Section 240.14a-101 Schedule 14A.
Information required in proxy statement.
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
REX STORES CORPORATION
.................................................................
(Name of Registrant as Specified In Its Charter)
.................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction
applies:
............................................................
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applies:
.......................................................
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computed pursuant to Exchange Act Rule 0-11 (set forth the amount
on which the filing fee is calculated and state how it was
determined):
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
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previous filing by registration statement number, or the
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[Logo]
REX STORES CORPORATION
2875 NEEDMORE ROAD
DAYTON, OHIO 45414
-------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 4, 2001
The Annual Meeting of Shareholders of REX Stores Corporation will be held at
the Dayton Racquet Club, Kettering Tower, Dayton, Ohio on Monday, June 4, 2001,
at 2:00 p.m., for the following purposes:
1. Election of six members to the Board of Directors to serve until the
next Annual Meeting of Shareholders and until their respective successors
are elected and qualified.
2. Transaction of such other business as may properly come before the
Annual Meeting or any adjournment thereof.
Only shareholders of record at the close of business on April 23, 2001 will
be entitled to notice of and to vote at the Annual Meeting.
All shareholders are cordially invited to attend the Annual Meeting in
person.
By Order of the Board of Directors
EDWARD M. KRESS
EDWARD M. KRESS
Secretary
Dayton, Ohio
May 2, 2001
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE MARK, DATE,
SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENVELOPE
PROVIDED.
REX STORES CORPORATION
2875 NEEDMORE ROAD
DAYTON, OHIO 45414
--------------------------
PROXY STATEMENT
--------------------------
MAILING DATE
MAY 2, 2001
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of REX Stores Corporation, a Delaware
corporation (the 'Company'), for use for the purposes set forth herein at its
Annual Meeting of Shareholders to be held on June 4, 2001 and any adjournments
thereof. All properly executed proxies will be voted as directed by the
shareholder on the proxy card. If no direction is given, proxies will be voted
in accordance with the Board of Directors' recommendations and, in the
discretion of the proxy holders, in the transaction of such other business as
may properly come before the Annual Meeting and any adjournments thereof. Any
proxy may be revoked by a shareholder by delivering written notice of revocation
to the Company or in person at the Annual Meeting at any time prior to the
voting thereof.
The Company has one class of stock outstanding, namely Common Stock, $.01
par value, of which there were 5,062,272 shares outstanding as of April 23,
2001. Only holders of Common Stock whose names appeared of record on the books
of the Company at the close of business on April 23, 2001 are entitled to notice
of and to vote at the Annual Meeting. Each shareholder is entitled to one vote
per share.
A majority of the outstanding shares of Common Stock will constitute a
quorum at the Annual Meeting. Abstentions and broker non-votes are counted for
purposes of determining the presence or absence of a quorum. Directors are
elected by a plurality of the votes cast by the holders of Common Stock at a
meeting at which a quorum is present. Abstentions and broker non-votes will not
be counted toward a nominee's achievement of a plurality and thus will have no
effect. A broker non-vote occurs when a broker submits a proxy that indicates
the broker does not have discretionary authority to vote the shares on a
particular matter.
FISCAL YEAR
All references in this Proxy Statement to a particular fiscal year are to
the Company's fiscal year ended January 31. For example, 'fiscal 2000' means the
period February 1, 2000 to January 31, 2001.
ELECTION OF DIRECTORS
Six directors are to be elected at the Annual Meeting to hold office until
the next Annual Meeting of Shareholders and until their successors are elected
and qualified. Unless otherwise directed, it is the intention of the persons
named in the accompanying proxy to vote each proxy for the election of the
nominees listed below. All nominees, with the exception of Mr. Schwartz, are
presently directors of the Company.
If at the time of the Annual Meeting any nominee is unable or declines to
serve, the proxy holders will vote for the election of such substitute nominee
as the Board of Directors may recommend. The Company and the Board of Directors
have no reason to believe that any substitute nominee will be required.
Set forth below is certain information with respect to the nominees for
director.
