Investment
income was $92,000 and $363,000 for the third quarter of fiscal years 2009 and
2008, respectively. Investment income was $356,000 and $1,732,000 for the first
nine months of fiscal years 2009 and 2008, respectively. The decline generally
results from lower yields earned on our excess cash in the current year
compared to the prior year.
Interest
expense was $1.6 million for the third quarter of fiscal year 2009, an increase
of $0.6 million over the prior year third quarter. Interest expense was $3.3
million for the first nine months of fiscal year 2009 compared to $2.1 million
for the first nine months of fiscal year 2008. The increases in interest
expense are primarily attributable to the alternative energy segment.
During
the third quarter of fiscal years 2009 and 2008, we recognized income of
approximately $1,221,000 and $1,044,000 from our equity investments in Big
River and Patriot, respectively. During the first nine months of fiscal years
2009 and 2008, we recognized income of approximately $1,144,000 and $2,966,000
from our equity investments in Big River and Patriot, respectively.
On
September 16, 2008, we completed a transaction for the sale and leaseback of
our Cheyenne, Wyoming distribution center under a three year lease term. A
pre-tax gain, classified as continuing operations, of approximately $1.6
million (net of expenses) resulted from this sale. We also sold vacant land
adjacent to the Cheyenne, Wyoming distribution center for a gain of $0.7
million.
During
the third quarter of fiscal year 2009, Levelland Hockley entered into an
agreement with Layne Christensen Company (Layne) to settle litigation between
the two parties. As a result of the settlement agreement, Layne paid Levelland
Hockley $1.5 million. Of the proceeds received, approximately $0.3 million was
recognized as other income during the third quarter of fiscal year 2009. The
remainder of the settlement offset contingent legal expenses and reduced the
carrying amount of certain plant equipment.
During
the third quarter of fiscal year 2009, Levelland Hockley received notification
from the United States Department of Agriculture that Levelland Hockley had
been approved to receive funds under the Advanced Biofuel Producer Program. As
a result, approximately $0.5 million was recognized as other income during the
third quarter of fiscal year 2009.
During
the first nine months of fiscal year 2008, we recognized approximately $0.7
million of income from the sales of our entire partnership interests in Colona
SynFuel Limited Partnership, L.L.L.P., (Colona) and Somerset Synfuel, L.P.
(Somerset). This income represents the estimated final settlements related to
Colona and Somerset as all synthetic fuel production ceased during fiscal year
2007. As the Section 29/45K program expired December 31, 2007, the Company does
not expect additional income from these sales.
On
March 30, 2004, we also sold our membership interest in the limited liability
company that owned a synthetic fuel facility in Gillette, Wyoming. The plant
was subsequently sold and during the third quarter of fiscal year 2006, we
modified our agreement with the owners and operators of the synthetic fuel facility.
Based on the terms of the modified agreement, we currently are not able to
determine the likelihood and timing of collecting payments related to
production occurring after September 30, 2006. Thus, we cannot currently
determine the timing of income recognition, if any,
29
related to production occurring subsequent to September 30, 2006. We did not recognize any
income from this sale during the first nine months of fiscal years 2009 or 2008.
We
recognized losses of $899,000 and $947,000 during the third quarter of fiscal
years 2009 and 2008, respectively, related to forward interest rate swap
agreements that Levelland Hockley and One Earth entered into during fiscal year
2007. We recognized a loss related to the swaps of $1,561,000 during the first
nine months of fiscal year 2009 compared to a gain of $481,000 during the first
nine months of fiscal year 2008.
Our
effective tax rate was 31.3% and 1.8% for the third quarter of fiscal years
2009 and 2008, respectively. Our effective tax rate for the first nine months
of fiscal year 2009 was 38.4% compared to 112.0% for the first nine months of
fiscal year 2008. The fluctuations in the effective tax rates are primarily a
result of not recognizing a tax provision or benefit on the income or loss
attributable to the noncontrolling interests in our consolidated ethanol
subsidiaries.
During
the quarter and nine months ended October 31, 2009 we closed 29 and 53 retail
stores, respectively, that were classified as discontinued operations. As a
result of these closings and certain other retail store closings from prior
periods, we had a loss from discontinued operations, net of tax benefit, of
$22,000 for the third quarter of fiscal year 2009 compared to $344,000 for the
third quarter of fiscal year 2008. We had a loss from discontinued operations,
net of tax benefit, of $873,000 for the first nine months of fiscal year 2009
compared to $103,000 for the first nine months of fiscal year 2008.
