REX Stores Reports Fiscal First Quarter Diluted Earnings Per Share of $0.13

REX Stores Corporation (NYSE:RSC) today announced financial results for the three month period ended April 30, 2008 (the first quarter of the Company’s 2008 fiscal year). REX also announced the launch of a strategic alternative review process of its retail segment. The Company expects to consider and evaluate a broad range of alternatives during this process, including opportunities to monetize its real estate portfolio. There is no assurance that any transaction will occur as a result of the strategic review process. The Company will host an investment community conference call and webcast this morning (details below) to review the results. Net income in the quarter ended April 30, 2008 was $1.5 million, or $0.13 per diluted share, compared with net income of $7.5 million, or $0.64 per diluted share, in the same period of fiscal 2007. Per share results are based on 11,620,000 and 11,799,000 diluted weighted average shares outstanding for the quarters ended April 30, 2008 and April 30, 2007, respectively. Net sales and revenue from continuing operations in the fiscal 2008 first quarter were $47.1 million compared with $48.9 million in the comparable period of fiscal 2007. Comparable store sales in the fiscal 2008 first quarter declined 0.3% compared to the fiscal 2007 first quarter. The Company reports sales performance quarterly and considers a store to be comparable after it has been open six full fiscal quarters. Comparable store sales figures do not include sales of extended service contracts. For the quarter ended April 30, 2008, income from continuing operations, before provision for income taxes, minority interest and discontinued operations was $2.0 million, compared with income from continuing operations, before provision for income taxes, minority interest and discontinued operations of $9.3 million in the same period a year ago. In the fiscal 2008 first quarter, the Company generated $0.9 million of income from continuing operations before income taxes and minority interest from its retail segment, compared with $1.9 million in the comparable period of fiscal 2007. In the fiscal 2008 first quarter, the Company generated $0.4 million of income from continuing operations before income taxes and minority interest from its alternative energy segment, compared with $1.7 million in the comparable period of fiscal 2007. In the fiscal 2008 first quarter, the Company generated income of $0.7 million from continuing operations before income taxes and minority interest from its corporate and other segment, compared with income of $5.7 million from continuing operations before income taxes and minority interest from its corporate and other segment in the comparable period of fiscal 2007. REX recorded a total of $1.7 million of income from synthetic fuel limited partnership investments and equity in unconsolidated affiliates in the quarter ended April 30, 2008 of which approximately $0.7 million was income from synthetic fuel limited partnership investments. As of December 31, 2007 the tax credit program related to the synthetic fuel facilities was concluded and the facilities discontinued operation. In the fiscal 2007 first quarter, REX recorded approximately $7.8 million of income from these sources of which approximately $6.7 million was income from synthetic fuel limited partnership investments. The Company’s financial results reflect the consolidation of its investments in two ethanol affiliates, Levelland Hockley County Ethanol, LLC ("Levelland Hockley”) as of September 30, 2006 and One Earth Energy LLC ("One Earth”) as of October 30, 2007. On February 20, 2008, REX (through a wholly-owned subsidiary) purchased a $5.0 million secured promissory note from Levelland Hockley. The note grants REX rights to convert the note into an additional equity ownership position. With the purchase of this note, REX has fulfilled all of its financing commitments for Levelland Hockley. In March 2008, the Levelland Hockley plant commenced production. During the fiscal 2008 first quarter, the Company recorded $0.5 million of non-cash income from interest rate derivative financial instruments held by its consolidated ethanol entities, Levelland Hockley and One Earth. The table below summarizes the Company’s current ethanol production interests:     Entity   REX’s Capital Investment ($ In millions)   REX’s Ownership Interest   Production Nameplate Capacity (millions of gallons)   Estimated Commencement of Production Levelland Hockley County Ethanol, LLC   $16.5   56%   40   In Production Patriot Renewable Fuels, LLC   $16.0   23%   100   Summer 2008 One Earth Energy, LLC   $50.8   74%   100   Early 2009 Big River Resources, LLC-W. Burlington Big River Resources, LLC-Galva   $20.0   10%   92   In Production       100   Summer 2009 The fiscal 2007 first quarter net income also reflected a $2.9 million gain on disposal of discontinued operations, net of tax, or $0.24 per diluted share. Subsequent to the end of the fiscal 2008 first quarter, REX purchased approximately 73,600 shares of its common stock in open market transactions. The Company has approximately 142,000 authorized shares remaining available to purchase under the expanded June 2007 stock buy-back authorization. The Company will host a conference call and webcast today at 11:00 a.m. EDT, which are open to the general public. The conference call dial-in number is 212/231-2904; please call ten minutes in advance to ensure that you are connected prior to the presentation. Interested parties may also access the call live via the Investor Relations page