STUART ROSE, 46, has been the Chairman of the Board and Chief Executive
Officer of the Company since its incorporation in 1984 as a holding company to
succeed to the ownership of Rex Radio and Television, Inc., Kelly & Cohen
Appliances, Inc. and Stereo Town, Inc. Prior to 1984, Mr. Rose was Chairman of
the Board and Chief Executive Officer of Rex Radio and Television, Inc., which
he founded in 1980 to acquire the stock of a corporation which operated four
retail stores.
LAWRENCE TOMCHIN, 73, has been the President and Chief Operating Officer of
the Company since 1990. From 1984 to 1990, he was the Executive Vice President
and Chief Operating Officer of the Company. Mr. Tomchin has been a director
since 1984. Mr. Tomchin was Vice President and General Manager of the
corporation which was acquired by Rex Radio and Television, Inc. in 1980 and
served as Executive Vice President of Rex Radio and Television, Inc. after the
acquisition.
ROBERT DAVIDOFF, 74, has been a director since 1984. Mr. Davidoff has been
employed by Carl Marks & Co., Inc., an investment banking firm, since 1950 and
currently is Vice President in charge of corporate finance. Mr. Davidoff is also
a director of Hubco Exploration, Inc., Marisa Christina, Inc. and Aquis
Communications Group, Inc.
EDWARD KRESS, 51, has been the Secretary of the Company since 1984 and a
director since 1985. Mr. Kress has been a partner of the law firm of Chernesky,
Heyman & Kress P.L.L., counsel for the Company, since 1988. From 1985 to 1988,
Mr. Kress was a member of the law firm of Smith & Schnacke. Mr. Kress has
practiced law in Dayton, Ohio since 1974.
LEE FISHER, 49, has been a director since 1996. Mr. Fisher is the President
and Chief Executive Officer of the Center for Families and Children, a private
nonprofit human services organization. Mr. Fisher was a partner of the law firm
of Hahn Loeser & Parks LLP from 1995 to 1999. Mr. Fisher served as Ohio Attorney
General from 1991 to 1995, State Senator, Ohio General Assembly, from 1983 to
1991, and State Representative, Ohio General Assembly, from 1981 to 1983. Mr.
Fisher also practiced law with Hahn Loeser & Parks from 1978 to 1991.
ALEXANDER SCHWARTZ, JR., 68, retired from Prudential Securities Incorporated
in 1996 after 33 years of service. While at Prudential Securities he held
various positions, including co-head of the Investment Banking Division, Manager
of the firm's International Division and Managing Director of the Health Care
Group. Mr. Schwartz has served on the Boards of Directors of several public and
privately held companies and is currently a director of Cryolife, Inc.
2
INFORMATION CONCERNING THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors held one meeting and took action by unanimous written
consent six times during the fiscal year ended January 31, 2001. Each incumbent
director attended all meetings of the Board of Directors and Board Committees on
which he served.
The Board of Directors has three standing committees: the Executive
Committee, the Audit Committee and the Compensation Committee. The Board has no
nominating committee.
The Executive Committee (of which Messrs. Rose and Tomchin are members) is
empowered to exercise all the powers and authority of the Board of Directors
between meetings of the Board, other than the power to fill vacancies on the
Board or on any Board committee and the power to declare dividends. The
Executive Committee met informally throughout the year and took formal action by
unanimous written consent 23 times during fiscal 2000.
The Audit Committee (of which Messrs. Davidoff and Fisher are members) meets
with Company personnel and with representatives of the Company's independent
public accountants to review internal auditing procedures and matters relating
to the annual audit of the Company's financial statements. The committee also
annually recommends to the Board of Directors the appointment of independent
public accountants. See 'Audit Committee Report.' The Audit Committee met three
times during fiscal 2000.
The Compensation Committee (of which Messrs. Davidoff and Fisher are
members) establishes the Company's executive compensation policies and
administers the Company's stock option plans. See 'Compensation Committee Report
on Executive Compensation.' The Compensation Committee met once and took action
by unanimous written consent once during fiscal 2000.
DIRECTOR COMPENSATION
Directors who are not officers or employees of the Company may receive a fee
of up to $1,000 plus reasonable expenses for each meeting of the Board attended.
