 740-10-25-5 on February 1, 2007. As a result of the adoption
of this accounting standard, we recorded a $0.3 million decrease to retained
earnings. As of January 31, 2010, total unrecognized tax benefits were $2.2
million, and accrued penalties and interest were $0.1 million. If we were to
prevail on all unrecognized tax benefits recorded, approximately $0.1 million
of the reserve would benefit the effective tax rate. In addition, the impact of
penalties and interest would also benefit the effective tax rate. Interest and
penalties associated with unrecognized tax benefits are recorded within income
tax expense.
It is
reasonably possible that the amount of the unrecognized tax benefit with
respect to certain unrecognized tax positions will increase or decrease during
the next 12 months; however, we do not expect the change to have a material
effect on results of operations or financial position.
On a quarterly
and annual basis, we accrue for the effects of open uncertain tax positions and
the related potential penalties and interest. Should future estimates of open uncertain
tax positions differ from our current estimates, we could be required to make a
material change to our accrual for uncertain tax positions. In addition, new
income tax audit findings could also require us to make a material change to
our accrual for uncertain tax positions.
Recoverability of Long-Lived Assets
Given the nature of our
business, each income producing property must be evaluated separately when
events and circumstances indicate that the value of that asset may not be
recoverable. We recognize an impairment loss when the fair value of the asset
is less than its carrying amount. Changes in the real estate market for
particular locations could result in changes to our estimates of the propertys
value upon disposal. In addition, changes in expected future cash flows from
our ethanol plants could result in additional impairment charges. Any adverse
change in the spread between ethanol and grain prices could result in
additional impairment charges.
46
Costs Associated
with Exit Activities and Restructuring Costs
Restructuring charges include severance and associated employee termination
costs, lease termination fees and other costs associated with the exit of our
retail business. We record severance and associated employee termination costs
pursuant to ASC 712, ASC 715 and ASC 420. ASC 420 requires that lease
termination fees, net of expected sublease rental income, be recorded once the
leased facility is no longer actively used in a revenue producing manner.
Future changes to our estimates of employee layoffs or leased stores abandoned
are unlikely to have a material impact on our restructuring accrual.
At January 31,
2010, we have an accrual of approximately $0.7 million for severance and other
costs related to restructuring.
New Accounting Pronouncements
On September
15, 2009, the Financial Accounting Standards Board (FASB) Accounting
Standards Codification (the Codification) became the single source of
authoritative generally accepted accounting principles in the United States of
America. The Codification changed the referencing of financial standards but
did not change or alter existing U.S. GAAP. The Codification became effective
for us in the third quarter of fiscal year 2009.
During
December 2007, the FASB issued new accounting and disclosure guidance related
to noncontrolling interests in subsidiaries. This guidance establishes
accounting and reporting standards for the noncontrolling interests in a
subsidiary and for the deconsolidation of a subsidiary. We adopted the provisions
of this guidance as of the beginning of its 2009 fiscal year. This guidance is
to be applied prospectively as of the beginning of 2009 except for the
presentation and disclosure requirements which are to be applied
retrospectively. The consolidated financial statements conform to the
presentation required under this guidance. Other than the change in
presentation of noncontrolling interests, the adoption had no impact on our
results of operations or financial position.
In April 2009,
the FASB issued new accounting standards that require disclosures about the
fair value of financial instruments in financial statements for interim and
annual reporting periods of publicly traded companies. These accounting
standards are effective for interim and annual reporting periods ending after
June 15, 2009. The adoption of these accounting standards did not have a
material impact on our consolidated financial statements.
In May 2009,
the FASB issued a new accounting standard which clarifies that management must
evaluate, as of each reporting period, events or transactions that occur after
the balance sheet date through the date that the financial statements are
issued or are available to be issued. This accounting standard is effective for
interim and annual periods ending after June 15, 2009. We adopted this
accounting standard in the second quarter of fiscal year 2009. The adoption of
this accounting standard did not have a material impact on our consolidated
financial statements.
In January
2010, the FASB issued Accounting Standards Update (ASU) 2010-06, Fair Value
Measurements and Disclosures (ASU 2010-06), which adds new disclosure
requirements for transfers into and out of Levels 1 and 2 in the fair value
hierarchy and additional disclosures about purchases, sales, issuances and
settlements relating to Level 3 fair value measurements. This ASU also
clarifies existing fair value disclosures about the level of disaggregation
about inputs and valuation techniques used to measure fair value. The ASU is
effective for the first reporting period beginning after December 15, 2009,
except for the requirement to provide the Level 3 activity on a gross basis,
which is effective for the fiscal year ends beginning after December 15, 2010
and interim periods within those years. We do not expect this statement to have
a material impact on our consolidated financial statements.
47
There were no
other new accounting standards issued during fiscal year 2009 that had or are
expected to have a material impact on our financial position, results of
operations, or cash flows.
|
|
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk
|
As of January
31, 2010, we had financial instruments which were sensitive to changes in
interest rates. These financial instruments consist of ethanol related term
loans, various mortgage notes payable secured by certain land, buildings and
leasehold improvements and interest rate swaps.
Approximately
$2.3 million of our debt consists of fixed rate debt. The interest rate on all
fixed rate debt is 8.4%. The remaining $135.8 million of debt is variable rate
debt. In general, the rate on the variable rate debt ranges from the one month
LIBOR plus 4.1% to prime less 0.25%. If the variable interest rate increased
1%, we estimate our annual interest cost would increase approximately $1.4
million for the variable rate debt. Principal and interest are payable over
terms which generally range from 5 to 10 years. The fair value of our long-term
debt at January 31, 2010 was approximately $138.4 million. The fair value was
estimated based on rates available to us for debt with similar terms and
maturities. Including the impact of the interest rate swap agreements,
approximately 81% of our indebtedness was based on fixed interest rates at
January 31, 2010. Including the impact of the interest rate swap agreements,
after April 30, 2010, approximately 55% of our indebtedness will be based on
fixed interest rates as Levelland Hockleys interest rate swap expires on April
30, 2010.
We manage a
portion of our risk with respect to the volatility of commodity prices inherent
in the ethanol industry by using forward purchase and sale contracts and other
similar instruments. Levelland Hockley has purchase commitments for 2,261,000
bushels of sorghum, the principal raw material for its ethanol plant. Levelland
Hockley expects to take delivery of the sorghum by March 2010. Levelland
Hockley has forward sales commitments for 4.2 million gallons of ethanol and
112,000 tons of distiller grains. Levelland Hockley expects to deliver the
ethanol and distillers grains by March 2010. One Earth has forward purchase
contracts for 3,501,000 bushels of corn, the principal raw material for its
ethanol plant. One Earth expects to take delivery of the corn through March
2010. One Earth has sales commitments for 10.3 million gallons of ethanol and
25,200 tons of distiller grains. One Earth expects to deliver the ethanol and
distiller grains through March 2010. Approximately 8% of our forecasted ethanol
production during the next 12 months has been sold under fixed-price contracts.
As a result, the effect of a 10% adverse move in the price of ethanol from the
current pricing would result in a decrease in annual revenues of $24.9 million
for the remaining 92% of forecasted ethanol production. Similarly,
approximately 9% of our estimated corn/sorghum usage for the next 12 months was
subject to fixed-price contracts. As a result, the effect of a 10% adverse move
in the price of corn/sorghum from current pricing would result in an increase
in annual cost of goods of approximately $16.6 million for the remaining 91% of
forecasted corn/sorghum usage.
Levelland
Hockley entered into a forward interest rate swap in the notional amount of
$43.7 million with Merrill Lynch Capital during fiscal year 2007. The swap
fixed the variable interest rate of the term loan, subsequent to the plant
completion date, at 7.89%. The swap settlements commenced on April 30, 2008 and
terminate on April 30, 2010. At January 31, 2010, we recorded a liability of $0.3
million, related to the fair value of the swap. The change in fair value was
recorded as losses on derivative financial instruments in the accompanying
Consolidated Statements of Operations.
One Earth
entered into two forward interest rate swaps in the notional amounts of $50.0
million and $25.0 million with the First National Bank of Omaha during fiscal
years 2008 and 2007. The $50.0 million swap fixed a portion of the variable
interest rate of the term loan, subsequent to the plant completion date, at
7.9% while the $25.0 million swap fixed the rate at 5.49%. The swap settlements
commence as of July 31, 2009; the $50.0 million swap terminates on July 8, 2014
and the $25.0 million swap terminates on
48
July 31, 2011.
At January 31, 2010, we recorded a liability of $5.6 million related to the
fair value of the swaps. The changes in fair value were recorded as losses on
derivative financial instruments in the accompanying Consolidated Statements of
Operations.
A hypothetical
10% change (for example, from 4.0% to 3.6%) in market interest rates at January
31, 2010 would change the fair value of the interest rate swap contracts by
approximately $0.6 million.
49
|
|
Item 8.
|
Financial Statements and Supplementary Data
|
REX STORES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands)
|
|
|
|
|
|
|
|
|
|
January 31,
|
|
|
|
|
|
ASSETS
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
|
|
|
|
Cash and
cash equivalents
|
|
$
|
100,398
|
|
$
|
91,991
|
|
Accounts
receivable-net
|
|
|
9,123
|
|
|
4,197
|
|
Inventory-
net
|
|
|
8,698
|
|
|
24,374
|
|
Refundable
income taxes
|
|
|
12,813
|
|
|
7,790
|
|
Prepaid
expenses and other
|
|
|
2,691
|
|
|
1,063
|
|
Deferred
taxes-net
|
|
|
6,375
|
|
|
13,230
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
140,098
|
|
|
142,645
|
|
Property and
equipment-net
|
|
|
246,874
|
|
|
235,454
|
|
Other assets
|
|
|
8,880
|
|
|
12,414
|
|
Deferred
taxes-net
|
|
|
8,468
|
|
|
18,697
|
|
Equity
method investments
|
|
|
44,071
|
|
|
38,861
|
|
Investments
in debt instruments
|
|
|
1,014
|
|
|
933
|
|
Restricted
investments
|
|
|
2,100
|
|
|
2,284
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
451,505
|
|
$
|
451,288
|
|
|
|
|
|
|
|
|
|
See notes to
consolidated financial statements.
50
REX STORES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (continued)
(Amounts in Thousands)
|
|
|
|
|
|
|
|
|
|
January 31,
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
|
|
|
|
Current
portion of long term debt and capital lease obligations alternative energy
|
|
$
|
12,935
|
|
$
|
5,898
|
|
Current
portion of long term debt other
|
|
|
371
|
|
|
1,576
|
|
Accounts
payable trade
|
|
|
6,976
|
|
|
24,917
|
|
Deferred
income
|
|
|
7,818
|
|
|
11,952
|
|
Accrued
restructuring charges
|
|
|
511
|
|
|
4,171
|
|
Deferred
gain on sale and leaseback
|
|
|
|
|
|
1,558
|
|
Accrued real
estate taxes
|
|
|
2,968
|
|
|
1,002
|
|
Derivative
financial instruments
|
|
|
1,829
|
|
|
1,996
|
|
Other
current liabilities
|
|
|
5,442
|
|
|
5,199
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
38,850
|
|
|
58,269
|
|
|
|
|
|
|
|
|
|
LONG TERM
LIABILITIES:
|
|
|
|
|
|
|
|
Long term
debt and capital lease obligations alternative energy
|
|
|
124,093
|
|
|
94,003
|
|
Long term
debt other
|
|
|
2,596
|
|
|
9,936
|
|
Deferred
income
|
|
|
6,396
|
|
|
13,796
|
|
Deferred
gain on sale and leaseback
|
|
|
|
|
|
3,467
|
|
Derivative
financial instruments
|
|
|
4,055
|
|
|
4,032
|
|
Other
|
|
|
419
|
|
|
4,152
|
|
|
|
|
|
|
|
|
|
Total long term liabilities
|
|
|
137,559
|
|
|
129,386
|
|
|
|
|
|
|
|
|
|
COMMITMENTS
AND CONTINGENCIES EQUITY:
|
|
|
|
|
|
|
|
REX
shareholders equity:
|
|
|
|
|
|
|
|
Common
stock, 45,000 shares authorized, 29,853 and 29,853 shares issued at par
|
|
|
299
|
|
|
299
|
|
Paid in
capital
|
|
|
141,698
|
|
|
142,486
|
|
Retained
earnings
|
|
|
290,984
|
|
|
282,332
|
|
Treasury
stock, 20,045 and 20,471 shares
|
|
|
(186,407
|
)
|
|
(186,057
|
)
|
Accumulated
other comprehensive income, net of tax
|
|
|
49
|
|
|
|
|
|
|
|
|
|
|
|
|
Total REX
shareholders equity
|
|
|
246,623
|
|
|
239,060
|
|
Noncontrolling
interests
|
|
|
28,473
|
|
|
24,573
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
275,096
|
|
|
263,633
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND SHAREHOLDERS EQUITY
|
|
$
|
451,505
|
|
$
|
451,288
|
|
|
|
|
|
|
|
|
|
See notes to
consolidated financial statements.
51
REX STORES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands, Except Per Share Amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended January 31,
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales and revenue
|
|
$
|
170,264
|
|
$
|
68,638
|
|
$
|
382
|
|
Cost of sales
|
|
|
150,531
|
|
|
67,433
|
|
|
18
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
19,733
|
|
|
1,205
|
|
|
364
|
|
Selling, general and administrative expenses
|
|
|
(6,025
|
)
|
|
(6,640
|
)
|
|
(4,955
|
)
|
Interest income
|
|
|
445
|
|
|
2,044
|
|
|
5,714
|
|
Interest expense
|
|
|
(4,741
|
)
|
|
(3,174
|
)
|
|
(604
|
)
|
Loss on early termination of debt
|
|
|
(89
|
)
|
|
|
|
|
(423
|
)
|
Equity in income of unconsolidated ethanol affiliates
|
|
|
6,027
|
|
|
849
|
|
|
1,601
|
|
Realized investment gains
|
|
|
|
|
|
|
|
|
23,951
|
|
Income from synthetic fuel investments
|
|
|
|
|
|
691
|
|
|
6,945
|
|
Other income
|
|
|
748
|
|
|
|
|
|
|
|
Losses on derivative financial instruments
|
|
|
(2,487
|
)
|
|
(3,797
|
)
|
|
(2,601
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income taxes and
noncontrolling interests
|
|
|
13,611
|
|
|
(8,822
|
)
|
|
29,992
|
|
(Provision) benefit for income taxes
|
|
|
(4,553
|
)
|
|
2,747
|
|
|
(11,245
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations including noncontrolling
interests
|
|
|
9,058
|
|
|
(6,075
|
)
|
|
18,747
|
|
Income (loss) from discontinued operations, net of tax
|
|
|
2,120
|
|
|
(2,176
|
)
|
|
3,809
|
|
Gain on disposal of discontinued operations, net of tax
|
|
|
1,374
|
|
|
1,798
|
|
|
10,470
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) including noncontrolling interests
|
|
|
12,552
|
|
|
(6,453
|
)
|
|
33,026
|
|
Net (income) loss attributable to noncontrolling interests
|
|
|
(3,900
|
)
|
|
3,156
|
|
|
841
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to REX common shareholders
|
|
$
|
8,652
|
|
$
|
(3,297
|
)
|
$
|
33,867
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding basic
|
|
|
9,254
|
|
|
10,170
|
|
|
10,420
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income (loss) per share from continuing operations attributable
to REX common shareholders
|
|
$
|
0.55
|
|
$
|
(0.29
|
)
|
$
|
1.88
|
|
Basic income (loss) per share from discontinued operations
attributable to REX common shareholders
|
|
|
0.23
|
|
|
(0.21
|
)
|
|
0.37
|
|
Basic income per share on disposal of discontinued operations attributable
to REX
|
|
|
0.15
|
|
|
0.18
|
|
|
1.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) per share attributable to REX common
shareholders
|
|
$
|
0.93
|
|
$
|
(0.32
|
)
|
$
|
3.25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding diluted
|
|
|
9,551
|
|
|
10,170
|
|
|
11,721
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted income (loss) per share from continuing operations
attributable to REX common shareholders
|
|
$
|
0.54
|
|
$
|
(0.29
|
)
|
$
|
1.67
|
|
Diluted income (loss) per share from discontinued operations
attributable to REX common shareholders
|
|
|
0.22
|
|
|
(0.21
|
)
|
|
0.33
|
|
Diluted gain per share on disposal of discontinued operations
attributable to REX common shareholders
|
|
|
0.15
|
|
|
0.18
|
|
|
0.89
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income (loss) per share attributable to REX common
shareholders
|
|
$
|
0.91
|
|
$
|
(0.32
|
)
|
$
|
2.89
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts attributable to REX common shareholders:
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations, net of tax
|
|
$
|
5,158
|
|
$
|
(2,919
|
)
|
$
|
19,588
|
|
Income (loss) from discontinued operations, net of tax
|
|
|
3,494
|
|
|
(378
|
)
|
|
14,279
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
8,652
|
|
$
|
(3,297
|
)
|
$
|
33,867
|
|
|
|
|
|
|
|
|
|
|
|
|
See notes to
consolidated financial statements.