of the Company’s website, www.rextv.com, or at www.earnings.com; please allow 15 minutes to register, download and install any necessary software. Following its completion, a telephonic replay of the call can be accessed through 1:00 p.m. EDT on June 12, 2008 by dialing 800/633-8284 or 402/977-9140 (international callers). The access code for the audio replay is 21384743. Alternatively, a replay will be available on the Internet for 30 days at www.rextv.com or www.earnings.com. REX has interests in four ethanol entities and is a specialty retailer of consumer electronic products and appliances. As of April 30, 2008, the Company operated 111 retail stores in 34 states under the trade name "REX.” This news announcement contains or may contain forward-looking statements within the meaning of 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 Company’s filings with the Securities and Exchange Commission and include among other things: the highly competitive nature of the consumer electronics retailing industry, changes in the national or regional economies, weather, the effects of terrorism or acts of war on consumer spending patterns, the availability of certain products, technological changes, changes in real estate market conditions, the fluctuating amount of quarterly payments received by the Company with respect to sales of its partnership interest in its synthetic fuel investments, and the uncertain amount of synthetic fuel production and resulting income received from time to time from the Company’s synthetic fuel investments. As it relates to ethanol investments, risks and uncertainties include among other things: the uncertainty of constructing plants on time and on budget, the price volatility of corn, sorghum, dried distiller grains, ethanol, gasoline and natural gas, and the plants operating efficiently and according to forecasts and projections. REX STORES CORPORATION AND SUBSIDIARIES Consolidated Condensed Statements Of Income (In Thousands, Except Per Share Amounts) Unaudited     Three Months Ended April 30, 2008   2007* Net sales and revenue $ 47,101 $ 48,888 Cost of sales (excluding retail segment depreciation)   33,653   33,410 Gross profit 13,448 15,478 Selling, general and administrative expenses (14,405) (14,629) Interest income 857 1,293 Interest expense (121) (74) Loss on early termination of debt - (598) Losses on sale of real estate, net - (10) Equity in income of unconsolidated ethanol affiliates 1,048 1,110 Income from synthetic fuel investments 670 6,733 Unrealized gain on derivative financial instruments   472   - Income from continuing operations before provisionfor income taxes, minority interest and discontinued operations 1,969 9,303 Provision for income taxes (522) (3,589) Minority interest   217   (95) Income from continuing operations 1,664 5,619 Loss from discontinued operations, net of tax (138) (961) Gains on disposal of discontinued operations, net of tax   -   2,876 Net income $ 1,526 $ 7,534   Weighted average shares outstanding - basic   10,729   10,468   Basic income per share from continuing operations $ 0.15 $ 0.54 Basic loss per share from discontinued operations (0.01) (0.09) Basic income per share on disposal of discontinued operations   -   0.27 Basic net income per share $ 0.14 $ 0.72   Weighted average shares outstanding – diluted   11,620   11,799   Diluted income per share from continuing operations $ 0.14 $ 0.48 Diluted loss per share from discontinued operations (0.01) (0.08) Diluted income per share on disposal of discontinued operations   -   0.24 Diluted net income per share $ 0.13 $ 0.64 * Amounts differ from those previously reported as a result of certain stores being reclassified into discontinued operations. REX STORES CORPORATION AND SUBSIDIARIES Consolidated Condensed Balance Sheets (in thousands) Unaudited     April 30,   January 31,   April 30, 2008 2008 2007 Assets Current assets: Cash and cash equivalents $ 106,301 $ 127,716 $ 105,355 Accounts receivable, net 3,025 1,877 3,439 Synthetic fuel receivable - 573 5,485 Inventory, net 56,800 49,933 90,427 Prepaid expenses and other 2,204 2,492 1,428 Deferred taxes   10,399   10,599   7,288 Total current assets 178,729 193,190 213,422 Property and equipment, net 168,359 136,505 74,426 Assets held for sale, net - - 1,676 Other assets 14,098 14,803 13,590 Goodwill 1,322 1,322 1,322 Deferred taxes 21,929 21,929 26,290 Equity method investments 39,509 38,748 27,936 Investments in debt instruments - - 14,000 Restricted investments   2,491   2,481   2,425 Total assets $ 426,437 $ 408,978 $ 375,087 Liabilities and shareholders' equity: Current liabilities: Current portion of long-term debt and capital lease obligations $ 5,352 $ 4,101 $ 2,013 Accounts payable, trade 39,409 27,253 45,461 Deferred income 13,708 14,448 15,322 Deferred gain on sale and leaseback 1,436 1,436 5,420 Other current liabilities   5,928   13,617   8,606 Total current liabilities   65,833   60,855   76,822 Long-term liabilities: Long-term debt and capital lease obligations 45,276 35,224 20,627 Deferred income 16,282 17,172 18,677 Deferred gain on sale and leaseback 4,132 4,493 6,748 Derivative financial instruments 2,129 2,601 - Other   6,485   4,313   940 Total long-term liabilities   74,304   63,803   46,992 Minority interest in consolidated subsidiaries   27,512   27,729   11,618 Shareholders’ equity: Common stock 298 298 295 Paid-in capital 141,867 141,357 140,264 Retained earnings 287,155 285,629 259,496 Treasury stock   (170,532)   (170,693)   (160,400) Total shareholders' equity   258,788   256,591   239,655 Total liabilities and shareholders’ equity $ 426,437 $ 408,978 $ 375,087