Nonemployee directors are eligible to receive grants of stock options under
the Company's 1995 and 1999 Omnibus Stock Incentive Plans. Under the Plans, on
the date of each annual meeting of the Company's shareholders, each nonemployee
director is awarded a nonqualified stock option to purchase a number of shares
of Common Stock such that the exercise price of the option multiplied by the
number of shares subject to the option is as near as possible to $100,000, but
in no event more than 10,000 shares. The exercise price of each nonqualified
option is the fair market value of the Common Stock on the date of grant. The
options are exercisable in five equal annual installments commencing on the
first anniversary of the date of grant and expire ten years from the date of
grant. For fiscal 2000, each nonemployee director was granted an option to
purchase 4,671 shares at an exercise price of $21.40625 per share.
AUDIT COMMITTEE REPORT
The Audit Committee is comprised of nonemployee directors who meet the
independence and financial experience requirements of the New York Stock
Exchange. The Audit Committee operates under a written charter, a copy of which
is attached to this Proxy Statement as Appendix A.
Management has the primary responsibility for the financial statements and
the reporting process, including the Company's systems of internal controls. In
fulfilling its oversight responsibilities, the Committee reviewed the audited
financial statements in the Annual Report on Form 10-K with
3
management, including a discussion of the quality and the acceptability of the
Company's financial reporting and controls.
The Committee reviewed with the independent auditors, who are responsible
for expressing an opinion on the conformity of those audited financial
statements with generally accepted accounting principles, their judgments as to
the quality and the acceptability of the Company's financial reporting and such
other matters as are required to be discussed with the Committee under generally
accepted auditing standards. In addition, the Committee has discussed with the
independent auditors the auditors' independence from management and the Company,
including the matters in the auditors' written disclosures required by the
Independence Standards Board.
The Committee also discussed with the Company's independent auditors the
overall scope and plans for their respective audits. The Committee meets
periodically with the independent auditors, with and without management present,
to discuss the results of their examinations, their evaluations of the Company's
internal controls, and the overall quality of the Company's financial reporting.
In reliance on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the fiscal year ended
January 31, 2001 for filing with the Securities and Exchange Commission.
AUDIT COMMITTEE
ROBERT DAVIDOFF
LEE FISHER
4
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation awarded to, earned by or
paid to the Chief Executive Officer, and to each of the other executive officers
of the Company whose total annual salary and bonus exceeded $100,000, for
services rendered in all capacities to the Company and its subsidiaries for each
of the last three fiscal years.
LONG-TERM
COMPENSATION
------------
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
NAME AND ---------------------- UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#) COMPENSATION ($)(1)
------------------ ---- ---------- --------- ----------- -------------------
Stuart Rose ........................ 2000 154,500 653,000 10,000 --
Chairman of the Board and Chief 1999 154,500 650,000 10,000 --
Executive Officer 1998 154,500 443,315 525,000 --
Lawrence Tomchin ................... 2000 154,500 305,000 10,000 --
President and Chief Operating 1999 154,500 304,000 10,000 --
Officer 1998 154,500 207,250 175,000 --
Douglas Bruggeman .................. 2000 123,825 35,550 10,000 200
Vice President -- Finance and 1999 113,400 119,050 10,000 200
Treasurer 1998 107,200 23,000 25,000 200
---------
(1) Amounts in this column represent employer matching contributions on behalf
of the named executive under the Company's Profit Sharing Plan.
EMPLOYMENT AGREEMENTS
Stuart Rose and Lawrence Tomchin have entered into Employment Agreements
with Rex Radio and Television, Inc. The Agreements provide that Mr. Rose and Mr.
Tomchin are each entitled to an annual salary of $154,500, a cash bonus at the
discretion of the Board of Directors, participation in all employee benefit
plans and reimbursement for business expenses. Each Agreement is for a term of
three years commencing January 1, 2000 and is automatically renewed for
additional one-year terms until Mr. Rose's or Mr. Tomchin's resignation, death,
total disability or termination of employment for cause, unless earlier
terminated by either party upon 180 days written notice. Effective April 17,
2001, Messrs. Rose and Tomchin each entered into new Employment Agreements on
the same terms as their current Agreements for a three-year term commencing
January 1, 2003. Messrs. Rose and Tomchin were also granted 500,000 and 150,000
nonqualified executive stock options, respectively, at an exercise price of
$18.015 per share, the fair market value of the underlying shares on the grant
date, in connection with entering into the new Agreements.