52
REX STORES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended January 31,
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
|
|
CASH FLOWS
FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss) including noncontrolling interests
|
|
$
|
12,552
|
|
$
|
(6,453
|
)
|
$
|
33,026
|
|
Adjustments
to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
10,603
|
|
|
5,061
|
|
|
2,428
|
|
Stock based
compensation expense
|
|
|
234
|
|
|
1,143
|
|
|
1,413
|
|
Impairment
charges
|
|
|
1,533
|
|
|
1,961
|
|
|
158
|
|
Income from
equity method investments
|
|
|
(6,027
|
)
|
|
(849
|
)
|
|
(1,601
|
)
|
Dividends
received from equity method investments
|
|
|
702
|
|
|
900
|
|
|
525
|
|
Income from
synthetic fuel investments
|
|
|
|
|
|
(691
|
)
|
|
(6,945
|
)
|
(Gains)
losses on derivative financial instruments
|
|
|
(144
|
)
|
|
3,427
|
|
|
2,601
|
|
Gain on sale
of investments
|
|
|
|
|
|
|
|
|
(23,951
|
)
|
Gain on
disposal of real estate and property and equipment
|
|
|
(2,003
|
)
|
|
(3,410
|
)
|
|
(16,584
|
)
|
Deferred
income
|
|
|
(16,559
|
)
|
|
(6,776
|
)
|
|
(4,819
|
)
|
Excess tax
benefits from stock option exercises
|
|
|
|
|
|
(12
|
)
|
|
(69
|
)
|
Deferred
income tax
|
|
|
12,958
|
|
|
601
|
|
|
2,909
|
|
Changes in
assets and liabilities, net of acquisitions:
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(4,926
|
)
|
|
(2,320
|
)
|
|
126
|
|
Inventory
|
|
|
15,676
|
|
|
25,559
|
|
|
20,145
|
|
Prepaid expenses and other current assets
|
|
|
(1,628
|
)
|
|
(93
|
)
|
|
(859
|
)
|
Income taxes refundable
|
|
|
(4,924
|
)
|
|
(5,390
|
)
|
|
|
|
Other long term assets
|
|
|
3,534
|
|
|
2,481
|
|
|
5,195
|
|
Accounts payable-trade
|
|
|
(8,457
|
)
|
|
(8,560
|
)
|
|
(3,041
|
)
|
Other liabilities
|
|
|
(2,146
|
)
|
|
(3,656
|
)
|
|
4,172
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
10,978
|
|
|
2,923
|
|
|
14,829
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS
FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(35,652
|
)
|
|
(101,271
|
)
|
|
(68,754
|
)
|
Proceeds
from sale of synthetic fuel investments
|
|
|
|
|
|
1,264
|
|
|
15,210
|
|
Purchase of
investments
|
|
|
(25
|
)
|
|
(933
|
)
|
|
(10,000
|
)
|
Proceeds of
note receivable and sale of investments
|
|
|
|
|
|
|
|
|
39,541
|
|
Acquisition,
net of cash acquired
|
|
|
|
|
|
|
|
|
8,703
|
|
Proceeds
from sale of real estate and property and equipment
|
|
|
4,756
|
|
|
9,172
|
|
|
94,775
|
|
Restricted
investments
|
|
|
184
|
|
|
197
|
|
|
(75
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by investing
activities
|
|
|
(30,737
|
)
|
|
(91,571
|
)
|
|
79,400
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS
FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from long term debt
|
|
|
48,958
|
|
|
75,890
|
|
|
25,424
|
|
Payments of
long term debt
|
|
|
(20,376
|
)
|
|
(6,724
|
)
|
|
(26,023
|
)
|
Stock
options exercised
|
|
|
6,038
|
|
|
1,453
|
|
|
5,596
|
|
Excess tax
benefits from stock option exercises
|
|
|
|
|
|
12
|
|
|
69
|
|
Treasury
stock acquired
|
|
|
(6,454
|
)
|
|
(17,708
|
)
|
|
(14,587
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing
activities
|
|
|
28,166
|
|
|
52,923
|
|
|
(9,521
|
)
|
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS
|
|
|
8,407
|
|
|
(35,725
|
)
|
|
84,708
|
|
CASH AND
CASH EQUIVALENTS-Beginning of year
|
|
|
91,991
|
|
|
127,716
|
|
|
43,008
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND
CASH EQUIVALENTS-End of year
|
|
$
|
100,398
|
|
$
|
91,991
|
|
$
|
127,716
|
|
|
|
|
|
|
|
|
|
|
|
|
Non cash
activitiesAccrued capital expenditures
|
|
$
|
265
|
|
$
|
6,474
|
|
$
|
8,100
|
|
Non cash
activitiesAssets acquired by capital leases
|
|
$
|
|
|
$
|
2,922
|
|
$
|
|
|
Non cash activitiesPayable
related to plant construction refinanced to long term debt
|
|
$
|
9,749
|
|
$
|
|
|
$
|
|
|
See notes to
consolidated financial statements.
53
|
REX STORES
CORPORATION AND SUBSIDIARIES
|
|
CONSOLIDATED
STATEMENTS OF SHAREHOLDERS EQUITY
|
FOR THE YEARS
ENDED JANUARY 31, 2010, 2009 AND 2008
|
(Amounts in
Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REX Shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Shares
Issued
|
|
Treasury
|
|
Paid-in
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income
|
|
Noncontrolling
Interest
|
|
Total
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In
Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 31, 2007, as reported
|
|
|
29,513
|
|
$
|
295
|
|
|
19,089
|
|
$
|
(161,092
|
)
|
$
|
139,337
|
|
$
|
252,249
|
|
$
|
|
|
$
|
|
|
$
|
230,789
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effects of adoption of new accounting standard for noncontrolling
interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,443
|
|
|
11,443
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 31, 2007, as adjusted
|
|
|
29,513
|
|
|
295
|
|
|
19,089
|
|
|
(161,092
|
)
|
|
139,337
|
|
|
252,249
|
|
|
|
|
|
11,443
|
|
|
242,232
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,867
|
|
|
|
|
|
(841
|
)
|
|
33,026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effects of adoption of new accounting standard for income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(287
|
)
|
|
|
|
|
|
|
|
(287
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Treasury stock acquired
|
|
|
|
|
|
|
|
|
971
|
|
|
(18,045
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(18,045
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock based compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,413
|
|
|
|
|
|
|
|
|
|
|
|
1,413
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options and related tax effects
|
|
|
300
|
|
|
3
|
|
|
(966
|
)
|
|
8,444
|
|
|
607
|
|
|
|
|
|
|
|
|
|
|
|
9,054
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling interests distribution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(200
|
)
|
|
|
|
|
295
|
|
|
95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of One Earth
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,832
|
|
|
16,832
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized holding gains, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,717
|
|
|
|
|
|
9,717
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification adjustment for net gains included in net income, net
of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9,717
|
)
|
|
|
|
|
(9,717
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 31, 2008
|
|
|
29,813
|
|
$
|
298
|
|
|
19,094
|
|
$
|
(170,693
|
)
|
$
|
141,357
|
|
$
|
285,629
|
|
$
|
|
|
$
|
27,729
|
|
$
|
284,320
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See notes to consolidated
financial statements.
54
|
REX STORES
CORPORATION AND SUBSIDIARIES
|
|
CONSOLIDATED
STATEMENTS OF SHAREHOLDERS EQUITY
|
FOR THE YEARS
ENDED JANUARY 31, 2010, 2009 AND 2008
|
(Amounts in
Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REX Shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Shares
Issued
|
|
Treasury
|
|
Paid-in
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income
|
|
Noncontrolling
Interest
|
|
Total
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 31, 2008
|
|
|
29,813
|
|
$
|
298
|
|
|
19,094
|
|
$
|
(170,693
|
)
|
$
|
141,357
|
|
$
|
285,629
|
|
$
|
|
|
$
|
27,729
|
|
$
|
284,320
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,297
|
)
|
|
|
|
|
(3,156
|
)
|
|
(6,453
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Treasury stock acquired
|
|
|
|
|
|
|
|
|
1,636
|
|
|
(17,708
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(17,708
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock based compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,143
|
|
|
|
|
|
|
|
|
|
|
|
1,143
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options and related tax effects
|
|
|
40
|
|
|
1
|
|
|
(259
|
)
|
|
2,344
|
|
|
(14
|
)
|
|
|
|
|
|
|
|
|
|
|
2,331
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 31, 2009
|
|
|
29,853
|
|
|
299
|
|
|
20,471
|
|
|
(186,057
|
)
|
|
142,486
|
|
|
282,332
|
|
|
|
|
|
24,573
|
|
|
263,633
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,652
|
|
|
|
|
|
3,900
|
|
|
12,552
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Treasury stock acquired
|
|
|
|
|
|
|
|
|
1,257
|
|
|
(15,694
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(15,694
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock based compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
234
|
|
|
|
|
|
|
|
|
|
|
|
234
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options and related tax effects
|
|
|
|
|
|
|
|
|
(1,683
|
)
|
|
15,344
|
|
|
(1,022
|
)
|
|
|
|
|
|
|
|
|
|
|
14,322
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized holding gains, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49
|
|
|
|
|
|
49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 31, 2010
|
|
|
29,853
|
|
$
|
299
|
|
|
20,045
|
|
$
|
(186,407
|
)
|
$
|
141,698
|
|
$
|
290,984
|
|
$
|
49
|
|
$
|
28,473
|
|
$
|
275,096
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See notes to consolidated
financial statements.
55
|
REX
STORES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
1.
|
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
|
|
|
|
Principles
of Consolidation
The accompanying financial statements
consolidate the operating results and financial position of REX Stores
Corporation, its wholly-owned and majority owned subsidiaries and entities in
which REX maintains a primary beneficial interest (the Company). All
significant intercompany balances and transactions have been eliminated. As of
January 31, 2010, the Company maintains ownership interests in four ethanol
entities and manages a portfolio of real estate located in 19 states. The
Company operates in two reportable segments, alternative energy and real
estate. The Company completed the exit of its retail business during fiscal
year 2009 although it will continue to recognize, in discontinued operations,
revenue and expense associated with administering extended service policies.
|
|
|
|
Fiscal
Year
All references in these consolidated financial statements
to a particular fiscal year are to the Companys fiscal year ended January
31. For example, fiscal year 2009 means the period February 1, 2009 to
January 31, 2010.
|
|
|
|
Use
of Estimates
The preparation of consolidated
financial statements in conformity with accounting principles generally
accepted in the United States of America 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 consolidated financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates.
|
|
|
|
Cash
Equivalents
Cash equivalents are principally
short-term investments with original maturities of less than three months.
The carrying amount of cash equivalents approximates fair value.
|
|
|
|
Concentrations
of Risk
The Company maintains cash and cash
equivalents in accounts with financial institutions which, at times, exceed
federally insured limits. The Company has not experienced any losses in such
accounts. The Company does not believe there is significant credit risk on
its cash and cash equivalents. During fiscal years 2009 and 2008, two
customers accounted for approximately 64% and 87%, respectively of the
Companys net sales and revenue. At January 31, 2010, these customers
represented approximately 41% of the Companys accounts receivable balance.
|
|
|
|
Inventory
Inventories are carried at the lower of cost or market on a
first-in, first-out (FIFO) basis. Alternative energy segment inventory
includes direct production costs and certain overhead costs such as
depreciation, property taxes and utilities related to producing ethanol and
related by products. Reserves are established for estimated net realizable
value based primarily upon commodity prices. The market value of inventory is
often dependent upon changes in commodity prices. These reserves totaled
$591,000 and $3,297,000 at January 31, 2010 and 2009, respectively.
|
56
|
|
|
The components of inventory at January
31, 2010, and January 31, 2009 are as follows (amounts in thousands):
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
|
Retail merchandise, net
|
|
$
|
190
|
|
$
|
22,318
|
|
Ethanol and other finished goods, net
|
|
|
1,784
|
|
|
487
|
|
Work in process, net
|
|
|
1,577
|
|
|
341
|
|
Grain and other raw materials
|
|
|
5,147
|
|
|
1,228
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
8,698
|
|
$
|
24,374
|
|
|
|
|
|
|
|
|
|
|
|
|
Property
and Equipment
Property and equipment is recorded at
cost. Assets under capital leases are capitalized at the lower of the net
present value of minimum lease payments or the fair market value of the
leased asset. Depreciation is computed using the straight-line method.
Estimated useful lives are 15 to 40 years for buildings and improvements, and
3 to 20 years for fixtures and equipment. The components of property and
equipment at January 31, 2010 and 2009 are as follows (amounts in thousands):
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
|
Land and improvements
|
|
$
|
26,405
|
|
$
|
24,073
|
|
Buildings and improvements
|
|
|
59,024
|
|
|
40,987
|
|
Machinery, equipment and fixtures
|
|
|
187,526
|
|
|
70,408
|
|
Leasehold improvements
|
|
|
569
|
|
|
3,396
|
|
Construction in progress
|
|
|
127
|
|
|
121,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
273,651
|
|
|
260,197
|
|
Less: accumulated depreciation
|
|
|
(26,777
|
)
|
|
(24,743
|
)
|
|
|
|
|
|
|
|
|
|
|
$
|
246,874
|
|
$
|
235,454
|
|
|
|
|
|
|
|
|
|
|
|
|
In accordance with ASC 360-05
Impairment or Disposal of Long-Lived Assets
,
the carrying value of long-lived assets is assessed for recoverability by
management when changes in circumstances indicate that the carrying amount
may not be recoverable, based on an analysis of undiscounted future expected
cash flows from the use and ultimate disposition of the asset. The Company
recorded an impairment charge included in selling, general and administrative
expenses in the consolidated statements of operations of $1,533,000 in fiscal
year 2009. The Company recorded an impairment charge classified as
discontinued operation of $639,000 and $158,000 in the fiscal years ended
January 31, 2008 and 2007, respectively. The impairment charges in fiscal
year 2009 relate to individual properties in the Companys real estate
segment. The impairment charges in fiscal years 2008 and 2007 all relate to
individual stores in the Companys former retail segment. These impairment
charges are primarily related to increased competition in local markets
and/or unfavorable changes in real estate conditions in local markets.
Impairment charges result from the Companys management performing cash flow
analysis and represent managements estimate of the excess of net book value
over fair value. Fair value is estimated using expected future cash flows on
a discounted basis or appraisals of specific properties as appropriate.
Long-lived assets are tested for recoverability whenever events or changes in
circumstances indicate that its carrying amount may not be recoverable.
Generally, declining cash flows from an ethanol plant or deterioration in
local real estate market conditions are indicators of possible impairment.
|
57
|
|
|
Investments
Restricted investments, which are principally money market
mutual funds and cash deposits, are stated at cost plus accrued interest,
which approximates market. Restricted investments at January 31, 2010 and
2009 are required by two states to cover possible future claims under
extended service policies. In accordance with ASC 320,
Investments-Debt and Equity Securities
the Company has classified these investments as held-to-maturity. The
investments had maturity dates of less than one year at January 31, 2010 and
2009. The Company has the intent and ability to hold these securities to
maturity.
|
|
|
|
The method of accounting applied to
long-term investments, whether consolidated, equity or cost, involves an
evaluation of the significant terms of each investment that explicitly grant
or suggest evidence of control or influence over the operations of the
investee and also includes the identification of any variable interests in
which the Company is the primary beneficiary. The Company consolidates the results
of two majority owned subsidiaries, Levelland Hockley and One Earth, with a
one month lag. See Note 6 for a further discussion of the acquisitions of
Levelland Hockley and One Earth. The Company accounts for investments in LLCs
in which it may have a less than 20% ownership interest, using the equity
method of accounting when the factors discussed in ASC 323
Investments-Equity Method and Joint Ventures
are met. The excess of the carrying value over the underlying equity in the
net assets of equity method investees is allocated to specific assets and
liabilities. Any unallocated excess is treated as goodwill and is recorded as
a component of the carrying value of the equity method investee. Investments
in businesses that the Company does not control but for which it has the
ability to exercise significant influence over operating and financial
matters are accounted for using the equity method with a one month lag.
Investments in which the Company does not have the ability to exercise
significant influence over operating and financial matters are accounted for
using the cost method.
|
|
|
|
Investments in debt securities are
considered held to maturity, available for sale, or trading securities
under ASC 320,
Investments-Debt and
Equity Securities
. Under ASC 320, held to maturity securities are
required to be carried at their cost; while available-for-sale securities are
required to be carried at their fair value, with unrealized gains and losses,
net of income taxes, that are considered temporary in nature recorded in
accumulated other comprehensive income (loss) in the consolidated balance
sheets. The fair values of investments in debt securities are determined
based upon market quotations and various valuation techniques, including
discounted cash flow analysis.
|
|
|
|
The Company periodically evaluates its
investments for impairment due to declines in market value considered to be
other than temporary. Such impairment evaluations include, in addition to
persistent, declining market prices, general economic and company-specific
evaluations. If the Company determines that a decline in market value is
other than temporary, then a charge to earnings is recorded in the
Consolidated Statements of Operations and a new cost basis in the investment
is established.
|
|
|
|
Revenue
Recognition
The Company recognizes sales from the
production of ethanol and distillers grains when title transfers to
customers, generally upon shipment from the ethanol plant. Shipping and
handling charges to ethanol customers are included in net sales and revenue.
|
|
|
|
The Company includes income from its
real estate leasing activities in net sales and revenue. The Company accounts
for these leases as operating leases. Accordingly, minimum rental revenue is
recognized on a straight-line basis over the term of the lease.
|
|
|
|
The Company sold, prior to its exit of
the retail business, extended service policies covering periods beyond the
normal manufacturers warranty periods, usually with terms of coverage
(including
|
58
|
|
|
manufacturers warranty periods) of
between 12 to 60 months. Contract revenues and 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. The Company
retains the obligation to perform warranty service and such costs are charged
to operations as incurred. All related revenue and expense is classified as
discontinued operations.
|
|
|
|
The Company recognized income from
synthetic fuel partnership sales as production was completed and
collectability of receipts was reasonably assured. The Company was paid for
actual tax credits earned as the synthetic fuel was produced with the
exception of production at the Pine Mountain (Gillette) facility. See Note 5 for
a further discussion of synthetic fuel partnership sales.
|
|
|
|
Costs
of Sales
Ethanol cost of sales includes
depreciation, costs of raw materials, inbound freight charges, purchasing and
receiving costs, inspection costs, shipping costs, other distribution
expenses, warehousing costs, plant management, certain compensation costs,
and general facility overhead charges.
|
|
|
|
Real estate cost of sales includes
depreciation, real estate taxes, insurance, repairs and maintenance and other
costs directly associated with operating the Companys portfolio of real
property.
|
|
|
|
Vendor
Allowances and Advertising Costs
Vendors often funded,
up front, certain advertising costs and exposure to general changes in
pricing to customers due to technological change. Allowances were deferred as
received from vendors and recognized into income as an offset to the cost of
merchandise sold when the related product was sold or expense incurred. All
such allowances were used in the wind down of the Companys retail business
during fiscal year 2009. Advertising costs were expensed as incurred.
|
|
|
|
Selling,
General and Administrative Expenses
The Company includes
non-production related costs from its alternative energy segment such as
utilities, property taxes, professional fees and certain payroll in selling,
general and administrative expenses.
|
|
|
|
The Company includes costs not directly
related to operating its portfolio of real property from its real estate
segment such as certain payroll and related costs, professional fees and
other general expenses in selling, general and administrative expenses.
|
|
|
|
Interest
Cost
Interest expense of approximately $4,741,000, $3,174,000
and $604,000 for fiscal years 2009, 2008 and 2007, respectively, is net of
approximately $1,651,000, $3,167,000 and $1,565,000 of interest capitalized
related to equity investments, store improvements, ethanol plant or warehouse
construction. Cash paid for interest in fiscal years 2009, 2008 and 2007 was
approximately $2,886,000, $2,592,000 and $2,017,000, respectively.
|
|
|
|
Deferred
Financing Costs
Direct expenses and fees associated with
obtaining long-term debt are capitalized and amortized to interest expense
over the life of the loan using the effective interest method.
|
|
|
|
Financial
Instruments
Forward grain purchase and ethanol
and distillers grain sale contracts are accounted for under the normal
purchases and normal sales scope exemption of ASC 815,
Derivatives and Hedging
because these
arrangements are for purchases of grain that will be delivered in quantities
expected to be used and sales of ethanol quantities expected to be produced
over a reasonable period of time in the normal course of business. The
Company uses derivative financial instruments to manage its balance of fixed
and variable rate debt. The Company does not hold or issue derivative
financial instruments for trading or speculative purposes. Interest rate swap
|
59
|
|
|
agreements involve the exchange of fixed
and variable rate interest payments and do not represent an actual exchange
of the notional amounts between the parties. The swap agreements were not
designated for hedge accounting pursuant to ASC 815. The interest rate swaps
are recorded at their fair values and the changes in fair values are recorded
as gain or loss on derivative financial instruments in the statements of
consolidated operations. The Company paid settlements of interest rate swaps
of approximately $2,510,000, $369,000 and $0 in fiscal years 2009, 2008 and
2007, respectively.
|
|
|
|
Restructuring
Costs
Restructuring charges include severance and associated
employee termination costs, lease termination fees and other costs associated
with the exit of the Companys retail business. The Company records severance
and associated employee termination costs pursuant to ASC 712, ASC 715 and
ASC 420. ASC 420 requires that lease termination fees, net of expected
sublease rental income, be recorded once the leased facility is no longer
actively used in a revenue producing manner. Future changes to the Companys
estimates of employee layoffs or leased stores abandoned are unlikely to have
a material impact on the Companys restructuring accrual.
|
|
|
|
Stock
Compensation
The Company has stock-based
compensation plans under which stock options have been granted to directors,
officers and key employees at the market price on the date of the grant. The
Company adopted ASC 718
Compensation-Stock
Compensation
, on February 1, 2006. The Company chose the Modified
Prospective Application (MPA) method for implementing this accounting
standard. Under the MPA method, new awards, if any, are valued and accounted
for prospectively upon adoption. Outstanding prior awards that are unvested
as of February 1, 2006 will be recognized as compensation cost over the remaining
requisite service period. Prior to its adoption of this accounting standard,
the Company accounted for stock-based compensation in compliance with APB 25,
under which no compensation cost was recognized. ASC 718 also requires the
Company to establish the beginning balance of the additional paid in capital
pool (APIC pool) related to actual tax deductions from the exercise of
stock options. This APIC pool is available to absorb tax shortfalls (actual
tax deductions less than recognized compensation expense) recognized
subsequent to the adoption of ASC 718. On November 10, 2005, the FASB issued
FASB Staff Position No. FAS 123R-3,
Transition
Election Related to Accounting for Tax Effects of Share-Based Payment Awards
.