On
April 30, 2007, we completed a transaction for the sale of 86 of our former
store locations to KLAC REX, LLC (Klac) for $74.5 million in cash, before
selling expenses. We 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 have been terminated as of October 31, 2009.
This
transaction resulted in a gain (realized and deferred) of $14.8 million. Of
this gain, $3.9 million and $1.1 million was recognized in the first nine
months of fiscal years 2009 and 2008, respectively. The following table
summarizes the pre-tax gains recognized during the third quarter and first nine
months of fiscal years 2009 and 2008 (amounts in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
October 31,
|
|
Nine Months Ended
October 31,
|
|
Classification
of Gain
|
|
2009
|
|
2008
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued
Operations
|
$
|
|
|
$
|
323
|
|
$
|
3,933
|
|
$
|
1,068
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Two
properties classified as discontinued operations were sold or abandoned during
the first nine months of fiscal year 2009, resulting in a gain, net of tax
expense of $0.1 million. These gains are consistent with those recognized in
the prior year.
Noncontrolling
interest (income) loss of $(1,012,000) and $1,878,000 for the quarters ended
October 31, 2009 and 2008, respectively and $(195,000) and $2,070,000 for the
nine months ended October 31, 2009 and 2008, respectively, represents the
owners (other than REX) share of the income or loss of Levelland Hockley and
One Earth.
30
As
a result of the foregoing, net income attributable to REX common shareholders
for the third quarter of fiscal year 2009 was $2.3 million, an increase of $3.0
million from the loss of $0.7 million for the third quarter of fiscal year
2008. Net income attributable to REX common shareholders for the first nine
months of fiscal year 2009 was $1.4 million, a decrease of $0.7 million from
net income of $2.1 million for the first nine months of fiscal year 2008.
Business Segment Results
Beginning
in the second quarter of fiscal year 2009, we realigned our reportable business
segments to be consistent with changes to our management structure and
reporting. We now have three segments: alternative energy, real estate and
retail. The real estate segment was formerly included in the retail segment.
For stores and warehouses closed for which we have a retained interest in the
related real estate, operations are now presented in the real estate segment
when retail operations ceased.
As
discussed in Note 17, our chief operating decision maker (as defined by the
accounting standards) evaluates the operating performance of our business
segments using a measure we call segment profit. Segment profit includes realized
and unrealized gains and losses on derivative financial instruments. Segment
profit excludes income taxes, indirect interest expense, discontinued
operations, indirect investment 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. Management believes these
are useful financial measures; however, they should not be construed as being
more important than other comparable GAAP measures.
Items
excluded from segment profit generally result from decisions made by corporate
executives. Financing, divestiture and tax structure decisions are generally
made by corporate executives. Excluding these items from our business segment
performance measure enables us to evaluate business segment operating
performance based upon current economic conditions.
