744187--4/14/2006--REX_STORES

related topics

{gas, price, oil}

{tax, income, asset}

{product, market, service}

{customer, product, revenue}

{stock, price, operating}

{condition, economic, financial}

{personnel, key, retain}

{cost, operation, labor}

{competitive, industry, competition}

{acquisition, growth, future}

We face significant competition from other retailers many of whom have greater financial resources. This could result in a decline of our sales and profitability. We may be unable to open new stores and any newly opened stores may not be profitable. A decline in economic conditions could lead to reduced consumer demand for the products we sell. If new products are not introduced or consumers do not accept new products, our sales may decline. If we do not adequately anticipate and respond to changing consumer demand and preferences, our results of operations may be impaired. Our opportunistic product buying strategy could negatively impact our sales and gross margins. Income and tax credits from our investments in facilities producing synthetic fuel have contributed significantly to our operating and net income in past years but will not continue after December 31, 2007. We face synthetic fuel risks as future IRS audits may result in the disallowance of previously recognized tax credits. We face synthetic fuel risks associated with crude oil prices as our income could decrease significantly. We may not be able to generate sufficient taxable income to realize our deferred tax assets. We may realize capital losses related to our sales of synthetic fuel ownership interests. The loss of the services of our Chief Executive Officer or our other key employees could jeopardize our ability to maintain our competitive position. Fluctuations in our comparable store sales may cause the price of our common stock to fluctuate substantially. Our quarterly operating results are subject to seasonality. We depend on our suppliers for products and our business could be adversely affected if we do not maintain relationships with our key vendors. We may incur higher costs or decreased sales and gross margins because we purchase imported products. We face risks associated with our proposed ethanol investments and our lack of experience in this industry. We may realize lower than expected results from our proposed ethanol investments. We face risks associated with our proposed ethanol investments and the construction of the ethanol plants as profitability from the investments could be adversely affected if the plants are not completed within budget. We face risks associated with our proposed ethanol investments as raw material prices will fluctuate and could increase significantly in the future, which will increase operating costs and adversely affect operating results. We face risks associated with our proposed ethanol investments as operating expenses will fluctuate and could increase significantly in the future, which will increase operating costs and adversely affect operating results. We face risks associated with our proposed ethanol investments from government regulations and the potential reduction in the selling price of ethanol. Fuel ethanol prices could fluctuate, which could result in returns from our ethanol investments being less than expected. Our proposed ethanol investments are illiquid.

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744187--4/14/2006--REX_STORES_CORP