This FASB Staff Position provided companies with the option to use either the
transition method prescribed by ASC 718 or a simplified alternative method
described in the staff position. The Company chose to utilize the transition
method prescribed by ASC 718, which requires the calculation of the APIC pool
as if the Company had adopted ASC 718 for fiscal years beginning after
December 15, 1994.
|
|
|
|
No options were granted in the fiscal
years ended January 31, 2010, January 31, 2009 or January 31, 2008. The
following table summarizes options granted, exercised and canceled or expired
during
|
60
|
|
|
the fiscal year ended January 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
(000s)
|
|
Weighted
Average
Exercise
Price
|
|
Weighted Average
Remaining
Contractual Term
(in years)
|
|
Aggregate
Intrinsic
Value
(000s)
|
|
|
|
|
|
|
|
|
|
|
|
|
OutstandingBeginning
of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
year
|
|
|
2,715
|
|
$
|
9.63
|
|
|
|
|
|
|
|
Granted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(1,683
|
)
|
|
8.87
|
|
|
|
|
|
|
|
Canceled or
expired
|
|
|
(208
|
)
|
|
13.75
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding and exercisableEnd of year
|
|
|
824
|
|
$
|
10.14
|
|
|
2.0
|
|
$
|
4,097
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The total intrinsic value of options
exercised in the fiscal years ended January 31, 2010, 2009 and 2008, was
approximately $7.2 million, $2.2 million and $14.6 million, respectively,
resulting in tax deductions to realize benefits of approximately $0.5
million, $0.9 million and $2.1 million, respectively. At January 31, 2010,
there was no unrecognized compensation cost related to nonvested stock
options. See Note 13 for a further discussion of stock options.
|
|
|
|
Income
Taxes
The Company provides for deferred tax liabilities and
assets for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities
and their respective tax bases and operating loss and tax credit
carryforwards. The Company provides for a valuation allowance if, based on
the weight of available evidence, it is more likely than not that some or all
of the deferred tax assets will not be realized.
|
|
|
|
Discontinued
Operations
The Company classifies sold real
estate assets and operations from its former retail segment in discontinued
operations when the operations and cash flows of the store or real estate
assets have been (or will be) eliminated from ongoing operations and when the
Company will not have any significant continuing involvement in the operation
of the store or real estate assets after disposal. To determine if cash flows
had been or would be eliminated from ongoing operations, the Company
evaluates a number of qualitative and quantitative factors. For purposes of
reporting the operations of stores or real estate assets meeting the criteria
for discontinued operations, the Company reports net sales and revenue, gross
profit and related selling, general and administrative expenses that are
specifically identifiable to those stores operations or real estate assets as
discontinued operations. For stores and warehouses closed for which the
Company has a retained interest in the related real estate, operations are
presented in the real estate segment when retail operations cease. Certain
corporate level charges, such as general office expense, certain interest
expense, and other fixed expenses are not allocated to discontinued operations
because the Company believes that these expenses were not specific to
components operations.
|
|
|
|
New
Accounting Pronouncements
On September 15, 2009, the Financial
Accounting Standards Board (FASB) Accounting Standards Codification (the
Codification) became the single source of authoritative generally accepted
accounting principles in the United States of America. The Codification
changed the referencing of financial standards but did not change or alter
existing
|
61
|
|
|
U.S. GAAP. The Codification became
effective for the Company in the third quarter of fiscal year 2009.
|
|
|
|
During December 2007, the FASB issued
new accounting and disclosure guidance related to noncontrolling interests in
subsidiaries. This guidance establishes accounting and reporting standards
for the noncontrolling interests in a subsidiary and for the deconsolidation
of a subsidiary. The Company adopted the provisions of this guidance as of
the beginning of its 2009 fiscal year. This guidance is to be applied
prospectively as of the beginning of 2009 except for the presentation and
disclosure requirements which are to be applied retrospectively. The
consolidated financial statements conform to the presentation required under
this guidance. Other than the change in presentation of noncontrolling
interests, the adoption had no impact on the Companys consolidated financial
statements.
|
|
|
|
In April 2009, the FASB issued new
accounting standards that require disclosures about the fair value of
financial instruments in financial statements for interim and annual
reporting periods of publicly traded companies. These accounting standards
are effective for interim and annual reporting periods ending after June 15,
2009. The adoption of these accounting standards did not have a material
impact on the Companys consolidated financial statements.
|
|
|
|
In May 2009, the FASB issued a new
accounting standard which clarifies that management must evaluate, as of each
reporting period, events or transactions that occur after the balance sheet
date through the date that the financial statements are issued or are
available to be issued. This accounting standard is effective for interim and
annual periods ending after June 15, 2009. The Company adopted this
accounting standard in the second quarter of fiscal year 2009. The adoption
of this accounting standard did not have a material impact on the Companys
consolidated financial statements.
|
|
|
|
In January 2010, the FASB issued
Accounting Standards Update (ASU) 2010-06, Fair Value Measurements and
Disclosures (ASU 2010-06), which adds new disclosure requirements for
transfers into and out of Levels 1 and 2 in the fair value hierarchy and
additional disclosures about purchases, sales, issuances and settlements
relating to Level 3 fair value measurements. This ASU also clarifies existing
fair value disclosures about the level of disaggregation about inputs and
valuation techniques used to measure fair value. The ASU is effective for the
first reporting period beginning after December 15, 2009, except for the
requirement to provide the Level 3 activity on a gross basis, which is
effective for the fiscal year ends beginning after December 15, 2010 and
interim periods within those years. The Company does not expect this
statement to have a material impact on its consolidated financial statements.
|
|
|
|
There were no other new accounting
standards issued during fiscal year 2009 that had or are expected to have a
material impact on the Companys consolidated financial statements.
|
|
|
2.
|
QUARTERLY UNAUDITED
INFORMATION
|
|
|
|
The following tables set forth the
Companys net sales and revenue, gross profit (loss), net income (loss) and
net income (loss) per share (basic and diluted) for each quarter during the
last two fiscal years. The unaudited financial information has been prepared
in accordance with accounting principles generally accepted in the United
States of America for interim financial information and with the instructions to Form
10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included.
|
62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarters Ended
(In Thousands, Except Per Share Amounts)
|
|
|
|
|
|
|
|
April 30,
2009
|
|
July 31,
2009
|
|
October 31,
2009
|
|
January 31,
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales and revenue (a)
|
|
$
|
14,248
|
|
$
|
17,145
|
|
$
|
61,697
|
|
$
|
77,174
|
|
Gross profit (a)
|
|
|
275
|
|
|
912
|
|
|
5,661
|
|
|
12,885
|
|
Net (loss) income
|
|
|
(1,731
|
)
|
|
837
|
|
|
2,273
|
|
|
7,273
|
|
Basic net (loss) income per share attributable to REX common shareholders
(b)
|
|
$
|
(0.19
|
)
|
$
|
0.09
|
|
$
|
0.25
|
|
$
|
0.78
|
|
Diluted net
(loss) income per share attributable to REX common shareholders (b)
|
|
$
|
(0.19
|
)
|
$
|
0.09
|
|
$
|
0.24
|
|
$
|
0.75
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarters Ended
(In Thousands, Except Per Share Amounts)
|
|
|
|
|
|
|
|
April 30,
2008
|
|
July 31,
2008
|
|
October 31,
2008
|
|
January 31,
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales and revenue (a)
|
|
$
|
1,262
|
|
$
|
24,971
|
|
$
|
22,539
|
|
$
|
19,866
|
|
Gross profit (loss) (a)
|
|
|
151
|
|
|
740
|
|
|
(2,357
|
)
|
|
2,671
|
|
Net income (loss)
|
|
|
1,526
|
|
|
1,206
|
|
|
(650
|
)
|
|
(5,379
|
)
|
Basic net income
(loss) per share attributable to REX common shareholders (b)
|
|
$
|
0.14
|
|
$
|
0.11
|
|
$
|
(0.07
|
)
|
$
|
(0.57
|
)
|
Diluted net
income (loss) per share attributable to REX common shareholders (b)
|
|
$
|
0.13
|
|
$
|
0.11
|
|
$
|
(0.07
|
)
|
$
|
(0.57
|
)
|
`
|
|
|
|
a)
|
Amounts differ from those
previously reported as a result of retail operations and certain real estate
assets sold being reclassified as discontinued operations.
|
|
|
|
|
b)
|
The total of the quarterly
net income (loss) per share amounts do not equal the annual net loss or
income per share amount due to the impact of varying amounts of shares and
options outstanding during the year.
|
|
|
|
|
During the fourth quarter
of fiscal year 2009, the Company identified an error in its classification of
certain closed retail stores in continuing operations as of January 31, 2009
and for the interim periods subsequent to January 31, 2009 and for the
classification of its extended warranty operations in continuing operations
for interim periods subsequent to April 30, 2009. Management has evaluated
the affects of the error on the consolidated financial statements for the
years ended January 31, 2009 and 2008 and concluded the error was not
material. The errors had no impact on the Companys Consolidated Balance
Sheet or the Consolidated Statements of Cash Flows for the years ended
January 31, 2009, 2008 or 2007. The Company corrected the presentation for
the years ended January 31, 2009 and 2008 in the accompanying Consolidated
Statements of Operations. The errors had no impact on net income or loss on
the Companys Consolidated Statements of Operations; however it did impact
the presentation of income or loss from continuing and discontinued
operations by amounts not exceeding $30,000.
|
|
|
|
Because of the
significance of the error correction to interim periods, the Company has
summarized the effect of the restatement on the Consolidated Condensed
Statements of Operations for the three-month periods ended April 30, 2009,
July 31, 2009 and October 31, 2009, and the effect of the retrospective
application of applying ASC 205-20 Discontinued Operations to financial
statements previously issued. The impact of the correction of the error
specific to income (loss) from continuing operations for the three-month
periods ended April 30, 2009, July 31, 2009 and October 31, 2009 was
$832,000, ($1,435,000) and ($556,000), respectively. The following reconciles
certain
|
63
|
|
|
amounts reported in the
Consolidated Condensed Statements of Operations previously reported to the
reclassified and corrected amounts reported currently:
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended April 30, 2009
|
|
As
Reported
|
|
Reclassified for
Operations
Discontinued in
Subsequent
Periods and
Correction of
Error
|
|
As Restated
|
|
|
|
|
|
|
|
|
|
Net sales and revenue
|
|
$
|
29,734
|
|
$
|
(15,486
|
)
|
$
|
14,248
|
|
Cost of sales
|
|
|
25,015
|
|
|
(11,042
|
)
|
|
13,973
|
|
Gross profit
|
|
|
4,719
|
|
|
(4,444
|
)
|
|
275
|
|
Selling, general and administrative expenses
|
|
|
5,749
|
|
|
(4,738
|
)
|
|
1,011
|
|
Interest expense
|
|
|
878
|
|
|
(65
|
)
|
|
813
|
|
(Loss) income from continuing operations including noncontrolling
interests
|
|
|
(1,951
|
)
|
|
312
|
|
|
(1,639
|
)
|
(Loss) income from discontinued operations, net of tax
|
|
|
(402
|
)
|
|
(184
|
)
|
|
(586
|
)
|
Loss on sale of discontinued operations, net of tax
|
|
|
|
|
|
(128
|
)
|
|
(128
|
)
|
Net loss attributable to REX common shareholders
|
|
|
(1,731
|
)
|
|
|
|
|
(1,731
|
)
|
Basic and diluted
(loss) earnings per share from continuing operations
attributable
to REX common shareholders
|
|
$
|
(0.14
|
)
|
$
|
0.03
|
|
$
|
(0.11
|
)
|
Basic and diluted
loss per share from discontinued operations
attributable
to REX common shareholders
|
|
$
|
(0.05
|
)
|
$
|
(0.02
|
)
|
$
|
(0.07
|
)
|
Basic and diluted
loss per share from loss on sale of discontinued operations
attributable
to REX common shareholders
|
|
$
|
|
|
$
|
(0.01
|
)
|
$
|
(0.01
|
)
|
Basic and diluted
net loss per share
attributable to REX common shareholders
|
|
$
|
(0.19
|
)
|
$
|
|
|
$
|
(0.19
|
)
|
64
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended July 31, 2009
|
|
As
Reported
|
|
Reclassified for
Operations
Discontinued in
Subsequent
Periods and
Correction of
Error
|
|
As Restated
|
|
|
|
|
|
|
|
|
|
Net sales and revenue
|
|
$
|
21,477
|
|
$
|
(4,332
|
)
|
$
|
17,145
|
|
Cost of sales
|
|
|
17,912
|
|
|
(1,679
|
)
|
|
16,233
|
|
Gross profit
|
|
|
3,565
|
|
|
(2,653
|
)
|
|
912
|
|
Selling, general and administrative expenses
|
|
|
1,905
|
|
|
(336
|
)
|
|
1,569
|
|
Income (loss) from continuing operations including noncontrolling
interests
|
|
|
442
|
|
|
(1,435
|
)
|
|
(993
|
)
|
(Loss) income from discontinued operations, net of tax
|
|
|
(52
|
)
|
|
1,435
|
|
|
1,383
|
|
Gain on sale of discontinued operations, net of tax
|
|
|
251
|
|
|
|
|
|
251
|
|
Net income attributable
to REX common shareholders
|
|
|
837
|
|
|
|
|
|
837
|
|
Basic and diluted
earnings (loss) per share from continuing operations attributable to REX
common shareholders
|
|
$
|
0.07
|
|
$
|
(0.15
|
)
|
$
|
(0.08
|
)
|
Basic and diluted
(loss) earnings per share from discontinued operations
attributable
to REX common shareholders
|
|
$
|
(0.01
|
)
|
$
|
0.15
|
|
$
|
0.14
|
|
Basic and diluted
earnings per share from gain on sale of discontinued operations
attributable
to REX common shareholders
|
|
$
|
0.03
|
|
$
|
|
|
$
|
0.03
|
|
Basic and diluted
net income per share
attributable to REX common shareholders
|
|
$
|
0.09
|
|
$
|
|
|
$
|
0.09
|
|
65
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended October 31, 2009
|
|
As
Reported
|
|
Reclassified for
Operations
Discontinued in
Subsequent
Periods and
Correction of
Error
|
|
As Restated
|
|
|
|
|
|
|
|
|
|
Net sales and revenue
|
|
$
|
64,416
|
|
$
|
(2,719
|
)
|
$
|
61,697
|
|
Cost of sales
|
|
|
56,556
|
|
|
(520
|
)
|
|
56,036
|
|
Gross profit
|
|
|
7,860
|
|
|
(2,199
|
)
|
|
5,661
|
|
Selling, general and administrative expenses
|
|
|
2,581
|
|
|
(1,347
|
)
|
|
1,234
|
|
Income (loss) from continuing operations including noncontrolling
interests
|
|
|
3,307
|
|
|
(556
|
)
|
|
2,751
|
|
Income (loss) from discontinued operations, net of tax
|
|
|
(22
|
)
|
|
556
|
|
|
534
|
|
Net income
attributable
to REX common shareholders
|
|
|
2,273
|
|
|
|
|
|
2,273
|
|
Basic earnings
(loss) per share from continuing operations
attributable
to REX common shareholders
|
|
$
|
0.25
|
|
$
|
(0.06
|
)
|
$
|
0.19
|
|
Diluted earnings
(loss) per share from continuing operations
attributable
to REX common shareholders
|
|
$
|
0.24
|
|
$
|
(0.06
|
)
|
$
|
0.18
|
|
Basic earnings
per share from discontinued operations
attributable
to REX common shareholders
|
|
$
|
|
|
$
|
0.06
|
|
$
|
0.06
|
|
Diluted earnings
per share from discontinued operations
attributable
to REX common shareholders
|
|
$
|
|
|
$
|
0.06
|
|
$
|
0.06
|
|
Basic net income
per share
attributable to REX common shareholders
|
|
$
|
0.24
|
|
$
|
|
|
$
|
0.24
|
|
Diluted net
income per share
attributable to REX common shareholders
|
|
$
|
0.24
|
|
$
|
|
|
$
|
0.24
|
|
|
|
3.
|
INVESTMENTS
|
|
|
|
The Company has debt and
equity investments. The debt investments are accounted for under ASC 320,
Investments-Debt and Equity Securities
,
while the equity investments are accounted for under ASC 323
Investments-Equity Method and Joint Ventures
.
