744187--4/14/2008--REX_STORES

related topics

{gas, price, oil}

{tax, income, asset}

{product, market, service}

{customer, product, revenue}

{condition, economic, financial}

{stock, price, operating}

{operation, natural, condition}

{property, intellectual, protect}

{cost, regulation, environmental}

{loss, insurance, financial}

{regulation, government, change}

{personnel, key, retain}

{cost, contract, operation}

{competitive, industry, competition}

We have concentrations of cash deposits at financial institutions that exceed federal insurance limits. Risks Related to our Retail Business 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. 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. 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. Our profitability would be adversely affected by lower than expected fourth quarter results. 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. The loss of the services of our Chief Executive Officer or our other key employees could jeopardize our ability to maintain our competitive position. Risks Related to our Synthetic Fuel Investments 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 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. Risks Related to our Alternative Energy Business Our ethanol investments are subject to the risks of a development stage business which could adversely affect the returns on our ethanol investments and our results of operations. We invest in new construction of ethanol plants and significant expansion of existing plants. As a result, we face significant project development risks that may adversely affect our investment returns. If cash flow from operations of our ethanol plants is not sufficient to service its debt, the plant could fail and we could lose our entire investment. We depend on our partners to operate our ethanol investments. We may not successfully acquire or develop additional ethanol investments. We face significant competition in the ethanol industry. The financial returns on our ethanol investments are highly dependent on commodity prices, which are subject to significant volatility and uncertainty, and the availability of supplies, so our results could fluctuate substantially. Our returns on ethanol investments are highly sensitive to grain prices. The spread between ethanol and corn prices can vary significantly and may not return to recent high levels. The market for natural gas is subject to market conditions that create uncertainty in the price and availability of the natural gas that our ethanol plants use in their manufacturing process. Fluctuations in the selling price and production costs of gasoline may reduce profit margins at our ethanol plants. New plants under construction or decreases in demand for ethanol may result in excess production capacity in the ethanol industry, which may cause the price of ethanol and/or distillers grains to decrease. Our ethanol plants may be adversely affected by technological advances and efforts to anticipate and employ such technological advances may prove unsuccessful. The U.S. ethanol industry is highly dependent upon a myriad of federal and state legislation and regulation and any changes in legislation or regulation could materially and adversely affect our results of operations and financial position. The elimination or significant reduction in the blenders credit could have a material adverse effect on the results of our ethanol investments. Ethanol can be imported into the U.S. duty-free from some countries, which may undermine the ethanol industry in the U.S. The effect of the renewable fuel standard ( RFS ) program in the Energy Independence and Security Act signed into law on December 19, 2007 (the 2007 Act ) is uncertain. Waivers of the RFS minimum levels of renewable fuels included in gasoline could have a material adverse effect on the results of our ethanol investments. Various studies have criticized the efficiency of ethanol, in general, and corn-based ethanol in particular, which could lead to the reduction or repeal of incentives and tariffs that promote the use and domestic production of ethanol or otherwise negatively impact public perception and acceptance of ethanol as an alternative fuel. Changes in interest rates could have a material adverse effect on the results of our ethanol investments.

Full 10-K form ▸

744187--4/14/2008--REX_STORES_CORP