5
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning individual grants of
stock options made to the named executive officers during the fiscal year ended
January 31, 2001.
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
---------------------------------------------------- ---------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
---- ----------- ----------- ------ ---- ------ -------
Stuart Rose........................ 10,000(1) 4.9 22.8125 3/29/10 143,467 363,573
Lawrence Tomchin................... 10,000(1) 4.9 22.8125 3/29/10 143,467 363,573
Douglas Bruggeman.................. 10,000(1) 4.9 22.8125 3/29/10 143,467 363,573
---------
(1) Nonqualified options granted pursuant to the Company's 1999 Omnibus Stock
Incentive Plan. These options become exercisable in five cumulative
installments of 20% on each anniversary of the date of grant. The date of
grant was March 29, 2000.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information concerning each exercise of stock
options during fiscal 2000 by each of the named executive officers and the
fiscal year-end value of unexercised options.
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
ACQUIRED YEAR-END (#) FISCAL YEAR-END ($)(1)
ON VALUE --------------------------- ---------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ ------------ ----------- ------------- ----------- -------------
Stuart Rose................. 6,552 56,432 945,419 375,542 5,169,456 3,607,833
Lawrence Tomchin............ 5,797 48,185 385,953 142,811 1,960,531 1,281,710
Douglas Bruggeman........... -- -- 48,207 44,000 501,945 306,000
---------
(1) Unexercised options were in-the-money if the fair market value of the
underlying shares exceeded the exercise price of the option at January 31,
2001.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors was comprised during
fiscal 2000 of Robert Davidoff and Lee Fisher, both outside directors of the
Company. This Committee establishes policies relating to compensation of
executive officers of the Company and administers the Company's 1995 and 1999
Omnibus Stock Incentive Plans.
6
EXECUTIVE COMPENSATION POLICIES
The goal of the Company's executive compensation policy is to ensure that an
appropriate relationship exists between executive pay and the creation of
shareholder value, while at the same time motivating and retaining key
employees. To achieve this goal, the Company's executive compensation policies
integrate base salary with annual bonuses based upon corporate and individual
performance, supplemented with long-term equity-based incentive awards.
Base salary is intended to be set at a level below the base salaries paid to
executives of similarly-sized companies within the industry and the peer group.
Salaries for executive officers are reviewed by the Committee on an annual
basis, subject to the terms of any existing employment agreements.
Annual bonuses are intended to comprise a substantial portion of each senior
executive officer's annual cash compensation and are based upon corporate
financial performance. For fiscal 2000, to reflect tax savings realized from the
Company's investments generating income tax credits, the Committee established
the amount of the Company's after-tax earnings as a percentage of net sales (the
'After-Tax Earnings Percentage') as the performance measure for determining
senior executives' bonuses. Annual bonuses for the executive officers other than
senior executives are established by the Chief Executive Officer based on his
assessment of the individual's performance.
Long-term incentive awards are made in the form of annual grants of
incentive stock options and nonqualified stock options pursuant to the Omnibus
Plans. Stock appreciation rights, restricted stock and other stock-based awards
may also be granted under the Plans. The Committee feels that stock options and
other stock-based awards are an effective long-term incentive for executive
officers to create value for shareholders, since their value bears a direct
relationship to the Company's stock price. Stock options are granted at the fair
market value of the underlying shares at the date of grant (unless otherwise
required by applicable law), and generally vest in installments over multiple
years. During fiscal 2000, nonqualified stock options were granted under the
1999 Omnibus Plan to 65 employees, including three executive officers, based
primarily on the individual's contribution to the Company's growth and
profitability.
CEO COMPENSATION
Stuart Rose, the Chairman and Chief Executive Officer of the Company,
received a base salary of $154,500 in fiscal 2000 pursuant to the terms of his
employment agreement.
Mr. Rose earned a cash bonus of $653,000 for fiscal 2000, compared to his
fiscal 1999 cash bonus of $650,000. This increase was based on the fiscal 2000
After-Tax Earnings Percentage of 3.9609% (compared to the fiscal 1999 After-Tax
Earnings Percentage of 3.9399%). In determining Mr. Rose's cash bonus, the
Committee utilized a measure of a $165,000 cash bonus for each After-Tax
Earnings Percentage point.