The following tables summarize investments at January 31, 2010 and 2009
(amounts in thousands):
|
|
|
|
Debt
Securities January 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
|
|
Coupon
Rate
|
|
Maturity
|
|
Classification
|
|
Fair
Market
Value
|
|
Initial
Investment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patriot Renewable Fuels, LLC Convertible Note
|
|
|
16.00
|
%
|
11/25/2011
|
|
Available
for Sale
|
|
$
|
1,014
|
|
$
|
933
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
66
|
|
|
Debt Securities January 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
|
|
Coupon
Rate
|
|
Maturity
|
|
Classification
|
|
Fair
Market
Value
|
|
Initial
Investment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patriot Renewable Fuels, LLC Convertible Note
|
|
|
16.00
|
%
|
11/25/2011
|
|
Available
for Sale
|
|
$
|
933
|
|
$
|
933
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized holding gains
were $81,000 ($49,000 net of income taxes) at January 31, 2010. There were no
unrealized holding gains at January 31, 2009.
The Company has $743,000 and
$933,000 at January 31, 2010 and 2009, respectively, on deposit with the
Florida Department of Financial Services to secure its obligation to fulfill
future obligations related to extended warranty contracts sold in the state of
Florida. The deposits earned 2.7% and 2.3% at January 31, 2010 and 2009,
respectively
.
In addition to the deposit
with the Florida Department of Financial Services, the Company has $1,357,000
and $1,351,000 at January 31, 2010 and 2009, respectively, invested in a money
market mutual fund to satisfy Florida Department of Financial Services
regulations. This investment earned 0.1% and 1.3% at January 31, 2010 and 2009,
respectively.
Equity Method Investments January 31, 2010
|
|
|
|
|
|
|
|
|
|
|
Entity
|
|
Ownership
Percentage
|
|
Carrying
Amount
|
|
Initial
Investment
|
|
|
|
|
|
|
|
|
|
|
Big River Resources, LLC
|
|
|
10
|
%
|
$
|
25,660
|
|
$
|
20,025
|
|
|
|
|
|
|
|
|
|
|
|
|
Patriot Renewable Fuels,
LLC
|
|
|
23
|
%
|
|
18,411
|
|
|
16,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Equity Securities
|
|
|
|
|
$
|
44,071
|
|
$
|
36,025
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
Method Investments January 31, 2009
|
|
|
|
|
|
|
|
|
|
|
Entity
|
|
Ownership
Percentage
|
|
Carrying
Amount
|
|
Initial
Investment
|
|
|
|
|
|
|
|
|
|
|
Big River Resources, LLC
|
|
|
10
|
%
|
$
|
23,850
|
|
$
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Patriot Renewable Fuels,
LLC
|
|
|
23
|
%
|
|
15,011
|
|
|
16,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Equity Securities
|
|
|
|
|
$
|
38,861
|
|
$
|
36,000
|
|
|
|
|
|
|
|
|
|
|
|
|
On October 1, 2006, the
Company entered into an agreement to invest $20 million in Big River, an Iowa
limited liability company and holding company for several entities. The Company
funded this
67
investment in exchange for a
10% ownership interest. Big River Resources West Burlington, LLC, a wholly
owned subsidiary of Big River, presently operates a 92 million gallon ethanol
manufacturing facility. Big River Resources Galva, LLC, a wholly owned
subsidiary of Big River, presently operates a 100 million gallon ethanol
manufacturing facility. Big River Resources United Energy, LLC, a 50.5% owned
subsidiary of Big River, presently operates a 100 million gallon ethanol
manufacturing facility. The Company recorded income of $2,487,000, $2,397,000
and $2,379,000 as its share of earnings from Big River during fiscal years
2009, 2008 and 2007, respectively.
On June 8, 2006, the Company
entered into an agreement to invest $16 million in Patriot which commenced
production operations during fiscal year 2008. The Company funded this
investment on December 4, 2006 in exchange for a 23% ownership interest. The
facility has a nameplate capacity of 100 million gallons annually and began
operations during the second quarter of fiscal year 2008. The Company recorded
income of $3,540,000 and losses of $1,548,000 and $778,000 as its share of
earnings or loss from Patriot during fiscal years 2009, 2008 and 2007,
respectively.
Undistributed earnings of
equity method investees totaled approximately $6.8 million at January 31, 2010.
68
|
|
|
Summarized
financial information for each of the Companys equity method investees, as
of their fiscal year end, is presented in the following table (amounts in
thousands):
|
|
|
|
|
|
|
|
|
As of
December 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patriot
|
|
Big River
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
$
|
24,767
|
|
$
|
101,710
|
|
|
|
|
|
|
|
|
|
Non current assets
|
|
|
179,954
|
|
|
371,669
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
204,721
|
|
$
|
473,379
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
$
|
13,941
|
|
$
|
46,162
|
|
|
|
|
|
|
|
|
|
Long-term liabilities
|
|
|
120,636
|
|
|
176,755
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
$
|
134,577
|
|
$
|
222,917
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling interests
|
|
$
|
|
|
$
|
11,530
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patriot
|
|
Big River
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
$
|
16,362
|
|
$
|
77,298
|
|
|
|
|
|
|
|
|
|
Non current assets
|
|
|
179,358
|
|
|
262,752
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
195,720
|
|
$
|
340,050
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
$
|
16,374
|
|
$
|
41,638
|
|
|
|
|
|
|
|
|
|
Long-term liabilities
|
|
|
126,490
|
|
|
77,237
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
$
|
142,864
|
|
$
|
118,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling interests
|
|
$
|
|
|
$
|
811
|
|
|
|
|
|
|
|
|
|
|
|
|
Summarized
financial information for each of the Companys equity method investees is
presented
|
69
|
|
|
in the
following table for the years ended December 31, 2009, 2008 and 2007 (amounts
in thousands):
|
|
|
|
|
|
|
|
|
Year Ended
December 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patriot
|
|
Big River
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales and revenue
|
|
$
|
213,709
|
|
$
|
448,145
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
$
|
26,556
|
|
$
|
43,317
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
17,288
|
|
$
|
25,225
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
17,288
|
|
$
|
25,225
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patriot
|
|
Big River
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales and revenue
|
|
$
|
63,534
|
|
$
|
343,698
|
|
|
|
|
|
|
|
|
|
Gross (loss) profit
|
|
$
|
(2,029
|
)
|
$
|
34,735
|
|
|
|
|
|
|
|
|
|
(Loss) income from continuing operations
|
|
$
|
(9,103
|
)
|
$
|
24,540
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(9,103
|
)
|
$
|
24,540
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patriot
|
|
Big River
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales and revenue
|
|
$
|
|
|
$
|
130,449
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
$
|
|
|
$
|
26,416
|
|
|
|
|
|
|
|
|
|
(Loss) income from continuing operations
|
|
$
|
(2,213
|
)
|
$
|
31,883
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(2,213
|
)
|
$
|
31,883
|
|
|
|
|
Both Patriot
and Big River have debt agreements that limit and restrict amounts the
companies can pay in the form of dividends or advances to owners. The
restricted net assets of Patriot and Big River combined at January 31, 2010
are approximately $298,076,000. At January 31, 2010, the Companys
proportionate share of restricted net assets of Patriot and Big River
combined are approximately $38,926,000.
|
70
|
|
4.
|
FAIR VALUE
|
|
|
|
Effective
February 1, 2008, the Company adopted ASC 820
Fair Value Measurements and Disclosures
, which provides a
framework for measuring fair value under GAAP. This accounting standard
defines fair value as the exchange price that would be received for an asset
or paid to transfer a liability (an exit price) in the principal or most
advantageous market for the asset or liability in an orderly transaction
between market participants on the measurement date. ASC 820 also eliminated
the deferral of gains and losses at inception of certain derivative contracts
whose fair value was not evidenced by market observable data. ASC 820
requires that the impact of this change in accounting for derivative
contracts be recorded as an adjustment to beginning retained earnings in the
period of adoption. There was no impact on the beginning balance of retained
earnings as a result of adopting ASC 820 because the Company held no
financial instruments in which a gain or loss at inception was deferred.
|
|
|
|
Effective
February 1, 2008, the Company determined the fair market values of its
financial instruments based on the fair value hierarchy established. ASC 820
requires an entity to maximize the use of observable inputs and minimize the
use of unobservable inputs when measuring fair value. The standard describes
three levels of inputs that may be used to measure fair values which are
provided below. The Company carries cash equivalents, restricted investments
and derivative assets and liabilities at fair value.
|
|
|
|
Level
1 Quoted prices in active markets for identical assets or liabilities.
Level 1 assets and liabilities include debt and equity securities and
derivative contracts that are traded in an active exchange market, as well as
certain U.S. Treasury securities that are highly liquid and are actively
traded in over-the-counter markets.
|
|
|
|
Level
2 Observable inputs other than Level 1 prices such as quoted prices for
similar assets or liabilities; quoted prices in markets that are not active;
or other inputs that are observable or can be corroborated by observable
market data for substantially the full term of the assets or liabilities.
Level 2 assets and liabilities include derivative contracts whose value is
determined using a pricing model with inputs that are observable in the
market or can be derived principally or corroborated by observable market
data.
|
|
|
|
Level
3 Unobservable inputs that are supported by little or no market activity
and that are significant to the fair value of the assets or liabilities.
Level 3 assets and liabilities include financial instruments whose value is
determined using pricing models, discounted cash flow methods, or similar
techniques, as well as instruments for which the determination of fair value
requires significant management judgment or estimation. Unobservable inputs
shall be developed based on the best information available, which may include
the Companys own data.
|
|
|
|
The fair
values of derivative assets and liabilities traded in the over-the-counter
market are determined using quantitative models that require the use of
multiple market inputs including interest rates, prices and indices to
generate pricing and volatility factors, which are used to value the
position. The predominance of market inputs are actively quoted and can be
validated through external sources, including brokers, market transactions
and third-party pricing services. Estimation risk is greater for derivative
asset and liability positions that are either option-based or have longer
maturity dates where observable market inputs are less readily available or
are unobservable, in which case interest rate, price or index scenarios are
extrapolated in order to determine the fair value. The fair values of
derivative assets and liabilities include adjustments for market liquidity,
counterparty credit quality, the Companys own credit standing and other
specific factors, where appropriate. To ensure the prudent application of
estimates and management judgment in
|
71
|
|
|
determining
the fair value of derivative assets and liabilities, various processes and
controls have been adopted, which include: model validation that requires a
review and approval for pricing, financial statement fair value determination
and risk quantification; periodic review and substantiation of profit and
loss reporting for all derivative instruments. Financial assets and
liabilities measured at fair value at January 31, 2010 on a recurring basis
are summarized below (amounts in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total Fair
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Equivalents
|
|
$
|
81,625
|
|
$
|
|
|
$
|
|
|
$
|
81,625
|
|
Investments in Debt Securities
|
|
|
|
|
|
1,014
|
|
|
|
|
|
1,014
|
|
Restricted Investments
|
|
|
1,357
|
|
|
|
|
|
|
|
|
1,357
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
82,982
|
|
$
|
1,014
|
|
$
|
|
|
$
|
83,996
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Liabilities
|
|
$
|
|
|
$
|
5,884
|
|
$
|
|
|
$
|
5,884
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
$
|
|
|
$
|
5,884
|
|
$
|
|
|
$
|
5,884
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial
assets and liabilities measured at fair value at January 31, 2009 on a
recurring basis are summarized below (amounts in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total Fair
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Equivalents
|
|
$
|
91,601
|
|
$
|
|
|
$
|
|
|
$
|
91,601
|
|
Investments in Debt Securities
|
|
|
|
|
|
933
|
|
|
|
|
|
933
|
|
Restricted Investments
|
|
|
1,351
|
|
|
|
|
|
|
|
|
1,351
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
92,952
|
|
$
|
933
|
|
$
|
|
|
$
|
93,885
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Liabilities
|
|
$
|
|
|
$
|
6,028
|
|
$
|
|
|
$
|
6,028
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
$
|
|
|
$
|
6,028
|
|
$
|
|
|
$
|
6,028
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No financial
instruments were elected to be measured at fair value in accordance with ASC
470-20-25-21.
|
|
|
|
The Company
reviews its long-lived assets balances for impairment on at least an annual
basis based on the carrying value of these assets as of January 31. As a
result of the increase in vacant owned real estate during the latter half of
fiscal year 2009, the Company tested certain long-lived assets for impairment
using a fair value measurement approach. The fair value measurement approach
utilizes a number of significant unobservable inputs or Level 3 assumptions.
These assumptions include, among others, the implied fair value of these
assets using an income approach by preparing a discounted cash flow analysis
and a the implied fair value of these assets using recent sales data of
comparable properties, and other subjective assumptions. Upon completion of
its impairment analysis during the fourth quarter of fiscal year 2009, the
Company determined that the carrying value of certain long-lived assets
exceeded the fair value of these assets. Accordingly, the Company recorded
long-lived asset impairment charges of approximately $1.5 million to properly
reflect the carrying value of these assets.
|
72
|
|
|
Assets
measured at fair value at January 31, 2010 on a non-recurring basis are
summarized below (amounts in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
January 31,
2010
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
Losses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and
equipment, net
|
|
$
|
6,161
|
|
$
|
|
|
$
|
|
|
$
|
6,161
|
|
$
|
1,533
|
|
|
|
5.
|
SYNTHETIC FUEL LIMITED PARTNERSHIPS
|
|
|
|
During
fiscal year 1998, the Company invested in two limited partnerships that
produced synthetic fuels. The limited partnerships earned Federal income tax
credits under Section 29/45K of the Internal Revenue Code based upon the
quantity and content of synthetic fuel production and sales. Credits under
Section 29/45K are available for qualified fuels sold before January 1, 2008
(see Note 19).
|
|
|
|
Through a
series of sales, the Company sold its ownership interest in Colona Synfuel
Limited Partnership L.L.L.P (Colona), a limited partnership that owned a
synthetic fuel facility, and generally received cash payments from the sales
on a quarterly basis through fiscal year 2007. The Company earned and
reported as income approximately $0.5 million and $4.2 million for fiscal
years 2008 and 2007, respectively. No income was reported for fiscal year
2009.
|
|
|
|
The Company
sold its entire ownership interest in Somerset Synfuel, L.P., (Somerset), a
limited partnership that owned two synthetic fuel facilities, and generally
received cash payments from the sales on a quarterly basis through fiscal
year 2007. The Company earned and reported as income approximately $0.2
million and $2.8 million for fiscal years 2008 and 2007, respectively. No
income was reported for fiscal year 2009.
|
|
|
|
The Section
29/45K tax credit program expired, under current law, at the end of 2007.
Thus, the Company does not expect to recognize any income or loss from the
Colona and Somerset sales beyond fiscal year 2008.
|
|
|
|
Income from
synthetic fuel investments also includes income related to the sale on March
30, 2004 of the Companys membership interest in the limited liability
company that owned a synthetic fuel facility in Gillette, Wyoming. In
addition to certain other payments, the Company was eligible to receive $1.50
per ton of qualified production produced by the facility and sold through
2007. The plant was subsequently sold and during the third quarter of fiscal
year 2006, the Company modified its agreement with the owners and operators
of the synthetic fuel facility. Based on the terms of the modified agreement,
the Company currently is not able to determine the likelihood and timing of
collecting payments related to production occurring after September 30, 2006.
Thus, the Company cannot currently determine the timing of income recognition,
if any, related to production occurring subsequent to September 30, 2006. The
Company did not recognize any investment income from this sale during fiscal
years 2009, 2008 or 2007.
|
|
|
6.
|
BUSINESS COMBINATIONS
|
|
|
|
On September
30, 2006, the Company acquired 47 percent of the outstanding membership units
of Levelland Hockley County Ethanol, LLC (Levelland Hockley). Levelland
Hockley was a
|
73
|
|
|
development
stage entity that completed construction of an ethanol production facility in
Levelland, Texas during fiscal year 2008. Levelland Hockley commenced
production operations in March of 2008. The ethanol plant has a nameplate
capacity of 40 million gallons of ethanol annually.
|
|
|
|
The results
of Levelland Hockleys operations have been included in the consolidated
financial statements subsequent to the acquisition date and are included in
the Companys alternative energy segment. The aggregate purchase price was
$11.5 million, all of which was cash.
|
|
|
|
The
acquisition was recorded by allocating the total purchase price to the assets
acquired, including intangible assets and liabilities assumed, based on their
estimated fair values at the acquisition date. The excess of the cost of the
acquisition over the net amounts assigned to the fair values of the assets
acquired and liabilities assumed was recorded as goodwill.
|
|
|
|
As a result
of losses incurred by Levelland Hockley and the decreasing spread between
ethanol and grain prices, which negatively impacted profitability during fiscal
year 2008, the Company performed an interim goodwill impairment analysis
during the third quarter of fiscal year 2008. Based upon this review of
goodwill, the Company recorded an impairment charge of $1.3 million during
the third quarter of fiscal year 2008, which represented the entire goodwill
balance. The impairment charge is included in selling, general and administrative
expenses in the consolidated statements of operations and relates to the
Companys alternative energy segment. There was no change in goodwill for the
year ended January 31, 2010.
|
|
|
|
The
following table summarizes the estimated fair values of the assets acquired
and liabilities assumed at the date of acquisition:
|
|
|
|
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
13,165
|
|
Accrued interest receivable
|
|
|
24
|
|
Property, plant and equipment
|
|
|
595
|
|
Prepaid loan fees
|
|
|
3,200
|
|
Deposits
|
|
|
5,220
|
|
Goodwill
|
|
|
1,322
|
|
|
|
|
|
|
Total assets acquired
|
|
|
23,526
|
|
Current liabilities
|
|
|
(583
|
)
|
Noncontrolling interest
|
|
|
(11,443
|
)
|
|
|
|
|
|
Net purchase price
|
|
$
|
11,500
|
|
|
|
|
|
|
|
|
|
Prepaid loan
fees have an estimated useful life of 6 years. The entire amount of goodwill
is expected to be deductible for income tax purposes.
|
|
|
|
Effective
July 1, 2007, the Company converted its $5.0 million convertible secured
promissory note, which increased its ownership interest in Levelland Hockley
to 56%. There was a $200,000 premium over book value related to the
conversion; the premium was recorded as a non-cash distribution to minority
interest holders on the consolidated statement of shareholders equity.
|
|
|
|
On October
30, 2007, the Company acquired 74 percent of the outstanding membership units
of One Earth Energy, LLC (One Earth). The results of One Earths operations
have been included in the consolidated financial statements subsequent to the
acquisition date and are included in the Companys alternative energy
segment. The aggregate purchase price was $50.8 million, all of which was
cash.
