-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
Originator-Key-Asymmetric:
 MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen
 TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB
MIC-Info: RSA-MD5,RSA,
 SCuSnWmrFHq5++BQiqzngnQj2o3bkLAR6y1fI6jWubwDQVt1RMG5/7PAwwnTyrXP
 H6MDRNZVRKxOAgbyhGySJA==

<SEC-DOCUMENT>0000950117-04-004298.txt : 20041209
<SEC-HEADER>0000950117-04-004298.hdr.sgml : 20041209
<ACCEPTANCE-DATETIME>20041209121634
ACCESSION NUMBER:		0000950117-04-004298
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		5
CONFORMED PERIOD OF REPORT:	20041031
FILED AS OF DATE:		20041209
DATE AS OF CHANGE:		20041209

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			REX STORES CORP
		CENTRAL INDEX KEY:			0000744187
		STANDARD INDUSTRIAL CLASSIFICATION:	RETAIL-RADIO TV & CONSUMER ELECTRONICS STORES [5731]
		IRS NUMBER:				311095548
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			0131

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-09097
		FILM NUMBER:		041192483

	BUSINESS ADDRESS:	
		STREET 1:		2875 NEEDMORE RD
		CITY:			DAYTON
		STATE:			OH
		ZIP:			45414
		BUSINESS PHONE:		5132763931

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	AUDIO VIDEO AFFILIATES INC
		DATE OF NAME CHANGE:	19920703
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>a38869.txt
<DESCRIPTION>REX STORES CORPORATION
<TEXT>

<PAGE>

================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                         ------------------------------
                                    FORM 10-Q


(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

     For the quarterly period ended October 31, 2004

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

     For the transition period from _________ to _________


                        Commission File Number 001-09097
                         ------------------------------
                             REX STORES CORPORATION
             (Exact name of registrant as specified in its charter)

                         ------------------------------

                   Delaware                             31-1095548
         (State or other jurisdiction of             (I.R.S. Employer
         incorporation or organization)           Identification Number)


            2875 Needmore Road, Dayton, Ohio              45414
      (Address of principal executive offices)          (Zip Code)

                                 (937) 276-3931
              (Registrant's telephone number, including area code)

                         ------------------------------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes (X) No ( )

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes (X) No ( )

At the close of business on December 8, 2004 the registrant had 11,065,030
shares of Common Stock, par value $.01 per share, outstanding.


================================================================================




<PAGE>



                     REX STORES CORPORATION AND SUBSIDIARIES

                                      INDEX

<TABLE>
<CAPTION>
                                                                                                      Page
<S>          <C>                                                                                      <C>
PART I.      FINANCIAL INFORMATION

Item 1.      Consolidated Financial Statements

             Consolidated Condensed Balance Sheets ..................................................... 3
             Consolidated Condensed Statements of Income ............................................... 4
             Consolidated Condensed Statements of Shareholders' Equity ................................. 5
             Consolidated Condensed Statements of Cash Flows ........................................... 6
             Notes to Consolidated Condensed Financial Statements ...................................... 7

Item 2.      Management's Discussion and Analysis of Financial Condition
             and Results of Operations ................................................................ 13

Item 3.      Quantitative and Qualitative Disclosures About Market Risk ............................... 19

Item 4.      Controls and Procedures .................................................................. 19


PART II.     OTHER INFORMATION

Item 2.      Unregistered Sales of Equity Securities and Use of Proceeds .............................. 20

Item 6.      Exhibits ................................................................................. 20
</TABLE>

                                       2




<PAGE>



                          PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

REX STORES CORPORATION AND SUBSIDIARIES
Consolidated Condensed Balance Sheets

<TABLE>
<CAPTION>
                                                       October 31        January 31        October 31
                                                          2004              2004              2003
                                                          ----              ----              ----
                                                                       (In Thousands)
                                                       Unaudited                           Unaudited
<S>                                                    <C>               <C>               <C>
CURRENT ASSETS:
   Cash and cash equivalents                           $   3,959         $  29,026         $   1,503
   Accounts receivable, net                                2,204             2,560             1,551
   Synthetic fuel receivable                               1,848             3,098               655
   Merchandise inventory                                 152,215           116,755           155,354
   Prepaid expenses and other                              2,897             1,481             2,704
   Future income tax benefits                              8,703             8,703             8,860
                                                       ---------         ---------         ---------
     Total current assets                                171,826           161,623           170,627