Mr. Rose was granted 10,000 nonqualified stock options under the 1999
Omnibus Plan in fiscal 2000 at an exercise price of $22.8125 per share, which
was the fair market value of the underlying shares on the date of grant. The
number of options granted to Mr. Rose equaled the option grants to each of the
other executive officers under the Plan.
INTERNAL REVENUE CODE SECTION 162(m)
Section 162(m) of the Internal Revenue Code generally disallows a federal
income tax deduction to a public company for compensation paid in excess of
$1 million in any taxable year to the corporation's
7
chief executive officer or any of its other named executive officers in the
proxy statement. Based on current compensation levels and the present structure
of the Company's compensation programs, the Company believes that the annual
compensation paid to its executive officers will not exceed or otherwise be
subject to the deduction limitation, other than with the possible exception of
the nonqualified executive stock options granted in 1993 and 1998 and the
nonqualified stock options granted under the 1999 Omnibus Plan. Depending upon
the number of options exercised by an executive officer in a particular year and
the value of the underlying shares at that time, exercise of the 1993 or 1998
nonqualified executive stock options or the nonqualified options granted under
the 1999 Omnibus Plan could result in the individual's annual compensation
exceeding the $1 million deduction limitation.
COMPENSATION COMMITTEE
ROBERT DAVIDOFF
LEE FISHER
PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareholder return on the Company's Common Stock against
the cumulative total return of the S&P 500 Stock Index and a peer index
comprised of three selected publicly traded consumer electronics retailers (*)
for the period commencing January 31, 1996 and ended January 31, 2001. The graph
assumes an investment of $100 in the Company's Common Stock and each index on
January 31, 1996 and reinvestment of all dividends.
REX STORES CORPORATION
Comparison of Five Year Total Return
(REX Stores Corporation, S&P 500 and Peer Group)
[PERFORMANCE GRAPH]
1/31/96 1/31/97 1/31/98 1/31/99 1/31/00 1/31/01
REX Stores Corporation $100 $ 63 $ 78 $ 97 $118 $153
S&P 500 $100 $126 $160 $212 $234 $232
Peer Group $100 $ 68 $ 70 $ 73 $138 $177
---------
* The peer group is comprised of The Good Guys, Inc., Sound Advice, Inc. and
Ultimate Electronics, Inc.
8
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth, as of April 23, 2001 (the record date for
the Annual Meeting), certain information with respect to the beneficial
ownership of the Company's Common Stock by each director and nominee for
director of the Company, each executive officer of the Company, all directors
and executive officers of the Company as a group and those persons or groups
known by the Company to own more than 5% of the Company's Common Stock.
For purposes of this table, a person is considered to 'beneficially own' any
shares if such person, directly or indirectly, through any contract,
arrangement, understanding, relationship, or otherwise, has (or has the right to
acquire within 60 days after April 23, 2001) sole or shared power (i) to vote or
to direct the voting of such shares or (ii) to dispose or to direct the
disposition of such shares. Unless otherwise indicated, voting power and
investment power are exercised solely by the named person or shared with members
of his household.
COMMON STOCK
BENEFICIALLY OWNED
----------------------
NAME AND ADDRESS NUMBER PERCENT(1)