|
74
|
|
|
The
acquisition was recorded by allocating the total purchase price to the assets
acquired, including intangible assets and liabilities assumed, based on their
estimated fair values at the acquisition date. The following table summarizes
the estimated fair values of the assets acquired and liabilities assumed at
the date of acquisition (amounts in thousands):
|
|
|
|
|
|
Cash
|
|
$
|
59,313
|
|
Property,
plant and equipment
|
|
|
9,899
|
|
Prepaid
expenses
|
|
|
307
|
|
Prepaid loan
fees
|
|
|
1,012
|
|
|
|
|
|
|
Total assets acquired
|
|
|
70,531
|
|
Current
liabilities
|
|
|
(1,922
|
)
|
Long term
debt
|
|
|
(1,010
|
)
|
Noncontrolling
interest
|
|
|
(16,832
|
)
|
|
|
|
|
|
Net purchase
price
|
|
$
|
50,767
|
|
|
|
|
|
|
|
|
|
Prepaid loan
fees have an estimated useful life of 6 years. One Earth was a development
stage entity that has completed construction of an ethanol production
facility in Gibson City, Illinois during fiscal year 2009. One Earth
commenced operations in July of 2009. The ethanol plant has a nameplate
capacity of 100 million gallons of ethanol annually.
|
|
|
|
The
unaudited financial information in the table below summarizes the combined
results of operations of the Company and One Earth, on a pro forma basis, as
though the companies had been combined as of the beginning of the period
presented (in thousands, except per share amounts):
|
|
|
|
|
|
|
|
|
|
Year Ended
January 31,
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales and revenue
|
|
|
$
|
382
|
|
|
Net income
|
|
|
|
33,661
|
|
|
Basic net income per share
|
|
|
|
3.23
|
|
|
Diluted net income per
share
|
|
|
|
2.87
|
|
|
|
|
|
|
|
|
|
|
|
|
The pro
forma financial information is presented for informational purposes only and
is not indicative of the results of operations that would have been achieved
if the acquisition had taken place at the beginning of each of the periods
presented.
|
75
|
|
7.
|
OTHER ASSETS
|
|
|
|
The
components of other noncurrent assets at January 31, 2010 and 2009 are as
follows (amounts in thousands):
|
|
|
|
|
|
|
|
|
|
|
January 31,
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
|
Prepaid loan fees
|
|
$
|
3,633
|
|
$
|
4,515
|
|
Prepaid commissions
|
|
|
4,320
|
|
|
7,563
|
|
Other
|
|
|
927
|
|
|
336
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
8,880
|
|
$
|
12,414
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid loan
fees represent amounts paid to obtain both mortgage debt and borrowings under
the Levelland Hockleys and One Earths debt arrangements. Such amounts are
amortized as interest expense. Future amortization expense is as follows
(amounts in thousands):
|
|
|
|
|
|
Years Ended
January 31,
|
|
Amortization
|
|
|
|
|
|
|
2011
|
|
$
|
1,117
|
|
2012
|
|
|
986
|
|
2013
|
|
|
854
|
|
2014
|
|
|
483
|
|
2015
|
|
|
187
|
|
Thereafter
|
|
|
6
|
|
|
|
|
|
|
Total
|
|
$
|
3,633
|
|
|
|
|
|
|
|
|
|
Prepaid
commissions represent sales commissions paid in connection with extended
warranties sold by the Companys former retail sales staff. Such amounts are
capitalized and amortized ratably over the life of the extended warranty plan
sold. Future amortization of prepaid commissions is as follows (amounts in
thousands):
|
|
|
|
|
|
Years Ended
January 31,
|
|
Amortization
|
|
|
|
|
|
|
2011
|
|
$
|
2,396
|
|
2012
|
|
|
1,195
|
|
2013
|
|
|
565
|
|
2014
|
|
|
164
|
|
|
|
|
|
|
Total
|
|
$
|
4,320
|
|
|
|
|
|
|
|
|
8.
|
NET INCOME PER SHARE FROM CONTINUING OPERATIONS
|
|
|
|
The Company
reports net income per share in accordance with ASC 260,
Earnings per Share
. Basic net income
per share is computed by dividing net income available to common shareholders
|
76
|
|
|
by the weighted
average number of common shares outstanding during the year. Diluted net
income per share is computed by dividing net income available to common
shareholders by the weighted average number of shares outstanding and
dilutive common share equivalents during the year. Common share equivalents
for each year include the number of shares issuable upon the exercise of
outstanding options, less the shares that could be purchased under the
treasury stock method. The following table reconciles the basic and diluted
net income per share from continuing operations computations for each year
presented for fiscal years 2009 and 2007 (amounts in thousands, except
per-share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
|
|
|
|
|
|
Income
|
|
Shares
|
|
Per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income per share from continuing operations attributable to
REX common shareholders
|
|
$
|
5,158
|
|
|
9,254
|
|
$
|
0.55
|
|
Effect of stock options
|
|
|
|
|
|
297
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per share from continuing operations attributable
to REX common shareholders
|
|
$
|
5,158
|
|
$
|
9,551
|
|
$
|
0.54
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
|
|
|
|
|
|
Income
|
|
Shares
|
|
Per
Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income per share from continuing operations attributable to
REX common shareholders
|
|
$
|
19,588
|
|
|
10,420
|
|
$
|
1.88
|
|
Effect of stock options
|
|
|
|
|
|
1,301
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per share from continuing operations attributable
to REX common shareholders
|
|
$
|
19,588
|
|
|
11,721
|
|
$
|
1.67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As there was
a loss from continuing operations in fiscal year 2008, basic loss per share
from continuing operations equals diluted loss per share from continuing
operations. For fiscal years 2009, 2008 and 2007, a total of 310,723,
2,715,001 and 162,719 shares, respectively, subject to outstanding options
were not included in the common equivalent shares outstanding calculation as
the effect from these shares is antidilutive.
|
|
|
9.
|
SALE AND LEASEBACK TRANSACTIONS AND OTHER LEASES
|
|
|
|
On September
16, 2008, the Company completed a transaction for the sale and partial
leaseback of its Cheyenne, Wyoming distribution center under a three year
lease term. A pre-tax gain, classified as discontinued operations, of
approximately $2.4 million (net of expenses) resulted from this sale. The
Company recognized approximately $0.8 million $1.6 million of the gain in
fiscal years 2009 and 2008, respectively. The lease has been accounted for as
an operating lease.
|
|
|
|
On April 30,
2007, the Company completed a transaction for the sale of 86 of its current
and former store locations to KLAC REX, LLC (Klac) for $74.5 million in
cash, before selling expenses. The Company also entered into leases to
leaseback 40 of the properties from Klac for initial lease terms expiring
January 31, 2010. All of the leases with Klac were terminated by January 31,
2010.
|
77
|
|
|
This
transaction resulted in a gain (realized and deferred) of $14.8 million. Of
this gain, $3.9 million and $1.5 million was recognized, in fiscal years 2009
and 2008, respectively. The gain recognized in fiscal years 2009 and 2008 was
classified in discontinued operations. As a result of the wind down of the
Companys retail business, the term over which the deferred gain was being
amortized had been shortened and is based upon the Company abandoning, or otherwise
ceasing use of the leased property. See Note 14 for a discussion of
restructuring related charges. The leases have been accounted for as
operating leases.
|
|
|
|
The Company
is committed under operating and capital leases for one former retail warehouse
location and equipment at ethanol plants. The lease agreements are for
varying terms through fiscal year 2011 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.
The following is a summary of rent expense under operating leases (amounts in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended
January 31
|
|
Minimum
Rentals
|
|
Sublease
Income
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
$
|
85
|
|
$
|
(117
|
)
|
$
|
(32
|
)
|
2009
|
|
|
78
|
|
|
(136
|
)
|
|
(58
|
)
|
2008
|
|
|
84
|
|
|
(134
|
)
|
|
(50
|
)
|
|
|
|
The Company
is secondarily liable under lease arrangements when there is a sublessee.
These arrangements arise out of the normal course of business when the
Company decides to close stores prior to lease expiration and is able to
sublease the facility. As of January 31, 2010, future minimum annual rentals
for all operating leases and sublease income are as follows (amounts in
thousands):
|
|
|
|
|
|
|
|
|
Years
Ended
January 31
|
|
Minimum
Rentals
|
|
Sublease
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011 (a)
|
|
$
|
66
|
|
$
|
65
|
|
2012 (a)
|
|
|
26
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
92
|
|
$
|
71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Amounts do
not include minimum rentals related to a distribution center for which the
related expense has been recognized as part of the Companys restructuring
activities. Such amounts are $288,000 for the fiscal year ended January 31,
2011 and $146,000 for the fiscal year ended January 31, 2012.
|
|
|
|
|
At January
31, 2010, the Company has lease or sub-lease agreements, as landlord, for all
or portions of eleven properties. The Company owns ten of these properties
and is the tenant/sub landlord for one of the properties. All of the leases
are accounted for as operating leases. The Company recognized lease revenue
of approximately $1,089,000, $415,000 and $382,000 in fiscal years 2009, 2008
and 2007, respectively.
|
78
|
|
|
As of
January 31, 2010, future minimum annual rentals on such leases are as follows
(amounts in thousands):
|
|
|
|
|
|
|
Years Ended
January 31
|
|
|
Minimum
Rentals
|
|
|
|
|
|
|
|
|
|
|
|
2011
|
|
$
|
1,122
|
|
2012
|
|
|
1,043
|
|
2013
|
|
|
1,004
|
|
2014
|
|
|
905
|
|
2015
|
|
|
847
|
|
Thereafter
|
|
|
576
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
5,497
|
|
|
|
|
|
|
|
|
|
Levelland
Hockley leases certain real estate and equipment for its ethanol plant. These
leases have been classified as capital leases. The following is a summary, at
January 31, 2010, of the aggregate minimum future annual rental commitments
for all capital leases:
|
|
|
|
|
|
|
Years Ended
January 31
|
|
|
Minimum
Rentals
|
|
|
|
|
|
|
|
2011
|
|
$
|
569
|
|
2012
|
|
|
569
|
|
2013
|
|
|
524
|
|
2014
|
|
|
393
|
|
|
|
|
|
|
Total minimum lease
payments
|
|
|
2,055
|
|
Less amoun representing
interest
|
|
|
172
|
|
|
|
|
|
|
Present value of minimum
capital lease payments
|
|
|
1,883
|
|
Less current maturities of
capital lease obligations
|
|
|
475
|
|
|
|
|
|
|
Long term capital lease
obligations
|
|
$
|
1,408
|
|
|
|
|
|
|
|
|
|
The
composition of capital leases reflected as property and equipment at January
31, 2010 and 2009 is as follows:
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Buildings and improvements
|
|
$
|
50
|
|
$
|
50
|
|
Machinery, equipment and
fixtures
|
|
|
2,872
|
|
|
2,872
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,922
|
|
|
2,922
|
|
Less: accumulated
amortization
|
|
|
(399
|
)
|
|
(141
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,523
|
|
$
|
2,781
|
|
|
|
|
|
|
|
|
|
|
|
10.
|
COMMON STOCK
|
|
|
|
During
fiscal years 2009, 2008 and 2007, the Company purchased 1,256,604 shares,
1,636,252 shares and 971,319 shares, respectively, of its common stock for
$15,694,000 $17,708,000 and
|
79
|
|
|
80
$18,045,000, respectively. Included in these amounts are shares the Company
received totaling 659,957 for the year ended January 31, 2010 and 186,919,
for the year ended January 31, 2008 as tenders of the exercise price of stock
options exercised by the Companys Chief Executive Officer. The cost of these
shares, determined as the fair market value on the date they were tendered,
was approximately $9,239,000 and $3,458,000 for the years ended January 31,
2010 and 2008, respectively. At January 31, 2010, the Company had prior
authorization by its Board of Directors to purchase, in open market
transactions, an additional 482,701 shares of its common stock. Information
regarding the Companys common stock is as follows (amounts in thousands):
|
|
|
|
|
|
|
|
|
|
|
January 31,
2010
|
|
January 31,
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Authorized
shares
|
|
|
45,000
|
|
|
45,000
|
|
Issued
shares
|
|
|
29,853
|
|
|
29,853
|
|
Outstanding
shares
|
|
|
9,808
|
|
|
9,382
|
|
|
|
11.
|
LONG-TERM DEBT AND INTEREST RATE SWAPS
|
|
|
|
Long-term
debt consists of notes payable secured by certain land, buildings and
equipment. Interest rates ranged from 2.3% to 8.4% in fiscal years 2009 and
2008. Principal and interest are payable periodically over terms that
generally range from 5 to 10 years. The following provides information on
rates segregated as fixed or variable and by term for fiscal years 2009 and
2008:
|
|
|
|
|
|
|
|
Fiscal Year 2009
|
|
|
|
|
|
|
|
|
Interest Rates
|
|
Maturity
|
|
Balance
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Variable
|
|
|
|
|
3.38%
- 4.25%
|
|
Within five years
|
|
$
|
135,790
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed
|
|
|
|
|
8.40%
|
|
Five to six years
|
|
$
|
2,330
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year 2008
|
|
|
|
|
|
|
|
Interest Rates
|
|
Maturity
|
|
Balance
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Variable
|
|
|
|
|
2.30%
- 5.44%
|
|
Within five years
|
|
$
|
43,113
|
|
5.29%
|
|
Five to six years
|
|
|
56,042
|
|
|
|
|
|
|
|
|
|
|
Total variable
|
|
$
|
99,155
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed
|
|
|
|
|
6.75%
- 7.21%
|
|
Within five years
|
|
$
|
2,243
|
|
6.41%
- 8.40%
|
|
Five to ten years
|
|
|
7,693
|
|
|
|
|
|
|
|
|
|
|
Total fixed
|
|
$
|
9,936
|
|
|
|
|
|
|
|
|
80
|
|
|
Annual
expected maturities of long-term debt are as follows (amounts in thousands):
|
|
|
|
|
|
|
Years
Ending
January 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011
|
|
$
|
12,831
|
|
2012
|
|
|
14,628
|
|
2013
|
|
|
15,253
|
|
2014
|
|
|
35,387
|
|
2015
|
|
|
59,646
|
|
Thereafter
|
|
|
375
|
|
|
|
|
|
|
|
|
$
|
138,120
|
|
|
|
|
|
|
|
|
|
In fiscal
year 2009, the Company paid off approximately $8.0 million in mortgage debt
prior to maturity. As a result, the Company expensed unamortized financing
cost and prepayment penalties of approximately $89,000 as loss on early
termination of debt.
|
|
|
|
The fair
value of the Companys long-term debt at January 31, 2010 and 2009 was
approximately $138.4 million and $109.6 million, respectively.
|
|
|
|
Levelland Hockley Subsidiary Level Debt
|
|
|
|
During the
second quarter of fiscal year 2008, pursuant to the terms of the construction
loan agreement, Levelland Hockley converted the construction loan into a
permanent term loan. Beginning with the first monthly payment on June 30,
2008, payments are due in 59 equal monthly payments of principal plus accrued
interest with the principal portion calculated based on a 120 month
amortization schedule. One final installment will be required on the maturity
date (June 30, 2013) for the remaining unpaid principal balance with accrued
interest. The term loan bears interest at a floating rate of 400 basis points
above LIBOR (4.3% at January 31, 2010), adjusted monthly through the maturity
date. Borrowings are secured by all of the assets of Levelland Hockley. This
debt is recourse only to Levelland Hockley and not to REX Stores Corporation
or any of its wholly owned subsidiaries. As of January 31, 2010,
approximately $37.2 million was outstanding on the term loan. Levelland
Hockley is also subject to certain financial covenants under the loan
agreement, including required levels of EBITDAR, debt service coverage ratio
requirements, net worth requirements and other common covenants. Levelland
Hockley was in compliance with all covenants at January 31, 2010.
|
|
|
|
Levelland
Hockley paid approximately $3.5 million for various fees associated with the
construction and term loan agreement. These fees are recorded as prepaid loan
fees and will be amortized ratably over the loan term. At January 31, 2010,
the Companys proportionate share of restricted assets related to Levelland
Hockley was approximately $13.2 million. Levelland Hockleys restricted
assets total approximately $23.6 million. Such assets may not be paid in the
form of dividends or advances to the parent company or other members of
Levelland Hockley per the terms of the loan agreement with GE Capital.
|
|
|
|
Levelland
Hockley entered into a forward interest rate swap in the notional amount of
$43.7 million with Merrill Lynch Capital during fiscal year 2007. The swap
fixed the variable interest rate of the term loan subsequent to the plant
completion date at 7.89%. The swap settlements commenced as of April 30, 2008
and terminate on April 30, 2010. At January 31, 2010 and 2009, the Company
|
81
|
|
|
recorded a
liability of $329,000 and $1,351,000, respectively related to the fair value
of the swap. The change in fair value was recorded in the Consolidated
Statements of Operations.
|
|
|
|
One Earth Energy Subsidiary Level Debt
|
|
|
|
During the
third quarter of fiscal year 2009, pursuant to the terms of the construction
loan agreement, One Earth converted the construction loan into a term loan as
all of the requirements, for such conversion, of the construction and term
loan agreement were fulfilled. Beginning with the first quarterly payment on
October 8, 2009, payments are due in 20 quarterly payments of principal plus
accrued interest with the principal portion calculated based on a 120 month
amortization schedule. One final installment will be required on the maturity
date (July 31, 2014) for the remaining unpaid principal balance with accrued
interest. The term loan bears interest at rates ranging from LIBOR plus 300
basis points to LIBOR plus 310 basis points (3.3% to 3.4% at January 31,
2010). Borrowings are secured by all property of One Earth. This debt is
recourse only to One Earth and not to REX Stores Corporation or any of its
other subsidiaries. During fiscal year 2010, One Earth borrowed $49.0 million
on this loan. As of January 31, 2010, approximately $98.0 million was
outstanding on the term loan. One Earth is also subject to certain financial
covenants under the loan agreement, including required levels of EBITDA,
working capital, debt service coverage ratio requirements, net worth
requirements and other common covenants. One Earth was in compliance with all
applicable covenants at January 31, 2010.
|
|
|
|
One Earth
has a $10.0 million revolving loan facility that matures September 17, 2010.