31
The
following table sets forth, for the periods indicated, sales and profits by
segment (amounts in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 31,
|
|
Nine Months Ended October 31,
|
|
|
|
2009
|
|
2008
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
Net sales and revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alternative energy
|
|
$
|
61,368
|
|
$
|
22,444
|
|
$
|
92,296
|
|
$
|
48,468
|
|
Real estate
|
|
|
341
|
|
|
83
|
|
|
827
|
|
|
270
|
|
Retail
|
|
|
2,707
|
|
|
16,644
|
|
|
18,057
|
|
|
50,904
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales and revenues
|
|
$
|
64,416
|
|
$
|
39,171
|
|
$
|
111,180
|
|
$
|
99,642
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment gross profit (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alternative energy
|
|
$
|
5,790
|
|
$
|
(2,443
|
)
|
$
|
6,740
|
|
$
|
(1,753
|
)
|
Real estate
|
|
|
(117
|
)
|
|
77
|
|
|
(351
|
)
|
|
252
|
|
Retail
|
|
|
2,187
|
|
|
6,038
|
|
|
8,383
|
|
|
17,807
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross profit
|
|
$
|
7,860
|
|
$
|
3,672
|
|
$
|
14,772
|
|
$
|
16,306
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment profit (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alternative energy
|
|
$
|
4,569
|
|
$
|
(4,957
|
)
|
$
|
2,222
|
|
$
|
(3,527
|
)
|
Real estate
|
|
|
(187
|
)
|
|
25
|
|
|
(462
|
)
|
|
95
|
|
Retail
|
|
|
843
|
|
|
2,936
|
|
|
3,142
|
|
|
3,331
|
|
Corporate expense
|
|
|
(430
|
)
|
|
(484
|
)
|
|
(1,046
|
)
|
|
(1,113
|
)
|
Interest expense
|
|
|
(60
|
)
|
|
(111
|
)
|
|
(314
|
)
|
|
(332
|
)
|
Investment income
|
|
|
82
|
|
|
345
|
|
|
230
|
|
|
1,481
|
|
Income from synthetic fuel investments
|
|
|
|
|
|
21
|
|
|
|
|
|
691
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
before income taxes
|
|
$
|
4,817
|
|
$
|
(2,225
|
)
|
$
|
3,772
|
|
$
|
626
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alternative Energy
The
alternative energy segment includes the consolidated financial statements of
Levelland Hockley and One Earth, our other investments in ethanol facilities,
the income or loss related to those investments and certain administrative
expenses. One Earth began limited production operations late in the second
quarter of fiscal year 2009 and became fully operational during the third
quarter of fiscal year 2009.
32
The following table summarizes sales from Levelland Hockley and One Earth by product group (amounts in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
October 31,
|
|
Nine Months Ended
October 31,
|
|
|
|
2009
|
|
2008
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ethanol
|
|
$
|
51,332
|
|
$
|
18,766
|
|
$
|
75,108
|
|
$
|
40,356
|
|
Dried distiller grains
|
|
|
7,636
|
|
|
1,936
|
|
|
10,925
|
|
|
4,674
|
|
Wet distiller grains
|
|
|
2,268
|
|
|
1,622
|
|
|
5,958
|
|
|
3,287
|
|
Other
|
|
|
132
|
|
|
120
|
|
|
305
|
|
|
151
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
61,368
|
|
$
|
22,444
|
|
$
|
92,296
|
|
$
|
48,468
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
following table summarizes selected operating data from Levelland Hockley and
One Earth:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
October 31,
|
|
Nine Months Ended
October 31,
|
|
|
|
2009
|
|
2008
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average selling price per gallon of ethanol
|
|
$
|
1.59
|
|
$
|
2.32
|
|
$
|
1.59
|
|
$
|
2.31
|
|
Average selling price per ton of dried
distiller grains
|
|
$
|
101.00
|
|
$
|
188.00
|
|
$
|
113.00
|
|
$
|
188.0
|
|
Average selling price per ton of wet
distiller grains
|
|
$
|
44.00
|
|
$
|
50.00
|
|
$
|
48.00
|
|
$
|
53.00
|
|
Average cost per bushel of grain
|
|
$
|
3.63
|
|
$
|
6.13
|
|
$
|
3.61
|
|
$
|
5.95
|
|
Average cost of natural gas (per mmbtu)
|
|
$
|
3.63
|
|
$
|
11.30
|
|
$
|
4.17
|
|
$
|
10.76
|
|
Segment Results Third Quarter Fiscal Year
2009 Compared to Third Quarter Fiscal Year 2008
Net
sales and revenue for the current year increased $38.9 million to $61.4
million, primarily a result of One Earth becoming fully operational during the
third quarter of fiscal year 2009. The average selling price per gallon of ethanol
declined from $2.32 in the prior year 2008 to $1.59 in the current year. Our
sales were based upon 32.4 million gallons of ethanol in the current year
compared to 8.1 million gallons in the prior year.
Gross
profit from these sales was approximately $5.8 million during the current year
compared to a gross loss of $2.4 million during the prior year. Gross profit
improved primarily as a result of an improved spread between ethanol and grain
prices compared to the prior year.