---------------- ------ ----------
Stuart Rose(2).............................................. 1,934,674 32.1%
2875 Needmore Road
Dayton, Ohio 45414
Lawrence Tomchin(3) ........................................ 509,698 9.3%
2875 Needmore Road
Dayton, Ohio 45414
Robert Davidoff(4) ......................................... 109,426 2.1%
135 East 57th Street, 27th Floor
New York, New York 10022
Edward Kress(5) ............................................ 67,278 1.3%
1100 Courthouse Plaza S.W.
Dayton, Ohio 45402
Lee Fisher(6) .............................................. 17,322 *
Western Reserve Building
1468 West 9th Street
Cleveland, Ohio 44113
Alexander Schwartz, Jr. .................................... -- --
Post Office Box 424
Tuxedo Park, New York 10987
Douglas Bruggeman(7) ....................................... 69,207 1.3%
2875 Needmore Road
Dayton, Ohio 45414
All directors and executive officers as a group
(6 persons)(8)............................................ 2,707,605 41.3%
FMR Corp.(9) .............................................. 704,370 13.9%
82 Devonshire Street
Boston, Massachusetts 02109
Dimensional Fund Advisors Inc.(10) ......................... 521,400 10.3%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
(table continued on next page)
9
(table continued from previous page)
COMMON STOCK
BENEFICIALLY OWNED
----------------------
NAME AND ADDRESS NUMBER PERCENT(1)
---------------- ------ ----------
Vanguard Horizon Funds -- Vanguard Capital
Opportunity Fund (11)..................................... 500,000 9.9%
Post Office Box 2600
Valley Forge, Pennsylvania 19482
---------
* One percent or less.
(1) Percentages are calculated on the basis of the number of shares outstanding
on April 23, 2001 plus the number of shares issuable upon the exercise of
options held by the person or group which are exercisable within 60 days
after April 23, 2001.
(2) Includes (i) 164,084 shares held by the Stuart Rose Family Foundation, an
Ohio nonprofit corporation of which Mr. Rose is the sole member, chief
executive officer and one of three members of the board of trustees, the
other two being members of his immediate family and (ii) 959,628 shares
issuable upon the exercise of options.
(3) Includes 7,047 shares held by Mr. Tomchin's wife and 400,764 shares
issuable upon the exercise of options.
(4) Includes 28,194 shares issuable upon the exercise of options.
(5) Includes 16,960 shares held by Mr. Kress as co-trustee of two trusts with
respect to which Mr. Kress has shared voting and investment power, 2,123
shares held by Mr. Kress as trustee of two trusts for the benefit of his
minor children and 28,194 shares issuable upon the exercise of options.
(6) Includes 17,322 shares issuable upon the exercise of options.
(7) Includes 64,207 shares issuable upon the exercise of options.
(8) Includes 1,498,309 shares issuable upon the exercise of options.
(9) Based on a Schedule 13G filing dated February 14, 2001. Fidelity Management
& Research Company, a wholly-owned subsidiary of FMR Corp. and a registered
investment adviser, is the beneficial owner of 658,300 shares of Common
Stock of the Company as a result of acting as investment adviser to various
registered investment companies. One investment company, Fidelity Low
Priced Stock Fund, owns 658,300 shares. Edward C. Johnson 3d (Chairman of
FMR Corp.), FMR Corp., through its control of Fidelity Management &
Research Company, and the funds each has sole power to dispose of the
658,300 shares owned by the funds, while the sole power to vote or direct
the voting of the shares owned directly by the Fidelity funds resides with
the funds' boards of trustees. Fidelity Management Trust Company, a
wholly-owned subsidiary of FMR Corp. and a bank, is the beneficial owner of
46,070 shares of Common Stock of the Company as a result of serving as
investment manager of the institutional account(s). Edward C. Johnson 3d
and FMR Corp., through its control of Fidelity Management Trust Company,
each has sole power to dispose and to vote or direct the voting of the
46,070 shares owned by the institutional account(s).
(10) Based on a Schedule 13G filing dated February 2, 2001. Dimensional Fund
Advisors Inc., a registered investment adviser, furnishes investment advice
to four registered investment companies and serves as investment manager to
certain other commingled group trusts and separate accounts.
(footnotes continued on next page)
10
(footnotes continued from previous page)
In its role as investment adviser or manager, Dimensional Fund Advisors
Inc. has sole power to vote and dispose of 521,400 shares owned by these
funds. Dimensional Fund Advisors Inc. disclaims beneficial ownership of all
such shares.
(11) Based on a Schedule 13G filed February 13, 2001. Vanguard Capital
Opportunity Fund, a registered investment company, has sole power to vote
or direct the voting and shared power to dispose or direct the disposition
of 500,000 shares. PRIMECAP Management Company, a registered investment
adviser who provides investment management services for the Vanguard
Capital Opportunity Fund, filed a Schedule 13G on October 11, 2000 showing
it has sole power to dispose of 500,000 shares. The Company believes these
are the same 500,000 shares reported as beneficially owned by the Fund.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers to file reports of ownership and changes of
ownership of the Company's Common Stock with the Securities and Exchange
Commission. The Company believes that during fiscal 2000 all filing requirements
applicable to its directors and executive officers were met.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Rex Radio and Television, Inc. leases 10,000 square feet for a store in a
strip shopping center in Beavercreek, Ohio, from Stuart Rose/Beavercreek, Inc.
under a lease dated December 12, 1994. The shareholders of Stuart
Rose/Beavercreek, Inc. are Stuart Rose and Lawrence Tomchin. Base rent is
$82,500 per year.