Borrowings under this facility bear interest at the greater of 2.0% or LIBOR
plus 310 basis points. One Earth has no outstanding borrowings on the
revolving loan as of January 31, 2010.
|
|
|
|
One Earth
has paid approximately $1.4 million in financing costs. These costs are
recorded as prepaid loan fees and are being amortized ratably over the term
of the loan. At January 31, 2010, the Companys proportionate share of
restricted assets related to One Earth was approximately $47.9 million. One
Earths restricted assets total approximately $65.0 million. Such assets may
not be paid in the form of dividends or advances to the parent company or
other members of One Earth per the terms of the loan agreement with First
National Bank of Omaha.
|
|
|
|
One Earth
entered into two forward interest rate swaps in the notional amounts of $50.0
million and $25.0 million with the Bank. The swap settlements commenced as of
July 31, 2009; the $50.0 million swap terminates on July 8, 2014 and the
$25.0 million swap terminates on July 31, 2011. The $50.0 million swap fixed
a portion of the variable interest rate of the term loan subsequent to the
plant completion date at 7.9% while the $25.0 million swap fixed the rate at
5.49%. At January 31, 2010 and 2009, the Company recorded a liability of $5.6
million and $4.7 million, respectively related to the fair value of the
swaps. The change in fair value was recorded in the Consolidated Statements
of Operations.
|
|
|
12.
|
FINANCIAL INSTRUMENTS
|
|
|
|
The Company
uses interest rate swaps to manage its interest rate exposure at Levelland
Hockley and One Earth by fixing the interest rate on a portion of the
variable rate debt these entities have. The Company does not engage in
trading activities involving derivative contracts for which a lack of
marketplace quotations would necessitate the use of fair value estimation
techniques. As of January 31, 2010, the notional value of the Levelland
Hockley and One Earth interest rate swaps were $36.0 million and $72.2
million, respectively. At January 31, 2010, the Company has recorded a
liability of $5.9 million related to the fair value of the swaps. The change
in fair value was recorded in the Consolidated Statements of Operations. The
notional amounts and fair values of derivatives, all of
|
82
|
|
|
which are
not designated as cash flow hedges at January 31, 2010 are summarized in the
table below (amounts in thousands):
|
|
|
|
|
|
|
|
|
|
|
Notionaol
Amount
|
|
Fair Value
Liability
|
|
|
|
|
|
|
|
|
|
Interest
rate swaps
|
|
$
|
108,238
|
|
$
|
5,884
|
|
|
|
|
|
|
|
|
|
|
|
|
As the
interest rate swaps are not designated as cash flow hedges, the unrealized
gain and loss on the derivatives is reported in current earnings. The Company
reported losses of $2,487,000 and $3,797,000 and $2,601,000, in fiscal years
2009, 2008 and 2007, respectively.
|
|
|
|
In the
normal course of its ethanol business, the Company enters into forward
pricing agreements for the purchase of grain and for the sale of ethanol and
distillers grains for delivery in future periods. The Company accounts for
these forward pricing arrangements as normal purchases and normal sales
pursuant to the normal purchases and normal sales scope exemption of ASC
815,
Derivatives and Hedging
.
|
|
|
|
Levelland
Hockley has forward purchase contracts for 2,261,000 bushels of sorghum, the
principal raw material for its ethanol plant. Levelland Hockley expects to
take delivery of the sorghum through March 2010. The unrealized loss of such
contracts was approximately $327,000 at January 31, 2010.
|
|
|
|
One Earth
has forward purchase contracts for 3,501,000 bushels of corn, the principal
raw material for its ethanol plant. One Earth expects to take delivery of the
corn through March 2010. The unrealized gain of such contracts was
approximately $1,904,000 at January 31, 2010.
|
|
|
|
Levelland
Hockley has sales commitments for 4,220,000 gallons of ethanol and 112,400
tons of distiller grains. Levelland Hockley expects to deliver the ethanol
and distiller grains through March 2010. The unrealized loss of such
contracts was approximately $81,000 at January 31, 2010.
|
|
|
|
One Earth
has sales commitments for 10.3 million gallons of ethanol and 25,200 tons of
distiller grains. One Earth expects to deliver the ethanol and distiller
grains through March 2010. The unrealized loss of such contracts was
approximately $2.1 million at January 31, 2010.
|
|
|
13.
|
EMPLOYEE BENEFITS
|
|
|
|
Stock Option Plans
The Company maintains the REX Stores Corporation 1995 Omnibus Stock
Incentive Plan and the REX Stores Corporation 1999 Omnibus Stock Incentive
Plan (the Omnibus Plans). Under the Omnibus Plans, the Company may grant to
officers and key employees awards in the form of non-qualified stock options,
stock appreciation rights, restricted stock, other stock-based awards and
cash incentive awards. The Omnibus Plans also provide for yearly grants of
non-qualified stock options to directors who are not employees of the
Company. The exercise price of each option must be at least 100% of the fair
market value of the Companys common stock on the date of grant. A maximum of
4,500,000 shares of common stock are authorized for issuance under each of
the Omnibus Plans. On January 31, 2010, 108,011 and 2,302,425 shares remain
available for issuance under the 1995 and 1999 Plans, respectively.
|
|
|
|
On April 17,
2001, the Companys Board of Directors approved a grant of non-qualified
stock options to two key executives for 1,462,500 shares at an exercise price
of $8.01, which represented
|
83
|
|
|
the market
price on the date of grant. These became fully vested as of December 31,
2005. As of January 31, 2010, 337,500 of these options remained outstanding.
|
|
|
|
On May 26,
2005, the Companys Board of Directors approved accelerating the vesting of
out-of-the-money, unvested stock options held by current employees, including
non-director executive officers. An option was considered out-of-the-money if
the stated option exercise price was greater than $13.82, which was the
closing price of the Companys common stock on May 26, 2005. As a result,
options to purchase approximately 118,000 shares, including options to
purchase approximately 60,000 shares held by non director executive officers,
became immediately exercisable. As a result of the acceleration, stock option
expense was reduced by approximately $181,000 ($118,000, net of tax) during
fiscal year 2007.
|
|
|
|
The
following summarizes stock option activity for fiscal years 2009, 2008 and
2007 (amounts in thousands, except per-share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
Shares
(000s)
|
|
Weighted
Average
Exercise
Price
|
|
Shares
(000s)
|
|
Weighted
Average
Exercise
Price
|
|
Shares
(000s)
|
|
Weighted
Average
Exercise
Price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OutstandingBeginning of year
|
|
|
2,715
|
|
$
|
9.63
|
|
|
3,016
|
|
$
|
9.16
|
|
|
4,337
|
|
$
|
8.18
|
|
Exercised
|
|
|
(1,683
|
)
|
|
8.87
|
|
|
(299
|
)
|
|
4.86
|
|
|
(1,266
|
)
|
|
5.64
|
|
Canceled or expired
|
|
|
(208
|
)
|
|
13.75
|
|
|
(2
|
)
|
|
12.64
|
|
|
(55
|
)
|
|
12.67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OutstandingEnd of year
|
|
|
824
|
|
$
|
10.14
|
|
|
2,715
|
|
$
|
9.63
|
|
|
3,016
|
|
$
|
9.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ExercisableEnd of year
|
|
|
824
|
|
$
|
10.14
|
|
|
2,661
|
|
$
|
9.57
|
|
|
2,854
|
|
$
|
8.96
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price ranges
and other information for stock options outstanding as of January 31, 2010
were as
|
84
|
|
|
follows
(amounts in thousands, except per share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding and Exercisable
|
|
|
|
|
|
|
Range of
Exercise
Prices
|
|
|
Shares
(000s)
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Life
|
|
|
|
|
|
|
|
|
|
|
|
$8.01 to $12.02
|
|
|
513
|
|
$
|
8.25
|
|
|
1.12
|
|
$12.04 to $16.04
|
|
|
311
|
|
|
13.27
|
|
|
3.46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
824
|
|
$
|
10.14
|
|
|
2.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit Sharing Plan
The Company has a qualified, noncontributory profit sharing plan (the
Plan) covering full-time employees who meet certain eligibility
requirements. The Plan also allows for additional 401(k) saving contributions
by participants, along 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 approximately $1,800, $15,000 and
$18,000 for fiscal years 2009, 2008 and 2007, respectively, under the Plan.
|
|
|
14.
|
RESTRUCTURING AND OTHER
|
|
|
|
During the
fourth quarter of fiscal year 2008, the Company entered into an agreement
with Appliance Direct, Inc. (Appliance Direct) pursuant to which (i) the
Company agreed to sell certain appliance inventory, furniture, fixtures and
equipment at the store locations to be taken over by Appliance Direct and
(ii) subsidiaries of Appliance Direct leased 37 retail store locations owned
by the Company.
|
|
|
|
The Company
agreed to pay Appliance Direct, as of the implementation date defined in the
agreement, an amount equal to the adjusted book value liability of the
Companys customer extended service plans for certain appliances previously
sold at locations that Appliance Direct took over from the Company (the ESP
Credit).
|
|
|
|
During the
fourth quarter of fiscal year 2008, the Company recorded a restructuring
charge of approximately $4.2 million related to (i) a workforce reduction of
a majority of employees located at its corporate headquarters, retail stores
and distribution facilities and (ii) certain costs associated with the
transition of the Companys retail business to Appliance Direct.
|
|
|
|
On July 31,
2009, the Company entered into a Third Amendment to Agreement and a Second
Global Amendment to Multiple Leases (together, the Amendments) with Appliance
Direct. The Amendments (i) eliminated the right of Appliance Direct to
purchase stores it leased from the Company (ii) eliminated the right of
Appliance Direct to terminate certain leases in the future and (iii)
eliminated the obligation of Appliance Direct to lease 22 properties from the
Company. The terms of the 15 leases and one sub-lease under which the Company
leased property to Appliance Direct remained in full force except as modified
by the Amendments. As a result of these Amendments, the Company reduced the
accruals for employee severance and bonus costs by approximately $0.7
million, for investment banker fees by approximately $0.3 million and for the
ESP Credit by approximately $0.3 million during the second quarter of fiscal
year 2009.
|
85
|
|
|
On September
30, 2009, the Company entered into a letter agreement with Appliance Direct
pursuant to which (i) Appliance Direct agreed to vacate all properties leased
from the Company and turn over possession of the leased premises to the
Company and (ii) the Company and Appliance Direct agreed to release and
discharge each other from all claims or causes of action whatsoever.
|
|
|
|
The Company
completed its exit of the retail business as of July 31, 2009. The following
is a summary of restructuring charges and payments (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee
Severance
and Bonus
Costs
|
|
Lease
Termination
Costs
|
|
Investment
Banker Fees
|
|
ESP
Credit
|
|
Total
Restructuring
Accrual
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January 31, 2008
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Restructuring charges
|
|
|
2,839
|
|
|
|
|
|
834
|
|
|
498
|
|
|
4,171
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January 31, 2009
|
|
|
2,839
|
|
|
|
|
|
834
|
|
|
498
|
|
|
4,171
|
|
Restructuring charges
|
|
|
85
|
|
|
2,951
|
|
|
|
|
|
|
|
|
3,036
|
|
Reversal of restructuring charges
|
|
|
(706
|
)
|
|
(41
|
)
|
|
(325
|
)
|
|
(287
|
)
|
|
(1,359
|
)
|
Payments of restructuring
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
liabilities
|
|
|
(1,999
|
)
|
|
(2,471
|
)
|
|
(509
|
)
|
|
(211
|
)
|
|
(5,190
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January 31, 2010
|
|
$
|
219
|
|
$
|
439
|
|
$
|
|
|
$
|
|
|
$
|
658
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Of the total
accrual balance of $658,000, $511,000 is classified within current
liabilities and $147,000 is classified within long term liabilities. The
restructuring charges are all classified as discontinued operations. The
accrued balances at January 31, 2010 are managements best estimate of the
amounts to be incurred for the related categories.
|
|
|
15.
|
COMMITMENTS
|
|
|
|
Levelland
Hockley has a contract with Permian Basin Railways to utilize a minimum of
2,989 rail cars per year between April 1 and March 31. The contract matures
March 31, 2017. The cars can be used to transport ethanol, grain, or any
other product to or from the Companys location. In accordance with the
agreement, a fee of $200 per car is assessed on any shortages of the annual
rail car usage.
|
|
|
|
One Earth
has a non-exclusive contract with an unrelated party (Marketer) for ethanol
marketing services. Under the terms of the contract, the Marketer will
purchase portions of One Earths ethanol production during the term of the
contract. Additionally, One Earth is also required to share with the Marketer
the additional profits and losses derived from the Marketers gains on swaps
and exchanges.
|
|
|
|
One Earth
has a contract with an unrelated party (Marketer) for distillers grains
marketing. Under the terms of the contract, the Marketer will purchase all of
One Earths distillers grain production during the term of the contract.
|
86
|
|
|
One Earth
has a contract with an unrelated party to lease rail cars. Under the terms of
the contract, One Earth will pay approximately $55,000 per month. The
contract has a term of three years and began June 1, 2009.
|
|
|
|
One Earth
has a contract with an unrelated party to provide use of a natural gas
pipeline. Under the terms of the contract, One Earth will pay approximately
$37,000 per month. The contract has a term of ten years and began February 1,
2009.
|
|
|
16.
|
INCOME TAXES
|
|
|
|
The
provision (benefit) for income taxes from continuing operations for fiscal
years 2009, 2008 and 2007 consists of the following (amounts in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
Federal:
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
$
|
(8,547
|
)
|
$
|
(3,422
|
)
|
$
|
8,134
|
|
Deferred
|
|
|
12,561
|
|
|
489
|
|
|
2,685
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,014
|
|
|
(2,933
|
)
|
|
10,819
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
State and Local:
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
142
|
|
|
74
|
|
|
203
|
|
Deferred
|
|
|
397
|
|
|
112
|
|
|
223
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
539
|
|
|
186
|
|
|
426
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,553
|
|
$
|
(2,747
|
)
|
$
|
11,245
|
|
|
|
|
|
|
|
|
|
|
|
|
87
|
|
|
The tax
effects of significant temporary differences representing deferred tax assets
and liabilities are as follows as of January 31, 2010 and 2009 (amounts in
thousands):
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
Deferral of service contract income
|
|
$
|
3,463
|
|
$
|
6,049
|
|
Accrued liabilities
|
|
|
504
|
|
|
2,341
|
|
Inventory accounting
|
|
|
215
|
|
|
1,320
|
|
Installment sales of limited partnerships
|
|
|
1,297
|
|
|
1,297
|
|
Sale and leaseback accounting
|
|
|
|
|
|
1,759
|
|
Derivative accounting
|
|
|
1,729
|
|
|
1,699
|
|
Stock based compensation
|
|
|
464
|
|
|
1,436
|
|
Federal net operating loss carryforward
|
|
|
156
|
|
|
|
|
AMT credit carryforward
|
|
|
23,449
|
|
|
15,442
|
|
State net operating loss carryforward
|
|
|
1,473
|
|
|
487
|
|
Valuation allowance
|
|
|
(578
|
)
|
|
(578
|
)
|
Other items
|
|
|
2,358
|
|
|
1,933
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
34,530
|
|
|
33,185
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
Basis in pass through entities
|
|
|
(6,201
|
)
|
|
(408
|
)
|
Depreciation
|
|
|
(12,106
|
)
|
|
(850
|
)
|
Other
|
|
|
(1,380
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
(19,687
|
)
|
|
(1,258
|
)
|
|
|
|
|
|
|
|
|
Net deferred tax asset
|
|
$
|
14,843
|
|
$
|
31,927
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company
has approximately $23,449,000 and $15,442,000 of alternative minimum tax
(AMT) credit carryforwards as of January 31, 2010 and 2009, respectively.
The AMT credit carryforwards can be used to offset future regular income tax
liabilities subject to certain limitations. The AMT credit carryforwards have
no expiration date. The Company must generate approximately $156 million in
future taxable income to fully utilize the AMT credit carryforward. If the
Company is not able to generate sufficient taxable income in subsequent years
to allow for the utilization of the deferred tax assets, the Company would
need to provide a valuation allowance for such deferred tax assets, thus
increasing income tax expense.
|
|
|
|
The Company
has federal net operating loss carryforwards of approximately $10.0 million,
which will expire in fiscal year 2019.
|
|
|
|
The Company
has state net operating loss carryforwards of approximately $35.4 million,
net of the federal benefit, which will begin to expire in fiscal year 2010.
|
|
|
|
The Company
has a valuation allowance of approximately $578,000 at January 31, 2010. The
Company reduced the valuation allowance by $231,000 and $150,000 in fiscal
years 2008 and 2007, respectively. These adjustments to the valuation
allowance are a result of estimates of realizing certain future state tax
benefits. No adjustment was made in fiscal year 2009.
|
88
|
|
|
The Company
paid income taxes of $14,000, $732,000 and $13,429,000 in fiscal years 2009,
2008 and 2007, respectively.
|
|
|
|
The
effective income tax rate on consolidated pre-tax loss or income differs from
the federal income tax statutory rate for fiscal years 2009, 2008 and 2007 as
follows:
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax at
statutory rate
|
|
35.0
|
%
|
(35.0
|
)%
|
35.0
|
%
|
Ethanol small producer
credit
|
|
|
|
(14.7
|
)
|
|
|
State and local taxes, net
of federal tax benefit
|
|
3.9
|
|
6.5
|
|
2.2
|
|
Net provision (reduction)
in valuation allowance
|
|
|
|
(6.3
|
)
|
(0.4
|
)
|
Uncertain tax positions
|
|
(0.3
|
)
|
(9.0
|
)
|
(0.7
|
)
|
Noncontrolling interest
|
|
(8.0
|
)
|
29.2
|
|
0.8
|
|
Other
|
|
2.9
|
|
(1.8
|
)
|
0.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
33.5
|
%
|
(31.1
|
)%
|
37.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
The Company
files a U.S. federal income tax return and income tax returns in various
states. In general, the Company is no longer subject to U.S. federal, state
or local income tax examinations by tax authorities for fiscal years ended January
31, 2006 and prior.
|
|
|
|
The Company
adopted the provisions of ASC 740-10-25-5 on February 1, 2007. As a result of
the adoption of this accounting standard, the Company recorded a $287,000
decrease to retained earnings. As of January 31, 2010, total unrecognized tax
benefits were $2,199,000, and accrued penalties and interest were $138,000.
If the Company were to prevail on all unrecognized tax benefits recorded,
approximately $129,000 of the reserve would benefit the effective tax rate.
In addition, the impact of penalties and interest would also benefit the
effective tax rate. Interest and penalties associated with unrecognized tax
benefits are recorded within income tax expense.
|
|
|
|
On a
quarterly and annual basis, the Company accrues for the effects of open
uncertain tax positions and the related potential penalties and interest. As
a result of statutes of limitation expiring, during fiscal year 2009, the
Company reduced the liability for unrecognized tax benefits by $164,000 and
related penalties and interest of $247,000. During fiscal year 2009, the
Company recognized interest and penalties of $175,000 related to unresolved
uncertain tax positions. Also during fiscal year 2009, the Company reduced
the liability for uncertain tax positions by $2,740,000 related to prior year
uncertain tax positions for which the Company obtained additional information
during fiscal year 2009 and changed the amount of benefit recognized. The
Company increased the liability for uncertain tax positions by $1,156,000
during fiscal year 2009 related to current year uncertain tax positions.
|
|
|
|
It is
reasonably possible that the amount of the unrecognized tax benefit with
respect to certain unrecognized tax positions will increase or decrease
during the next 12 months; however, the Company does not expect the change to
have a material effect on results of operations or financial position. A
reconciliation of the beginning and ending amount of unrecognized tax
benefits, including interest and penalties, is as follows (dollars in
thousands):
|
89
|
|
|
|
|
|
|
|
|
|
Years Ended
January 31,
|
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrecognized tax benefits,
beginning of year
|
|
$
|
4,160
|
|
$
|
1,394
|
|
Changes for tax positions
for prior years
|
|
|
(2,978
|
)
|
|
(349
|
)
|
Changes for tax positions
for current year
|
|
|
1,156
|
|
|
3,115
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrecognized tax benefits,
end of year
|
|
$
|
2,338
|
|
$
|
4,160
|
|
|
|
|
|
|
|
|
|
|
|
17.
|
COMPREHENSIVE INCOME (LOSS)
|
|
|
|
Comprehensive
income includes net income (loss) and unrealized gains on securities classified
as available for sale (net of the related tax effects), and are reported
separately in shareholders equity. The components of comprehensive income
(loss) in fiscal years 2009, 2008 and 2007 are as follows (amounts in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to REX common shareholders
|
|
$
|
8,652
|
|
$
|
(3,297
|
)
|
$
|
33,867
|
|
Unrealized holding gains on
available for sale securities, net
|
|
|
49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
(loss)
|
|
$
|
8,701
|
|
$
|
(3,297
|
)
|
$
|
33,867
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18.
|
DISCONTINUED OPERATIONS
|
|
|
|
During
fiscal year 2009, the Company completed the exit of its retail business.