Segment
profit was $4.6 million in the current year compared to segment loss of $5.0
million in the prior year. The increase in segment performance was primarily
related to the increase in gross profit discussed above. In addition, selling
general and administrative expenses decreased by $0.9 million in the current
year compared to the prior year 2008. An impairment charge of $1.3 million
33
related to the
write off of goodwill associated with the Levelland Hockley acquisition caused
a majority of this fluctuation. Interest expense increased $0.6 million in the
current year over the prior year, as we no longer capitalize interest on the
One Earth credit facility subsequent to the commencement of operations at the
plant. Other income increased $0.8 million in the current year compared to the
prior year. The increase is a result of recognizing a legal settlement of $0.3
million and grant income of $0.5 million in fiscal year 2009.
Segment Results Nine Months Ended October
31, 2009 Compared to Nine Months Ended October 31, 2008
Net
sales and revenue for the current year were $92.3 million compared to $48.5
million for the prior year. The increase in sales is primarily a result of One
Earth becoming fully operational during the third quarter of fiscal year 2009.
The average selling price per gallon of ethanol declined from $2.31 in the
prior year 2008 to $1.59 in the current year. Our sales were based upon 47.3
million gallons of ethanol in the current year compared to 17.5 million gallons
in the prior year.
Gross
profit from these sales was approximately $6.7 million during the current year
compared to a gross loss of $1.8 million during the prior year. Gross profit
improved primarily as a result of an improved spread between ethanol and grain
prices compared to the prior year.
Segment
profit was $2.2 million in the current year compared to segment loss of $3.5
million in the prior year. The increase in segment performance was primarily
related to the increase in gross profit discussed above. In addition, selling
general and administrative expenses decreased by $1.7 million in the current
year compared to the prior year. An impairment charge of $1.3 million
recognized in the prior year that related to the write off of goodwill associated
with the Levelland Hockley acquisition caused a majority of this fluctuation.
Interest expense increased $1.3 million in the current year over the prior
year, as we no longer capitalize interest on the One Earth credit facility
subsequent to the commencement of operations at the plant. Income from equity
method investments declined from $3.0 million in the prior year to $1.1 million
in the current year. Losses on derivative financial instruments were $1.6
million in the current year compared to gains of $0.5 million in the prior
year.
Real Estate
The
real estate segment includes all owned and sub-leased real estate including
those previously used as retail store and distribution center operations, our
real estate sales and leasing activities and certain administrative expenses.
It excludes results from discontinued operations.
At
October 31, 2009, we had lease or sub-lease agreements, as landlord, for all or
parts of seven former retail store properties. We own six of these properties
and are the tenant/sub landlord for one of the properties. We have 38 owned
properties, including one former distribution center, that are vacant at
October 31, 2009. We are marketing these vacant properties to lease or sell. In
34
addition, we
have one owned former distribution center that is partially leased to a tenant;
we are marketing the vacant space for lease or sale.
Segment Results Third Quarter Fiscal Year
2009 Compared to Third Quarter Fiscal Year 2008
Net
sales and revenue in the current year increased to approximately $0.3 million
from approximately $0.1 million in the prior year; the increase is primarily a
result of 15 properties leased to Appliance Direct for a portion of the current
year that were utilized in our retail segment in the prior year. Gross loss
from these sales was approximately $0.1 million during the current year
compared to gross profit of approximately $0.1 million during the prior year.
Gross profit declined as a result of expenses associated with vacant
properties. The increase in vacant properties is a result of the agreement we
reached with Appliance Direct during the current year which relieved Appliance
Direct of their obligation to lease properties from us.
Segment
loss was approximately $200,000 for the current year compared to segment profit
of approximately $25,000 for the prior year. The decline in segment profit is
primarily a result of the lower gross profit in the current year discussed
above.
Segment Results Nine Months Ended October
31, 2009 Compared to Nine Months Ended October 31, 2008
Net
sales and revenue for the current year were approximately $0.8 million compared
to approximately $0.3 million for the prior year. The increase in revenue is
primarily a result of 15 properties leased to Appliance Direct for a portion of
the current year that were utilized in our retail segment in fiscal year 2008.
Gross loss from these sales was approximately $0.4 million during the current
year compared to gross profit of approximately $0.3 during the prior year.
Gross profit declined as a result of expenses associated with vacant
properties. The increase in vacant properties is a result of the agreement we
reached with Appliance Direct during the current year which relieved Appliance
Direct of their obligation to lease properties from us.