During fiscal 2000, the Company paid the law firm of Chernesky, Heyman &
Kress P.L.L., of which Edward Kress is a partner, a total of $470,661 for legal
services.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP served as the Company's independent public accountants
for the fiscal year ended January 31, 2001, and has served in that capacity
since the Company's incorporation in 1984. It is anticipated that
representatives of Arthur Andersen LLP will be present at the Annual Meeting to
respond to appropriate questions from shareholders and to make a statement if
they desire to do so.
The Board of Directors of the Company annually appoints the independent
public accountants for the Company after receiving the recommendations of its
Audit Committee. No recommendation of the Audit Committee has been made
concerning the appointment of independent public accountants for the fiscal year
ending January 31, 2002.
AUDIT FEES
Arthur Andersen LLP billed the Company $125,500 for professional services
rendered for the audit of the Company's financial statements and reviews of
financial statements included in the Company's Form 10-Qs for fiscal 2000.
11
ALL OTHER FEES
Arthur Andersen LLP billed the Company $144,500 for all other non-audit
services rendered in fiscal 2000. None of these fees were for financial
information systems design and implementation.
The Audit Committee considered whether the provision of the other non-audit
services described above is compatible with maintaining Arthur Andersen's
independence.
OTHER BUSINESS
SOLICITATION OF PROXIES
The Company will bear the entire expense of this proxy solicitation.
Arrangements will be made with brokers and other custodians, nominees and
fiduciaries to send proxy solicitation materials to their principals and the
Company will, upon request, reimburse them for their reasonable expenses in so
doing. Officers and other regular employees of the Company may solicit proxies
by mail, in person or by telephone.
OTHER MATTERS
The Board of Directors does not know of any matters to be presented at the
Annual Meeting other than those mentioned above. However, if other matters
should properly come before the Annual Meeting or any adjournments thereof, the
proxy holders will vote the proxies thereon in their discretion.
SHAREHOLDER PROPOSALS
Proposals by shareholders intended to be presented at the Company's 2002
Annual Meeting of Shareholders must, in accordance with applicable regulations
of the Securities and Exchange Commission, be received by the Secretary of the
Company at 2875 Needmore Road, Dayton, Ohio 45414 on or before January 2, 2002
in order to be considered for inclusion in the Company's proxy materials for
that meeting. Shareholder proposals intended to be submitted at the 2002 Annual
Meeting outside the processes of Rule 14a-8 will be considered untimely under
Rule 14a-4(c)(1) if not received by the Company at its corporate offices on or
before March 18, 2002. If the Company does not receive timely notice of such
proposal, the proxy holders will vote on the proposal, if presented at the
meeting, in their discretion.
By Order of the Board of Directors
EDWARD M. KRESS
EDWARD M. KRESS
Secretary
May 2, 2001
Dayton, Ohio
12
Appendix A
REX STORES CORPORATION
AUDIT COMMITTEE CHARTER
I. FUNCTION
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing the
financial information which will be provided to shareholders and others, the
systems of internal controls which management and the Board of Directors have
established, and the audit process. The Committee shall provide an open avenue
of communication between the Board of Directors, management, the internal
auditors and the independent accountants.
II. COMPOSITION
From the date of adoption through June, 2001, the Audit Committee shall be
comprised of Robert Davidoff, Director and Lee Fisher, Director. Effective as of
June, 2001, the Audit Committee shall be comprised of three (3) or more
Directors as determined by the Board, each of whom shall be an Independent
Director, and free from any relationship that, in the opinion of the Board,
would interfere with the exercise of his or her independent judgment as a member
of the Committee. All members of the Committee shall have a working familiarity
with basic finance and accounting practices, and at least one member of the
Committee shall have accounting or related financial management expertise.