Accordingly, all operations of the Companys former retail segment and
certain sold properties have been classified as discontinued operations for
all periods presented. Once real estate property has been sold, and no
continuing involvement is expected, the Company classifies the results of the
operations as discontinued operations. The results of operations were
previously reported in the Companys retail or real estate segment, depending
on when the store ceased operations. Below is a table reflecting certain
items of the income statement that were reclassified as
|
90
|
|
|
discontinued
operations for fiscal years 2009, 2008 and 2007 (amounts in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales and revenue
|
|
$
|
35,017
|
|
$
|
185,108
|
|
$
|
270,674
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of merchandise sold
|
|
$
|
23,243
|
|
$
|
134,542
|
|
$
|
195,555
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
$
|
3,288
|
|
$
|
(3,385
|
)
|
$
|
5,903
|
|
(Provision) benefit for income taxes
|
|
|
(1,168
|
)
|
|
1,209
|
|
|
(2,094
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued operations,
net of tax
|
|
$
|
2,120
|
|
$
|
(2,176
|
)
|
$
|
3,809
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on disposal before provision for
income taxes
|
|
$
|
2,131
|
|
$
|
2,797
|
|
$
|
16,162
|
|
Provision for income taxes
|
|
|
(757
|
)
|
|
(999
|
)
|
|
(5,692
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Gain on disposal of discontinued
operations, net of tax
|
|
$
|
1,374
|
|
$
|
1,798
|
|
$
|
10,470
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19.
|
CONTINGENCIES
|
|
|
|
The Company
sold its entire interest, through a series of transactions, in three
partnerships (Colona, Somerset and Gillette) that owned synthetic fuel
facilities. As such, the Company was no longer allocated Section 29/45K tax
credits after fiscal year 2005. In connection with the Colona and Somerset
sales, the Company received contingent payments based upon percentages of
qualified Section 29/45K credits generated. In connection with the sale of
the Gillette partnership, the Company was eligible to receive contingent
payments based upon the amount of qualified production. The Company has
recognized $59.3 million of income from these sales from years the
partnerships have not been audited by the IRS. In the event that the
synthetic fuel tax credits are reduced as a result of IRS audits, the amount
of proceeds realized from the sales could be significantly impacted.
|
|
|
|
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
material effect on the Companys consolidated financial statements.
|
|
|
20.
|
SEGMENT REPORTING
|
|
|
|
Beginning in
the second quarter of fiscal year 2009, the Company realigned its reportable
business segments to be consistent with changes to its management structure
and reporting. The Company has two segments: alternative energy and real
estate. In prior years, the real estate segment was formerly included in the
retail segment and historical amounts have been reclassified to conform to
the current year segment reporting presentation. For stores and warehouses
closed for which the Company has a retained interest in the related real
estate, operations are presented in the real estate segment when retail
operations cease. The Company evaluates the performance of each reportable
segment based on segment profit. Segment profit excludes income taxes,
indirect interest expense, discontinued operations, indirect interest income
and certain other items that are included in net income determined in
accordance with accounting principles generally accepted in the United States
of America. Amounts below include corporate activities that are not
separately reportable and income from synthetic fuel
|
91
investments
(amounts in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended January 31,
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
and revenues:
|
|
|
|
|
|
|
|
|
|
|
Alternative
energy
|
|
$
|
169,175
|
|
$
|
68,223
|
|
$
|
|
|
Real estate
|
|
|
1,089
|
|
|
415
|
|
|
382
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net
sales and revenues
|
|
$
|
170,264
|
|
$
|
68,638
|
|
$
|
382
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
gross profit (loss):
|
|
|
|
|
|
|
|
|
|
|
Alternative
energy
|
|
$
|
21,923
|
|
$
|
807
|
|
$
|
|
|
Real estate
|
|
|
(2,190
|
)
|
|
398
|
|
|
364
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross
profit
|
|
$
|
19,733
|
|
$
|
1,205
|
|
$
|
364
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended January 31,
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
Segment profit (loss):
|
|
|
|
|
|
|
|
|
|
|
Alternative energy segment profit (loss)
|
|
$
|
17,811
|
|
$
|
(8,992
|
)
|
$
|
22,404
|
|
Real estate segment (loss) profit
|
|
|
(2,373
|
)
|
|
116
|
|
|
177
|
|
Corporate expenses
|
|
|
(1,721
|
)
|
|
(2,038
|
)
|
|
(2,077
|
)
|
Interest expense
|
|
|
(369
|
)
|
|
(387
|
)
|
|
(1,032
|
)
|
Interest income
|
|
|
263
|
|
|
1,788
|
|
|
3,575
|
|
Income from synthetic fuel investments
|
|
|
|
|
|
691
|
|
|
6,945
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
before income taxes and noncontrolling interests
|
|
$
|
13,611
|
|
$
|
(8,822
|
)
|
$
|
29,992
|
|
|
|
|
|
|
|
|
|
|
|
|
92
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended January 31,
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
Sales of products alternative energy
segment:
|
|
|
|
|
|
|
|
|
|
|
Ethanol
|
|
|
83
|
%
|
|
82
|
%
|
|
|
%
|
Distillers grains
|
|
|
17
|
%
|
|
18
|
%
|
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
100
|
%
|
|
100
|
%
|
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Sales of services real estate segment:
|
|
|
|
|
|
|
|
|
|
|
Leasing
|
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Interest income:
|
|
|
|
|
|
|
|
|
|
|
Alternative energy
|
|
$
|
182
|
|
$
|
256
|
|
$
|
2,142
|
|
Real estate
|
|
|
|
|
|
|
|
|
|
|
Unallocated
|
|
|
263
|
|
|
1,788
|
|
|
3,572
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest income
|
|
$
|
445
|
|
$
|
2,044
|
|
$
|
5,714
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization expense:
|
|
|
|
|
|
|
|
|
|
|
Alternative energy
|
|
$
|
9,644
|
|
$
|
3,543
|
|
$
|
|
|
Real estate
|
|
|
472
|
|
|
69
|
|
|
33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total depreciation and amortization expense
|
|
$
|
10,116
|
|
$
|
3,612
|
|
$
|
33
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in unconsolidated affiliates:
|
|
|
|
|
|
|
|
|
|
|
Alternative energy
|
|
$
|
6,027
|
|
$
|
849
|
|
$
|
1,601
|
|
Real estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity in unconsolidated affiliates:
|
|
$
|
6,027
|
|
$
|
849
|
|
$
|
1,601
|
|
|
|
|
|
|
|
|
|
|
|
|
93
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended January 31,
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to property and equipment:
|
|
|
|
|
|
|
|
|
|
|
Alternative energy
|
|
$
|
35,320
|
|
$
|
107,575
|
|
$
|
68,555
|
|
Real estate
|
|
|
332
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total additions to property and equipment
|
|
$
|
35,652
|
|
$
|
107,575
|
|
$
|
68,555
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
Alternative energy
|
|
$
|
302,228
|
|
$
|
249,422
|
|
$
|
167,070
|
|
Real estate
|
|
|
31,796
|
|
|
3,149
|
|
|
3,206
|
|
Corporate and other
|
|
|
117,481
|
|
|
198,717
|
|
|
238,702
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
451,505
|
|
$
|
451,288
|
|
$
|
408,978
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to other long lived assets:
|
|
|
|
|
|
|
|
|
|
|
Alternative energy
|
|
$
|
25
|
|
$
|
284
|
|
$
|
1,103
|
|
Real estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total additions to other long lived assets
|
|
$
|
25
|
|
$
|
284
|
|
$
|
1,103
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long term debt and capital lease
obligations
|
|
|
|
|
|
|
|
|
|
|
Alternative energy
|
|
$
|
124,093
|
|
$
|
94,003
|
|
$
|
22,072
|
|
Real estate
|
|
|
|
|
|
|
|
|
|
|
Corporate and other
|
|
|
2,596
|
|
|
9,936
|
|
|
13,152
|
|
|
|
|
|
|
|
|
|
|
|
|
Total long term debt and capital lease
obligations
|
|
$
|
126,689
|
|
$
|
103,939
|
|
$
|
35,224
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to
other long lived assets represent primarily equity method investments,
goodwill and prepaid loan fees.
|
|
|
|
Certain
corporate costs and expenses, including information technology, employee
benefits, and other shared services, are allocated to the business segments.
The allocations are generally amounts agreed upon by management, which may
differ from amounts that would be incurred if such services were purchased
separately by the business segment. Corporate assets are primarily cash and
equivalents, and deferred income tax benefits.
|
|
|
|
Cash, except
for cash held by Levelland Hockley and One Earth, is considered to be
fungible and available for both corporate and segment use depending on
liquidity requirements. Cash of approximately $17.9 million held by Levelland
and One Earth will be used primarily to fund working capital needs for those
entities.
|
94
|
|
21.
|
SUBSEQUENT EVENTS
|
|
|
|
The company
evaluated all subsequent event activity through the issue date of this Annual
Report on Form 10-K and concluded that no additional subsequent events have
occurred that would require recognition in the financial statements or
disclosure in the notes to the financial statements.
|
* * * * * *
95
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
To the
Shareholders and Board of Directors of
REX Stores Corporation
We
have audited the accompanying consolidated balance sheets of REX Stores
Corporation and subsidiaries (the Company) as of January 31, 2010
and 2009, and the related consolidated statements of operations, shareholders equity,
and cash flows for each of the three years in the period ended January 31,
2010. Our audits also included the consolidated financial statement schedule
listed in the Index at Item 15. These consolidated financial statements and
consolidated financial statement schedule are the responsibility of the
Companys management. Our responsibility is to express an opinion on the
consolidated financial statements and consolidated financial statement schedule
based on our audits. We did not audit the financial statements of Patriot
Renewable Fuels, LLC, an equity method investment, which statements reflect
total assets of $18,411,000 and $15,011,000 as of
January 31, 2010 and 2009, respectively, and equity in income (loss) of unconsolidated
affiliates of $3,540,000, ($1,548,000) and ($788,000) for the years ended
January 31, 2010, 2009, and 2008, respectively. Those statements were audited
by other auditors whose report has been furnished to us, and our opinion,
insofar as it relates to the amounts included for Patriot Renewable Fuels, LLC,
is based solely on the report of the other auditors.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). 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 and the report of other auditors provide a reasonable basis for our
opinion.
In
our opinion, based on our audits and the report of other auditors, such
consolidated financial statements present fairly, in all material respects, the
financial position of REX Stores Corporation and subsidiaries as of January 31,
2010 and 2009, and the results of their operations and their cash flows for
each of the three years in the period ended January 31, 2010, in conformity
with accounting principles generally accepted in the United States of America.
Also, in our opinion, such consolidated financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as
a whole, presents fairly, in all material respects, the information set forth
therein.
As
disclosed in Note 1 and Note 18, the consolidated financial statements have
been adjusted for the retrospective application of Accounting Standards
Codification (ASC) 810,
Consolidation
(formerly Financial
Accounting Standards Board (FASB) Statement No. 160,
Noncontrolling Interests in Consolidated
Financial Statements
), which became effective February 1, 2009 and the
retrospective presentation of the Companys retail business as discontinued
operations. Additionally, as discussed in Note 1 to the consolidated financial
statements, the Company adopted the provisions of ASC 740,
Income Taxes
(formerly FASB Interpretation No. 48,
Accounting for Uncertainty in
Income Taxesan Interpretation of FASB Statement No. 109
), effective February
1, 2007.
96
We
have also audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the effectiveness of the Companys
internal control over financial reporting as of January 31, 2010, based on the
criteria established in
Internal
ControlIntegrated Framework
issued by the Committee of Sponsoring
Organizations of the Treadway Commission and our report dated April 16, 2010
expressed an unqualified opinion on the effectiveness of the Companys internal
control over financial reporting.
/s/ Deloitte
& Touche LLP
Cincinnati,
Ohio
April 16, 2010
97
REX STORES CORPORATION AND SUBSIDIARIES
|
Schedule II - VALUATION
AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED JANUARY 31, 2010, 2009 AND 2008
(Amounts in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions
|
|
Deductions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
Beginning
of Year
|
|
Charged to
Cost and
Expenses
|
|
Charges for
Which Reserves
Were Created
|
|
Balance
End
of Year
|
|
|
|
|
|
|
|
|
|
|
|
2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts
|
|
$
|
447
|
|
$
|
|
|
$
|
279
|
|
$
|
168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts
|
|
$
|
84
|
|
$
|
499
|
|
$
|
136
|
|
$
|
447
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts
|
|
$
|
116
|
|
$
|
169
|
|
$
|
201
|
|
$
|
84
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
|
|
|
|
None
|
|
|
Item 9A.
|
Controls and Procedures
|
Evaluation of Disclosure Controls and
Procedures
|
|
|
Our
management evaluated, with the participation of our Chief Executive Officer
and Chief Financial Officer, the effectiveness of our disclosure controls and
procedures (as defined in Rules 13a15(e) and 15d15(e) under the Securities
Exchange Act of 1934) as of the end of the period covered by this report.
Based on that evaluation, our Chief Executive Officer and Chief Financial
Officer concluded that our disclosure controls and procedures are effective
to ensure that information required to be disclosed by us in the reports that
we file or submit under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified in the Securities
and Exchange Commissions rules and forms. Our officers concluded that our
disclosure controls and procedures are also effective to ensure that
information required to be disclosed in the reports that we file or submit
under the Exchange Act is accumulated and communicated to our management,
including our Chief Executive Officer and Chief Financial Officer, to allow
timely decisions regarding required disclosure.
|
|
|
|
Material Changes to Disclosure Controls and Procedures
|
|
|
|
During
fiscal year 2009, we have corrected errors in the process of calculating the
significance of our equity method investees pursuant to Rule 3-09 of
Regulation S-X. During fiscal 2008, deficiencies in our disclosure controls
and procedures led to a failure to file required financial statements of Big
River Resources, LLC and Patriot Renewable Fuels, LLC in accordance with Rule
3-09 of Regulation S-X in our Annual Report on Form 10-K for the year ended
January 31, 2009. We have revised our calculations of significance of equity
method investees, as appropriate, and have included required financial
statements in this Annual Report on Form 10-K for the year ended January 31,
2010.
|
98
|
|
|
Material Changes to Internal Control Over Financial Reporting
|
|
|
|
There were
no changes in our internal control over financial reporting that occurred
during our last fiscal quarter that have materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.
|
|
|
Managements Annual Report on Internal Control Over Financial
Reporting
|
|
|
|
Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting, as defined in Exchange Act Rule 13a-15(f).
Our internal control over financial reporting is designed to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America.
|
|
|
|
All internal
control systems, no matter how well designed, have inherent limitations.
Therefore, even those systems deemed to be effective can provide only
reasonable assurance with respect to financial statement preparation and
presentation.
|
|
|
|
Under the
supervision and with the participation of our senior management, including
our Chief Executive Officer and Chief Financial Officer, we assessed the
effectiveness of our internal control over financial reporting as of January
31, 2010 based on the Internal Control-Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Based upon this assessment, our management concluded that our internal
control over financial reporting was effective as of January 31, 2010 based
on those criteria.
|
|
|
|
The
effectiveness of our internal control over financial reporting as of January
31, 2010 has been audited by Deloitte & Touche LLP, an independent
registered public accounting firm, as stated in their report which is
included herein.
|
|
|
|
|
|
STUART A.
ROSE
|
Chairman of
the Board and Chief Executive
|
|
|
Stuart A.
Rose
|
Officer
(principal executive officer)
|
April 16,
2010
|
|
|
|
|
|
DOUGLAS L.
BRUGGEMAN
|
Vice
President-Finance, Chief Financial Officer and Treasurer
|
|
Douglas L.
Bruggeman
|
(principal
financial and accounting officer)
|
April 16,
2010
|
99
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
To the
Shareholders and Board of Directors of
REX Stores Corporation
We
have audited the internal control over financial reporting of REX Stores
Corporation and subsidiaries (the Company) as of January 31, 2010, based on
criteria established in
Internal
ControlIntegrated Framework
issued by the Committee of Sponsoring
Organizations of the Treadway Commission. The Companys management is
responsible for maintaining effective internal control over financial reporting
and for its assessment of the effectiveness of internal control over financial
reporting, included in the accompanying Managements Annual Report on Internal
Control over Financial Reporting. Our responsibility is to express an opinion
on the Companys internal control over financial reporting based on our audit.
We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether
effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal
control over financial reporting, assessing
the risk that a material weakness exists, testing and evaluating the design and
operating effectiveness of internal control, and performing such other procedures
as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.
A
companys internal control over financial reporting is a process designed by,
or under the supervision of, the companys principal executive and principal
financial officers, or persons performing similar functions, and effected by
the companys board of directors, management, and other personnel to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A companys internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of management and
directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition
of the companys assets that could have a material effect on the financial
statements.
Because
of the inherent limitations of internal control over financial reporting,
including the possibility of collusion or improper management override of
controls, material misstatements due to error or fraud may not be prevented or
detected on a timely basis. Also, projections of any evaluation of the
effectiveness of the internal control over financial reporting to future
periods are subject to the risk that the controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
In
our opinion, the Company maintained, in all material respects, effective
internal control over financial reporting as of January 31, 2010, based on the
criteria established in
Internal
ControlIntegrated Framework
issued by the Committee of Sponsoring
Organizations of the Treadway Commission.