Retail
The
retail segment includes all of our store and distribution center operations and
certain administrative expenses. It excludes results from discontinued
operations. We substantially exited the retail business as of July 31, 2009. We
expect ongoing results from the retail segment to include revenue and expense
associated with our extended warranty operations.
Segment Results Third Quarter Fiscal Year
2009 Compared to Third Quarter Fiscal Year 2008
Net
sales and revenue for the current year decreased to approximately $2.7 million
from approximately $16.6 million, primarily a result of the winding down of our
retail business. Gross profit was approximately $2.2 million in the current
year 2009 compared to approximately $6.0 million in the prior year. The
decrease in gross profit is primarily attributable to the decline in retail
sales. However, gross profit margin as a percentage of sales increased in the
current year as gross
35
profit from
extended service plans was a higher percentage of retail gross profit in the
current year compared to the prior year.
Retail
segment profit decreased approximately $2.1 million to approximately $0.8
million in the current year from approximately $2.9 million in the prior year.
The decrease in segment profit was primarily related to lower gross profit in
the current year discussed above. In addition, selling, general and
administrative expenses declined to approximately $1.3 million in the current
year compared to approximately $5.4 million in the prior year. This decrease is
primarily a result of cost reductions in fiscal year 2009 associated with the
wind down of our retail business.
Segment Results Nine Months Ended October
31, 2009 Compared to Nine Months Ended October 31, 2008
Net
sales and revenue for the current year decreased to approximately $18.1 million
from approximately $50.9 million, primarily a result of the winding down of our
retail business. Gross profit was approximately $8.4 million in the current
year compared to approximately $17.8 million in the prior year. The decrease in
gross profit is primarily attributable to the decline in retail sales. However,
gross profit margin as a percentage of sales increased in the current year 2009
as gross profit from extended service plans was a higher percentage of retail
gross profit in the current year compared to the prior year.
Retail
segment profit of approximately $3.1 million in the current year is consistent
with the prior year profit of $3.3 million. Selling, general and administrative
expenses declined by approximately $11.5 million offsetting the decline in net
sales and revenue. This decline is primarily a result of cost reductions in the
current year associated with the wind down of our retail business. We had gains
of approximately $2.3 million on the sale of retail related real estate in the
prior year; there were no such gains in the current year.
Corporate and Other
Corporate
and other includes certain administrative expenses of the corporate
headquarters, interest expense and interest income not directly allocated to
the alternative energy, real estate or retail segments and income from
synthetic fuel investments.
Corporate and Other Results Third Quarter
Fiscal Year 2009 Compared to Third Quarter Fiscal Year 2008
Selling,
general and administrative expenses were $0.4 million in the current year,
consistent with $0.5 million in the prior year.
Interest
expense of $0.1 million in the current year is consistent with prior year
expense.
Investment
income was $0.1 million in the current year compared to $0.3 million in the
prior year. The decline generally results from lower yields earned on our
excess cash in the current year compared to the prior year.
36
Corporate and Other Results Nine Months
Ended October 31, 2009 Compared to Nine Months Ended October 31, 2008
Selling,
general and administrative expenses were $1.0 million in the current year
consistent with the $1.1 million in the prior year.
Interest
expense of $0.3 million in the current year is consistent with prior year
expense.
Investment
income was $0.2 million in the current year 2009 compared to $1.5 million in
the prior year. The decline generally results from lower yields earned on our
excess cash in the current year compared to the prior year.
Income
from synthetic fuel investments declined $0.7 million in the current year compared
to the prior year. Prior year income represents the estimated final settlements
for Colona and Somerset as all synthetic fuel production ceased during fiscal
year 2007.
Liquidity and Capital Resources
Net
cash provided by operating activities was approximately $0.3 million for the
first nine months of fiscal year 2009, compared to cash used of $26.3 million
for the first nine months of fiscal year 2008. For the first nine months of
fiscal year 2009, cash was provided by net income of $1.6 million, non-cash
items of $(8.4) million, which consisted of depreciation and amortization,
income from equity method investments, deferred income, unrealized losses on
derivative financial instruments, other items and the deferred income tax
provision. In addition, inventory and other assets provided cash of $16.7
million and $5.1 million, respectively, primarily a result of the wind down of
our retail business. The primary use of cash was a decrease in accounts payable
of $6.2 million as we finalized several outstanding retail vendor accounts
associated with the wind down of our retail business. Accounts receivable
increased $5.1 million as a result of production and sales from both of our
consolidated ethanol entities. Other liabilities decreased $3.3 million as we
paid certain payroll and other accrued expenses in connection with the wind
down of our retail business.