III. MEETINGS
The Committee shall meet regularly as necessary to discharge its
responsibilities or as circumstances require. The Committee shall meet with
management, the internal auditors and the independent accountants in separate
executive sessions to discuss any matters that the Committee or these groups
believe should be discussed privately.
IV. RESPONSIBILITIES
In carrying out its responsibilities and duties, the Audit Committee shall:
a. DOCUMENT AND REPORT REVIEW
Review the Company's annual financial statements and the report rendered
with respect to those statements by the independent accountants.
Review any internal reports to management prepared by the internal
auditors.
Review with management and the independent accountants as necessary interim
quarterly financial reports prior to filing with the SEC or prior to the
release of earnings.
Review and update this Charter annually.
A-1
b. INDEPENDENT ACCOUNTANTS
Recommend to the Board of Directors the selection of the independent
accountants, approve the compensation of the independent accountants and
review and approve the discharge of the independent accountants.
Review the performance of the independent accountants.
Review and discuss with the independent accountants, on an annual basis,
all significant relationships the accountants have with the Company to
determine the accountants' independence.
Periodically consult with the independent accountants, without management,
about internal controls and the accuracy of the Company's financial
statements.
c. FINANCIAL REPORTING PROCESSES
Review with management, the independent accountants and internal auditors
significant risks and exposures, audit activities and significant audit
findings.
Review with the independent accountants and internal auditors the adequacy
of the Company's internal accounting and financial controls and the
integrity of the Company's internal and external financial reporting
processes.
Consider the independent accountant's judgments about the Company's
accounting principles.
Consider and approve major changes to the Company's auditing and accounting
practices as suggested by the independent accountants, management or the
internal auditors.
Review separately with management, the independent accountants and the
internal auditors any significant difficulties encountered during the
course of the audit, including any restrictions on the scope of work or
access to required information.
Review any significant disagreements among management and the independent
accountants or internal auditors in connection with preparing the financial
statements.
Consider the independent accountant's evaluation of the Company's
financial, accounting and auditing personnel.
d. DISCLOSURE
Provide a report of the Audit Committee in the Company's proxy statement
annually.
Include a copy of this Charter as an appendix to the Company's proxy
statement once every three (3) years.
e. OTHER
Conduct or authorize investigations into any matters within the Committee's
scope of responsibilities. The Committee shall be empowered to retain
independent counsel and other professionals to assist in the conduct of any
investigation.
Approved by Board of Directors of REX Stores Corporation on June 14, 2000.
A-2
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Appendix I
PROXY
REX STORES CORPORATION
Proxy for Annual Meeting of Shareholders
June 4, 2001
The undersigned hereby appoints Stuart Rose and Lawrence Tomchin and
each of them proxies for the undersigned, with full power of substitution, to
vote all the shares of Common Stock of REX STORES CORPORATION, a Delaware
corporation (the "Company"), which the undersigned is entitled to vote at the
Annual Meeting of Shareholders of the Company to be held on Monday, June 4,
2001, at 2:00 p.m. and any adjournments thereof.
(Continued, and to be signed, on the other side)
APPENDIX I
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Shareholders
REX STORES CORPORATION
June 4, 2001
Please Detach and Mail in the Envelope Provided
Please mark your
A [X] votes as in this
example.
WITHHOLD
FOR ALL AUTHORITY
nominees listed to vote for all nominees
at right listed at right
1. ELECTION OF
DIRECTORS [ ] [ ]
(INSTRUCTION: To withhold authority to vote for any
individual nominee, strike a line through the nominee's
name at right.)
Nominees: Stuart Rose
Lawrence Tomchin
Robert Davidoff
Edward Kress
Lee Fisher
Alexander Schwartz, Jr.
2. IN THEIR DISCRETION the proxies are authorized to vote upon such
other business as may properly come before the meeting.
This proxy is solicited on behalf of the Board of Directors and will be
voted as directed herein. If no direction is given, this proxy shall be
voted FOR Proposal 1.
(Signature)_________________ ____________________ Dated:_______, 2001
NOTE: Shareholders should date this proxy and sign here exactly as the name(s)
hereon. If stock is held jointly, both should sign this proxy. Executors,
administrators, trustees, guardians, and others signing in a fiduciary
capacity should indicate their full title in such capacity.