100
We
have also audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the consolidated financial
statements and consolidated financial statement schedule as of and for the year
ended January 31, 2010 of the Company and our report dated April 16, 2010
expressed an unqualified opinion on those consolidated financial statements and
consolidated financial statement schedule and
included an explanatory paragraph regarding the Companys retrospective application
of Accounting Standards Codification (ASC) 810,
Consolidation
(formerly
Financial Accounting Standards Board (FASB) Statement No. 160,
Noncontrolling
Interests in Consolidated Financial Statements
), which became effective February
1, 2009, the retrospective presentation of the Companys retail business
as discontinued operations, and the adoption of the provisions of ASC 740,
Income
Taxes
(formerly FASB Interpretation No. 48,
Accounting for Uncertainty in
Income Taxesan Interpretation of FASB Statement No. 109
), effective
February 1, 2007.
/s/ Deloitte
& Touche LLP
Cincinnati,
Ohio
April 16, 2010
101
|
|
Item 9B.
|
Other Information
|
|
|
None
|
|
|
PART III
|
|
|
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
|
|
The
information required by this Item 10 is incorporated herein by reference to
the Proxy Statement for our Annual Meeting of Shareholders on June 9, 2010,
except for certain information concerning our executive officers 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 Proxy Statement for
our Annual Meeting of Shareholders on June 9, 2010 and is incorporated herein
by reference.
|
|
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
|
|
|
The information
required by this Item 12 is set forth in the Proxy Statement for our Annual
Meeting of Shareholders on June 9, 2010 and is incorporated herein by
reference.
|
|
|
Item 13.
|
Certain Relationships and Related Transactions and Director
Independence
|
|
|
The
information required by this Item 13 is set forth in the Proxy Statement for
our Annual Meeting of Shareholders on June 9, 2010 and is incorporated herein
by reference.
|
|
|
Item 14.
|
Principal Accountant Fees and Services
|
|
|
The
information required by this Item 14 is set forth in the Proxy Statement for
our Annual Meeting of Shareholders on June 9, 2010 and is incorporated herein
by reference.
|
|
|
PART IV
|
|
|
Item 15.
|
Exhibits and Financial Statement Schedules
|
|
|
|
(a)(1)
Financial
Statements
|
|
|
The
following consolidated financial statements of REX Stores Corporation and
subsidiaries are filed as a part of this report at Item 8 hereof.
|
|
|
|
Consolidated
Balance Sheets as of January 31, 2010 and 2009
|
|
|
|
Consolidated
Statements of Operations for the years ended January 31, 2010, 2009 and 2008
|
|
|
|
Consolidated
Statements of Cash Flows for the years ended January 31, 2010, 2009 and 2008
|
|
|
|
Consolidated
Statements of Shareholders Equity for the years ended January 31, 2010, 2009
and 2008
|
|
|
|
Notes to
Consolidated Financial Statements
|
102
|
|
|
Report of
Independent Registered Public Accounting Firm
|
|
|
|
(a)(2)(i)
Financial
Statement Schedules
|
|
|
|
The
following financial statement schedule is filed as a 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)(2)(ii)
Separate
Financial Statements of Subsidiaries Not Consolidated and 50 Percent or Less
Owned Persons
|
|
|
|
Separate
consolidated financial statements of Big River Resources, LLC and Patriot
Renewable Fuels, LLC required pursuant to Rule 3-09 of Regulation S-X are
filed as Exhibits 99(a) and 99(b) to this report.
|
|
|
|
(a)(3)
Exhibits
|
|
|
|
See Exhibit
Index at page 105 of this report.
|
|
|
|
Management
contracts and compensatory plans and arrangements filed as exhibits to this
report are identified by an asterisk in the exhibit index.
|
103
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
|
|
|
|
|
By:
|
STUART A.
ROSE
|
|
|
Stuart A.
Rose
|
|
|
Chairman of
the Board and
|
|
|
Chief
Executive Officer
|
|
|
|
|
Date: April
16, 2010
|
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 A.
ROSE
|
|
Chairman of
the Board
|
|
|
Stuart A.
Rose
|
|
and Chief
Executive Officer
|
|
|
|
|
(principal
executive officer)
|
|
April 16,
2010
|
|
|
|
|
|
DOUGLAS L.
BRUGGEMAN
|
|
Vice
President-Finance, Chief
|
|
|
Douglas L.
Bruggeman
|
|
Financial
Officer and Treasurer
|
|
|
|
|
(principal
financial and accounting
|
|
|
|
|
officer)
|
|
April 16,
2010
|
|
|
|
|
|
LAWRENCE
TOMCHIN
|
|
|
|
|
Lawrence
Tomchin
|
|
Director
|
|
April 16,
2010
|
|
|
|
|
|
EDWARD M.
KRESS
|
|
|
|
|
Edward M.
Kress
|
|
Director
|
|
April 16,
2010
|
|
|
|
|
|
ROBERT
DAVIDOFF
|
|
|
|
|
Robert
Davidoff
|
|
Director
|
|
April 16,
2010
|
|
|
|
|
|
CHARLES A.
ELCAN
|
|
|
|
|
Charles A.
Elcan
|
|
Director
|
|
April 16,
2010
|
|
|
|
|
|
DAVID S.
HARRIS
|
|
|
|
|
David S.
Harris
|
|
Director
|
|
April 16,
2010
|
|
|
|
|
|
MERVYN L.
ALPHONSO
|
|
|
|
|
Mervyn L.
Alphonso
|
|
Director
|
|
April 16,
2010
|
104
EXHIBIT INDEX
|
|
|
(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)
|
Construction
and Term Loan Agreement dated as of September 27, 2006 among Merrill Lynch
Capital, a division of Merrill Lynch Business Financial Services Inc., as
Administrative Agent, the Lenders party thereto and Levelland Hockley County
Ethanol, LLC (incorporated by reference to Exhibit 4(f) to Form 10-K for
fiscal year ended January 31, 2007, File No. 001-09097)
|
|
|
|
|
4(b)
|
First
Amendment to Construction and Term Loan Agreement and Other Loan Documents
dated as of August 10, 2007 among Levelland Hockley County Ethanol, LLC, the
Lenders party thereto, and Merrill Lynch Capital, a division of Merrill Lynch
Business Financial Services Inc., as Administrative Agent (incorporated by
reference to Exhibit 4(i) to Form 10-K for fiscal year ended January 31,
2008, File No. 001-09097)
|
|
|
|
|
4(c)
|
Second
Amendment to Construction and Term Loan Agreement and Other Loan Documents
dated as of February 15, 2008 among Levelland Hockley County Ethanol, LLC,
the Lenders party thereto, and Merrill Lynch Capital, a division of Merrill
Lynch Business Financial Services Inc., as Administrative Agent (incorporated
by reference to Exhibit 4(j) to Form 10-K for fiscal year ended January 31,
2008, File No. 001-09097)
|
|
|
|
|
4(d)
|
Third
Amendment to Construction and Term Loan Agreement and Other Loan Documents
dated as of February 19, 2008 among Levelland Hockley County Ethanol, LLC,
the Lenders party thereto, and Merrill Lynch Capital, a division of Merrill
Lynch Business Financial Services Inc., as Administrative Agent (incorporated
by reference to Exhibit 4(k) to Form 10-K for fiscal year ended January 31,
2008, File No. 001-09097)
|
105
|
|
|
|
4(e)
|
Fourth
Amendment to Construction and Term Loan Agreement dated as of May 31, 2008
among Levelland/Hockley County Ethanol, LLC, the Lenders party thereto, and
GE Business Financial Services Inc. (f/k/a Merrill Lynch Business Financial
Services Inc.), as Administrative Agent (incorporated by reference to Exhibit
4(m) to Form 10-K for fiscal year ended January 31, 2009, File No. 001-09097)
|
|
|
|
|
4(f)
|
Fifth
Amendment to Construction and Term Loan Agreement dated as of May 31, 2008
among Levelland/Hockley County Ethanol, LLC, the Lenders party thereto, and
GE Business Financial Services Inc. (f/k/a Merrill Lynch Business Financial
Services Inc.), as Administrative Agent (incorporated by reference to Exhibit
4(n) to Form 10-K for fiscal year ended January 31, 2009, File No. 001-09097)
|
|
|
|
|
4(g)
|
Sixth
Amendment to Construction and Term Loan Agreement dated as of January 29,
2009 among Levelland/Hockley County Ethanol, LLC, the Lenders party thereto,
and GE Business Financial Services Inc. (f/k/a Merrill Lynch Business
Financial Services Inc.), as Administrative Agent (incorporated by reference
to Exhibit 4(o) to Form 10-K for fiscal year ended January 31, 2009, File No.
001-09097)
|
|
|
|
|
4 (h)
|
Seventh
Amendment to Construction and Term Loan Agreement dated as of September 4,
2009 among Levelland/Hockley County Ethanol, LLC, the Lenders party thereto,
and GE Business Financial Services Inc., as Administrative Agent
(incorporated by reference to Exhibit 4(a) to Form 10-Q for quarter ended
July 31, 2009, File No. 001-09097)
|
|
|
|
|
4 (i)
|
Construction
Loan Agreement dated as of September 20, 2007 among One Earth Energy, LLC,
First National Bank of Omaha, as a Bank and as Administrative Agent, Accounts
Bank and Collateral Agent, and the other Banks party thereto (incorporated by
reference to Exhibit 4(l) to Form 10-K for fiscal year ended January 31,
2008, File No. 001-09097)
|
|
|
|
|
4 (j)
|
First
Amendment of Construction Loan Agreement dated September 19, 2008 among One
Earth Energy, LLC, First National Bank of Omaha, as a Bank and as
Administrative Agent, Accounts Bank and Collateral Agent, and the other Banks
party thereto
|
|
|
|
|
4(k)
|
Second
Amendment of Construction Loan Agreement dated January 30, 2009 among One
Earth Energy, LLC, First National Bank of Omaha, as a Bank and as
Administrative Agent, Accounts Bank and Collateral Agent, and the other Banks
party thereto
|
|
|
|
|
4(l)
|
Third
Amendment of Construction Loan Agreement dated September 18, 2009 among One
Earth Energy, LLC, First National Bank of Omaha, as a Bank and as
Administrative Agent, Accounts Bank and Collateral Agent, and the other Banks
party thereto
|
106
|
|
|
|
|
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 November 29, 2005 between Rex Radio and Television, Inc. and
Stuart Rose (incorporated by reference to Exhibit 10(a) to Form 8-K filed
November 30, 2005, File No. 001-09097)
|
|
|
|
|
10(b)*
|
Amended and
Restated Amendment No. 1 to Employment Agreement dated December 10, 2007
between Rex Radio and Television, Inc. and Stuart A. Rose (incorporated by
reference to Exhibit 10(b) to Form 8-K filed November 30, 2008, File No.
001-09097)
|
|
|
|
|
10(c)*
|
Amendment
No. 2 to Employment Agreement dated December 10, 2007 between Rex Radio and
Television, Inc. and Stuart A. Rose (incorporated by reference to Exhibit
10(c) to Form 8-K filed November 30, 2005, File No. 001-09097)
|
|
|
|
|
10(d)*
|
Employment
Agreement dated October 11, 2005 between Rex Radio and Television, Inc. and
David L. Bearden (incorporated by reference to Exhibit 10(a) to Form 8-K
filed October 12, 2005, File No. 001-09097)
|
|
|
|
|
10(e)*
|
Amendment
No. 1 to Employment Agreement dated December 10, 2007 between Rex Radio and
Television, Inc. and David L. Bearden (incorporated by reference to Exhibit
10(e) to Form 8-K filed November 30, 2005, File No. 001-09097)
|
|
|
|
|
10(f)*
|
Amendment
No. 2 to Employment Agreement dated March 6, 2008 between Rex Radio and
Television, Inc. and David L. Bearden (incorporated by reference to Exhibit
10(f) to Form 8-K filed November 30, 2005, File No. 001-09097)
|
|
|
|
|
10(g)*
|
Amendment
No. 3 to Employment Agreement dated February 19, 2009 between Rex Radio and
Television, Inc. and David L. Bearden (incorporated by reference to Exhibit
10(a) to Form 8-K filed February 20, 2009, File No. 001-09097)
|
|
|
|
|
10(h)*
|
Amendment
No. 4 to Employment Agreement dated September 30, 2009 between Rex Radio and
Television, Inc. and David L. Bearden (incorporated by reference to Exhibit
10(b) to Form 8-K filed October 6, 2009, File No. 001-09097)
|
107
|
|
|
|
10(i)*
|
Executive
Stock Option dated April 17, 2001 granting Lawrence Tomchin an option to
purchase 150,000 shares of registrants Common Stock (incorporated by
reference to Exhibit 10(h) to Form 10-K for fiscal year ended January 31,
2002, File No. 001-09097)
|
|
|
|
|
10(j)*
|
Subscription
Agreement dated December 1, 1989 from Stuart Rose to purchase 300,000 shares
of registrants Common Stock (incorporated by reference to Exhibit 6.5 to
Form 10-Q for quarter ended October 31, 1989, File No. 0-13283)
|
|
|
|
|
10(k)*
|
Subscription
Agreement dated December 1, 1989 from Lawrence Tomchin to purchase 140,308
shares of registrants Common Stock (incorporated by reference to Exhibit 6.6
to Form 10-Q for quarter ended October 31, 1989, File No. 0-13283)
|
|
|
|
|
10(l)*
|
1995 Omnibus
Stock Incentive Plan, as amended and restated effective June 2, 1995
(incorporated by reference to Exhibit 4(c) to Post-Effective Amendment No. 1 to
Form S-8 Registration Statement No. 33-81706)
|
|
|
|
|
10(m)*
|
1999 Omnibus
Stock Incentive Plan (incorporated by reference to Exhibit 10(a) to Form 10-Q
for quarter ended April 30, 2000, File No. 001-09097)
|
|
|
|
|
10(n)*
|
Form of
Stock Option Agreement under 1999 Omnibus Stock Incentive Plan (Nonqualified
Stock Option)(incorporated by reference to Exhibit 10(a) to Form 10-Q for
quarter ended October 31, 2004, File No. 001-09097)
|
|
|
|
|
10(o)*
|
Form of
Stock Option Agreement under 1999 Omnibus Stock Incentive Plan (Nonemployee
Director Stock Option) (incorporated by reference to Exhibit 10(b) to Form
10-Q for quarter ended October 31, 2004, File No. 001-09097)
|
|
|
|
|
10(p)
|
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)
|
|
|
|
|
10(q)
|
Purchase and
Sale Agreement dated February 8, 2007 among Rex Radio and Television, Inc.,
Kelly & Cohen Appliances, Inc., Stereo Town, Inc., REX Stores Corporation
and Coventry Real Estate Investments, LLC (incorporated by reference to
Exhibit 10(o) to Form 10-K for fiscal year ended January 31, 2007, File No.
001-09097)
|
|
|
|
|
10(r)
|
Agreement
dated January 29, 2009 between Rex Radio and Television, Inc., Kelly &
Cohen Appliances, Inc., Stereo Town, Inc., Rex Alabama, Inc., REX Stores
Corporation and Appliance Direct, Inc. (incorporated by reference to Exhibit
10(a) to Form 8-K filed February 2, 2009, File No. 001-09097)
|
|
|
|
|
10 (s)
|
Third
Amendment to Agreement dated July 31, 2009 between Rex Radio and Television,
Inc., Kelly & Cohen Appliances, Inc., Stereo Town, Inc., Rex Alabama,
Inc., REX Stores Corporation and Appliance Direct, Inc. (incorporated by
reference to Exhibit 10(a) to Form 8-K filed July 31, 2009, File No.
001-09097)
|
|
|
|
|
10(t)
|
Second
Global Amendment to Multiple Leases dated July 31, 2009 between Rex Radio and
Television, Inc., Kelly & Cohen Appliances, Inc., Stereo Town, Inc.,
Appliance Direct, Inc. and the Tenants (incorporated by reference to Exhibit
10(b) to Form 8-K filed July 31, 2009, File No. 001-09097)
|
108
|
|
|
|
10 (u)
|
Letter
Agreement dated September 30, 2009 between Rex Radio and Television, Inc.,
Kelly & Cohen Appliances, Inc., Stereo Town, Inc. and Appliance Direct,
Inc. (incorporated by reference to Exhibit 10(a) to Form 8-K filed October 6,
2009, File No. 001-09097)
|
|
|
|
(14)
|
Code of Ethics:
|
|
|
|
14(a)
|
Code of Business Conduct and Ethics (incorporated by
reference to Exhibit 14 (a) to Form 10-K for fiscal year ended January 31,
2004, File No. 001-09097)
|
|
|
|
(21)
|
Subsidiaries of the registrant:
|
|
|
|
21(a)
|
Subsidiaries
of registrant
|
|
|
(23)
|
Consents of experts and counsel:
|
|
|
|
23(a)
|
Consent of
Deloitte & Touche LLP to use its report dated April 16, 2010 included in
this annual report on Form 10-K into registrants Registration Statements on
Form S-8 (Registration Nos. 33-3836, 33-81706, 33-62645, 333-69081,
333-69089, 333-35118 and 333-69690)
|
|
|
|
|
23(b)
|
Consent of
Christianson & Associates, PLLP to use its reports dated February 18,
2010 and February 6, 2008, relating to the financial statements of Big River
Resources, LLC included in this annual report on Form 10-K into the
Registration Statements
|
|
|
|
|
23(c)
|
Consent of
Boulay, Heutmaker, Zibell & Co, P.L.L.P. to use its report dated April
12, 2010 relating to the financial statements of Patriot Renewable Fuels, LLC
included in this annual report on Form 10-K into the Registration Statements
|
|
|
|
|
23(d)
|
Consent of
Deloitte & Touche LLP to use its report dated November 24, 2009 relating
to the financial statements of Patriot Renewable Fuels, LLC included in this
annual report on Form 10-K into the Registration Statements
|
|
|
|
(31)
|
Rule
13a-14(a)/15d-14(a) Certifications:
|
|
|
|
31
|
Certifications
|
|
|
|
(32)
|
Section 1350 Certifications:
|
|
|
|
32
|
Certifications
|
|
|
|
(99)
|
Additional Exhibits
|
109
|
|
|
|
99(a)
|
Consolidated
financial statements of Big River Resources, LLC for the years ended December
31, 2009, 2008 and 2007 and for the four months ended December 31, 2006
|
|
|
|
|
99(b)
|
Financial
statements of Patriot Renewable Fuels, LLC for the years ended December 31,
2009, 2008 and 2007
|
|
|
|
|
|
Copies of the Exhibits not contained herein
may be obtained by writing to Edward M. Kress, Secretary, REX Stores
Corporation, 2875 Needmore Road, Dayton, Ohio 45414.
|
|
|
|
Those
exhibits marked with an asterisk (*) above are management contracts or
compensatory plans or arrangements for directors or executive officers of the
registrant.
|
110
Rex Stores (NYSE:RSC)
Historical Stock Chart
From Apr 2024 to May 2024
Rex Stores (NYSE:RSC)
Historical Stock Chart
From May 2023 to May 2024