Net
cash used in operating activities was approximately $26.3 million for the first
nine months of fiscal year 2008. For the first nine months of fiscal year 2008,
cash was provided by net income of $0.01 million, adjusted for the impact of
$0.7 million for gains on our sales of synthetic fuel investments, the gain on
the disposal of real estate and property and equipment of $3.3 million and
non-cash items of $(2.9) million, which consisted of depreciation and
amortization, income from equity method investments, deferred income,
unrealized gains on derivative financial instruments, other items and the
deferred income tax provision. In addition, other assets provided cash of $1.6
million, primarily a result of reductions in our levels of prepaid commissions
associated with the sale of extended service contracts. The increase in
accounts receivable of $2.8 million is primarily a result of Levelland Hockley
commencing operations in the current fiscal year. The increase in inventory of
$6.6 million was primarily due to seasonal fluctuations in our retail segment
and Levelland Hockley commencing operations in the current fiscal year. The decrease
in accounts payable is primarily a result of our modification of payment terms
with one of our retail product vendors. The primary use of cash was a decrease
in other liabilities of $10.5 million; primarily a
37
result of
payments related to synthetic fuel obligations, incentive compensation and
other payroll and sales tax payments being made in the first quarter of fiscal
year 2008.
At October 31, 2009, working capital was $76.2 million compared to
$84.4 million at January 31, 2009. This decrease is primarily a result of
treasury stock purchases. The ratio of current assets to current liabilities
was 2.9 to 1 and 2.5 to 1 at October 31, 2009 and January 31, 2009,
respectively.
Cash
of $34.4 million was used in investing activities for the first nine months of
fiscal year 2009, compared to $69.6 million for the first nine months of fiscal
year 2008. During the first nine months of fiscal year 2009, we received
proceeds of $1.0 million from the sale of real estate and property and equipment.
We had capital expenditures of approximately $34.5 million during the first
nine months of fiscal year 2009, primarily related to construction at the One
Earth ethanol plant. We deposited approximately $1.0 million into a restricted
account as collateral for a letter of credit on behalf of Levelland Hockley to
secure grain purchasing.
Cash
of $69.6 million was used in investing activities for the first nine months of
fiscal year 2008. During the first nine months of fiscal year 2008, we received
proceeds of $1.3 million from the sales of our synthetic fuel investments and
$6.4 million from the sale of real estate and property and equipment. We had
capital expenditures of approximately $75.9 million during the first nine
months of fiscal year 2008, primarily related to construction at the Levelland
Hockley and One Earth ethanol plants. We deposited $1.3 million in escrow
accounts (restricted cash) in connection with the final draw on Levelland
Hockleys construction loan.
Cash
provided by financing activities totaled approximately $26.6 million for the
first nine months of fiscal year 2009 compared to $34.4 million for the first
nine months of fiscal year 2008. Cash of approximately $12.1 million was used
to repay debt and capital lease obligations. Cash was provided by debt
borrowings of $44.0 million on One Earths construction loan and stock option
activity of $1.2 million. Cash of approximately $5.5 million was also used to
acquire 535,000 shares of our common stock. As of October 31, 2009, we had
approximately 45,000 authorized shares remaining available for purchase under
the stock buy-back program. Cash of approximately $1.0 million was used to pay
settlements of derivative financial instruments.
Cash
provided by financing activities totaled approximately $34.4 million for the
first nine months of fiscal year 2008. Cash of approximately $4.4 million was
used to repay debt and capital lease obligations. Cash was provided by new debt
borrowings at Levelland Hockley and One Earth of $53.1 million. Cash of
approximately $15.5 million was also used to acquire 1,332,000 shares of our
common stock.
We
believe we have sufficient working capital and credit availability to fund our
commitments and to maintain our operations at their current levels for the next
twelve months and foreseeable future.
We
plan to seek and evaluate various investment opportunities. We can make no
assurances that we will be successful in our efforts to find such
opportunities.