PROPERTY AND EQUIPMENT, NET                              130,487           131,409           131,560
ASSETS HELD FOR SALE                                       2,569                 -                 -
OTHER ASSETS                                                 612             3,477             2,596
FUTURE INCOME TAX BENEFITS                                16,082            14,645             7,560
SYNTHETIC FUEL ESCROW                                          -                 -             7,886
RESTRICTED INVESTMENTS                                     2,265             2,257             2,253
                                                       ---------         ---------         ---------
   Total assets                                        $ 323,841         $ 313,411         $ 322,482
                                                       =========         =========         =========

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
   Notes payable                                       $  15,169                 -         $  18,901
   Current portion of long-term debt                       2,939             5,258             7,708
   Current portion of deferred income
     and deferred gain on sale and leaseback              10,378            10,544            10,985
   Accounts payable, trade                                49,259            32,745            34,690
   Accrued income taxes                                        -               806             1,371
   Accrued payroll and related items                       5,101             6,602             4,885
   Other current liabilities                               7,454             7,214             8,449
                                                       ---------         ---------         ---------
     Total current liabilities                            90,300            63,169            86,989
                                                       ---------         ---------         ---------

LONG-TERM LIABILITIES:
   Long-term mortgage debt                                31,633            53,548            57,752
   Deferred income                                        11,522            12,762            12,632
                                                       ---------         ---------         ---------
     Total long-term liabilities                          43,155            66,310            70,384
                                                       ---------         ---------         ---------

SHAREHOLDERS' EQUITY:
   Common stock                                              287               283               281
   Paid-in capital                                       130,705           126,124           123,677
   Retained earnings                                     195,830           185,080           168,026
   Treasury stock                                       (136,436)         (127,555)         (126,875)
                                                       ---------         ---------         ---------
   Total shareholders' equity                            190,386           183,932           165,109
                                                       ---------         ---------         ---------

     Total liabilities and shareholders' equity        $ 323,841         $ 313,411         $ 322,482
                                                       =========         =========         =========
</TABLE>

The accompanying notes are an integral part of these unaudited consolidated
condensed financial statements.

                                       3



<PAGE>



REX STORES CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statements Of Income
Unaudited

<TABLE>
<CAPTION>
                                                                            Three Months Ended             Nine Months Ended
                                                                                October 31                    October 31
                                                                                ----------                    ----------
                                                                            2004           2003         2004           2003
                                                                            ----           ----         ----           ----
                                                                                 (In Thousands, Except Per Share Amounts)
<S>                                                                      <C>             <C>          <C>            <C>
NET SALES                                                                $ 93,606        $94,493      $267,564       $277,058
COSTS AND EXPENSES:
   Cost of merchandise sold                                                68,419         66,310       192,226        193,818
   Selling, general and administrative expenses                            25,789         25,478        74,024         76,075
                                                                           ------         ------        ------         ------
Total costs and expenses                                                   94,208         91,788       266,250        269,893
                                                                           ------         ------       -------        -------

Income (loss) from continuing operations before
   interest, other items, income taxes and
   discontinued operations                                                   (602)         2,705         1,314          7,165

INVESTMENT INCOME                                                               7             14           152             54
INTEREST EXPENSE                                                             (716)        (1,247)       (2,426)        (3,687)
LOSS ON EARLY TERMINATION OF DEBT                                               -              -          (614)             -
GAIN ON SALE OF REAL ESTATE                                                   121            393           121            779
INCOME FROM LIMITED PARTNERSHIPS                                            5,219          3,733        13,798          9,916
                                                                            -----          -----        ------          -----

Income from continuing operations before provision
   for income taxes and discontinued operations                             4,029          5,598        12,345         14,227

PROVISION FOR INCOME TAXES                                                    530          1,421         1,165          3,609
                                                                              ---          -----         -----          -----

Income from continuing operations                                           3,499          4,177        11,180         10,618

Loss from discontinued operations, net of tax                                (118)           (96)         (430)          (232)
                                                                            -----           ----         -----          -----

Net Income                                                                 $3,381         $4,081       $10,750        $10,386
                                                                           ======         ======       =======        =======

WEIGHTED AVERAGE SHARES
OUTSTANDING - BASIC                                                        10,897         10,819        11,092         10,820
                                                                           ======         ======        ======         ======

Basic income per share from continuing operations                           $0.32          $0.39         $1.01          $0.98
Basic loss per share from discontinued operations                           (0.01)         (0.01)        (0.04)         (0.02)
                                                                           ------         ------        ------         ------
BASIC NET INCOME PER SHARE                                                  $0.31          $0.38         $0.97          $0.96
                                                                            =====          =====         =====          =====

WEIGHTED AVERAGE SHARES
OUTSTANDING - DILUTED                                                      12,610         12,866        12,778         12,608
                                                                           ======         ======        ======         ======

Diluted income per share from continuing operations                         $0.28          $0.33         $0.87          $0.84
Diluted loss per share from discontinued operations                         (0.01)         (0.01)        (0.03)         (0.02)
                                                                           ------         ------        ------         ------
DILUTED NET INCOME PER SHARE                                                $0.27          $0.32         $0.84          $0.82
                                                                            =====          =====         =====          =====
</TABLE>

The accompanying notes are an integral part of these unaudited consolidated
condensed financial statements.

                                       4




<PAGE>



REX STORES CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statements Of Shareholders' Equity
Unaudited
In Thousands

<TABLE>
<CAPTION>
                                                     Common Shares
                                            Issued                 Treasury                                            Total
                                            ------                 --------            Paid-in      Retained       Shareholders'
                                      Shares        Amount    Shares      Amount       Capital      Earnings           Equity
                                      ------        ------    ------      ------       -------      --------           ------
<S>                                    <C>            <C>      <C>        <C>          <C>           <C>               <C>
Balance at January 31, 2004            28,308         $283     17,214     $127,555     $126,124     $ 185,080          $183,932

Net income                                  -            -          -            -            -        10,750            10,750

Treasury stock acquired                     -            -        761       10,032            -             -          (10,032)

Stock options exercised
  and related tax effects                 422            4       (155)      (1,151)       4,581             -             5,736
                                       ------         ----     ------     --------     --------      --------          --------

Balance at October 31, 2004            28,730         $287     17,820     $136,436     $130,705      $195,830          $190,386
                                       ======         ====     ======     ========     ========      ========          ========
</TABLE>


The accompanying notes are an integral part of these unaudited consolidated
condensed financial statements.

                                       5




<PAGE>



REX STORES CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statements Of Cash Flows
Unaudited

<TABLE>
<CAPTION>
                                                                                          Nine Months Ended
                                                                                              October 31
                                                                                              ----------
                                                                                        2004             2003
                                                                                        ----             ----
                                                                                          (In Thousands)
<S>                                                                                  <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                                           $ 10,750         $ 10,386
Adjustments to reconcile net income to net cash used in operating activities:
   Depreciation and amortization, net                                                   3,051            3,039
   Income from limited partnerships                                                   (13,798)          (9,916)
   Loss (gain) on disposal of fixed assets                                                246             (713)
   Deferred income                                                                     (1,106)          (1,360)
   Deferred income taxes                                                               (1,437)               -
Changes in assets and liabilities:
   Accounts receivable                                                                    356            1,862
   Merchandise inventory                                                              (35,460)         (13,292)
   Other current assets                                                                (1,416)            (138)
   Other long term assets                                                               2,865             (940)
   Accounts payable, trade                                                             16,514            7,273
   Other current liabilities                                                           (2,067)            (715)
                                                                                     --------         --------
NET CASH USED IN OPERATING ACTIVITIES                                                 (21,502)          (4,514)
                                                                                     --------         --------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Capital expenditures                                                                (5,438)          (2,486)
   Proceeds from sale of partnership interest                                          15,048            7,995
   Proceeds from sale of real estate and fixed assets                                     194            2,693
   Restricted investments                                                                  (8)             (12)
                                                                                     --------         --------
NET CASH PROVIDED BY INVESTING ACTIVITIES                                               9,796            8,190
                                                                                     --------         --------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Increase in notes payable                                                           15,169            5,451
   Payments of long-term debt                                                         (24,234)          (4,623)
   Stock options exercised and related tax effects                                      2,910            2,399
   Treasury stock issued                                                                1,151              635
   Treasury stock acquired                                                             (8,357)          (7,415)
                                                                                     --------         --------
NET CASH USED IN FINANCING ACTIVITIES                                                 (13,361)          (3,553)
                                                                                     --------         --------

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                                  (25,067)             123
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                         29,026            1,380
                                                                                     --------         --------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                             $  3,959         $  1,503
                                                                                     ========         ========
</TABLE>

The accompanying notes are an integral part of these unaudited consolidated
condensed financial statements.