38
Forward-Looking Statements
This Form 10-Q
contains or may contain forward-looking statements as defined in the Private Securities
Litigation Reform Act of 1995. Such statements can be identified by use of
forward-looking terminology such as may, expect, believe, estimate,
anticipate or continue or the negative thereof or other variations thereon
or comparable terminology. Readers are cautioned that there are risks and
uncertainties that could cause actual events or results to differ materially
from those referred to in such forward-looking statements. These risks and
uncertainties include the risk factors set forth from time to time in the
Companys filings with the Securities and Exchange Commission and include among
other things: the uncertainty of constructing ethanol plants on time and on
budget, the impact of legislative changes, the price volatility and
availability of corn, sorghum, distiller grains, ethanol, gasoline and natural
gas, ethanol plants operating efficiently and according to forecasts and
projections, changes in the national or regional economies, weather, the
effects of terrorism or acts of war, changes in real estate market conditions,
the fluctuating amount of income received from the Companys synthetic fuel
investments and the impact of Internal Revenue Service audits. The Company does
not intend to update publicly any forward-looking statements except as required
by law. Other factors that could cause actual results to differ materially from
those in the forward-looking statements are set forth in Item 1A of the
Companys Annual Report on Form 10-K for the fiscal year ended January 31, 2009
(File No. 001-09097).
|
|
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
|
No
material changes since January 31, 2009.
|
|
Item 4. 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 of the end of the period covered by this report. Based on that
evaluation, the 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 and is accumulated and communicated to
our management, including our Chief Executive Officer and Chief Financial
Officer, as appropriate, to allow timely decisions regarding required
disclosure.
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.
PART II. OTHER INFORMATION
|
|
Item 1.
Legal Proceedings
|
Levelland
Hockley entered into a lease agreement with Layne Christensen Company (Layne)
for certain water treatment equipment for its ethanol plant. Levelland Hockley
filed a lawsuit, as amended, against Layne in the District Court, Hockley
County, Texas on April 30, 2008, generally alleging that Layne was negligent in
its design and construction of the water treatment facility and breached its
various process guaranties and warranties. Layne and Levelland Hockley
39
settled this litigation during the third quarter of fiscal year 2009 as the parties executed
a settlement agreement.
During
the quarter ended October 31, 2009, there have been no material changes to the
risk factors discussed in our Annual Report on Form 10-K for the year ended
January 31, 2009.
|
|
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
|
Issuer Purchases of Equity Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period
|
|
Total Number
of Shares
Purchased
|
|
Average
Price
Paid per
Share
|
|
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs (1)
|
|
Maximum Number
of Shares that May
Yet Be Purchased
Under the Plans
or Programs (1)
|
|
|
|
|
|
|
|
|
|
|
|
August 1-31,
2009
|
|
|
|
$
|
|
|
|
|
|
|
298,843
|
|
September
1-30, 2009
|
|
42,713
|
|
$
|
10.51
|
|
|
42,713
|
|
|
256,130
|
|
October
1-31, 2009
|
|
211,329
|
|
$
|
12.10
|
|
|
211,329
|
|
|
44,801
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
254,042
|
|
$
|
11.83
|
|
|
254,042
|
|
|
44,801
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
At October
31, 2009, a total of 44,801 shares remained available to purchase under this
authorization. On December 1, 2009, the Companys Board of Directors
authorized the Company to purchase up to an additional 500,000 shares from
time to time in private or market transactions at prevailing market prices.
|
|
|
|
|
|
The
following exhibits are filed with this report:
|
|
|
|
31
|
|
Rule
13a-14(a)/l5d-14(a) Certifications
|
|
|
|
|
|
32
|
|
Section 1350
Certifications
|
40
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
|
|
|
REX STORES
CORPORATION
|
|
Registrant
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
/s/
Stuart A. Rose
|
|
Chairman of the Board
|
|
December 3, 2009
|
|
|
(Chief Executive Officer)
|
|
|
(Stuart A. Rose)
|
|
|
|
|
|
|
|
|
|
/s/
Douglas L. Bruggeman
|
|
Vice President, Finance and Treasurer
|
|
December 3, 2009
|
|
|
(Chief Financial Officer)
|
|
|
(Douglas L. Bruggeman)
|
|
|
|
|
41
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