                                       6




<PAGE>



                     REX STORES CORPORATION AND SUBSIDIARIES

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                October 31, 2004

Note 1. Consolidated Condensed Financial Statements

         The consolidated condensed financial statements included in this report
have been prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission and include, in the
opinion of management, all adjustments necessary to state fairly the information
set forth therein. Any such adjustments were of a normal recurring nature.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are adequate to
make the information presented not misleading. It is suggested that these
unaudited consolidated condensed financial statements be read in conjunction
with the consolidated financial statements and the notes thereto included in the
Company's Annual Report on Form 10-K for the year ended January 31, 2004 (fiscal
2003). The results of operations for the interim periods are not necessarily
indicative of the results to be expected for the year.

Note 2. Accounting Policies

         The interim consolidated condensed financial statements have been
prepared in accordance with the accounting policies described in the notes to
the consolidated financial statements included in the Company's 2003 Annual
Report on Form 10-K. While management believes that the procedures followed in
the preparation of interim financial information are reasonable, the accuracy of
some estimated amounts is dependent upon facts that will exist or calculations
that will be accomplished at fiscal year end. Examples of such estimates include
changes in the LIFO reserve (based upon the Company's best estimate of inflation
to date), management bonuses and the provision for income taxes. Any adjustments
pursuant to such estimates during the quarter were of a normal recurring nature.
The provision for income taxes could vary based upon full year synthetic fuel
production levels, federal income tax law changes, and the price of certain fuel
products adjusted for inflation and Internal Revenue Service audits.

         The following table reflects the approximate percent of net sales for
each major product group for the periods presented.

<TABLE>
<CAPTION>
                                                                         Three Months Ended             Nine Months Ended
                                                                            October 31                      October 31
                                                                            ----------                      ----------
Product Category                                                      2004              2003           2004            2003
- ----------------                                                      ----              ----           ----            ----
<S>                                                                  <C>               <C>            <C>             <C>
Televisions...............................................            57.2%             53.5%          52.2%           50.6%
Appliances................................................             19.5              20.3           21.6            21.6
Audio.....................................................              9.9              11.4           11.8            12.9
Video.....................................................              5.6               7.1            6.3             6.9
Other.....................................................              7.8               7.7            8.1             8.0
                                                                     ------            ------         ------          ------
                                                                     100.0%            100.0%         100.0%          100.0%
                                                                     ======            ======         ======          ======
</TABLE>

                                       7




<PAGE>



         The Company accounts for vendor allowances in accordance with Emerging
Issues Task Force (EITF) 02-16 "Accounting by a Customer for Certain
Consideration Received from a Vendor," which addresses how and when to reflect
consideration received from vendors in the consolidated financial statements.
Vendors often fund, up front, certain advertising costs and exposure to general
changes in pricing to customers due to technological change. Allowances are
deferred as received from vendors and recognized into income as an offset to the
cost of merchandise sold when the related product is sold or expense incurred.
Advertising costs are expensed as incurred.

         Cost of merchandise sold includes the cost of merchandise, markdowns
and inventory shortage, receiving, warehousing and freight charges to deliver
merchandise to retail stores, service repair bills as well as cash discounts and
rebates. The Company classifies purchasing costs as selling, general and
administrative expenses. As a result of this classification, the Company's gross
margins may not be comparable to those of other retailers that include costs
related to their distribution network in selling, general and administrative
expense.

         The Company includes stores expenses (such as payroll and occupancy
costs), advertising, purchasing, depreciation, insurance and overhead costs in
selling, general and administrative expenses.

         Interest expense of $2,426,000 for the nine months ended October 31,
2004 is net of approximately $30,000 of interest capitalized. Interest expense
of $3,687,000 for the nine months ended October 31, 2003 is net of approximately
$65,000 of interest capitalized. Cash paid for interest for the nine months
ended October 31, 2004 and 2003 was approximately $2,320,000 and $3,838,000,
respectively.

         During the first nine months of fiscal 2004 the Company completed the
early payoff of mortgages for 42 retail locations totaling approximately $21.6
million. The scheduled payment on these notes included approximately $0.5
million for the last three months of fiscal 2004, $6.2 million for fiscal 2005,
$6.9 million for fiscal 2006, $1.6 million for fiscal 2007, $1.4 million for
fiscal 2008 and $4.3 million thereafter. The Company incurred a charge of
approximately $614,000, including cash payments of approximately $341,000, for
the first nine months of fiscal 2004 related to this termination of debt.

         During the first nine months of fiscal 2004 the Company received
113,346 shares of common stock into treasury with a market value of
approximately $1.7 million as payment for the exercise of options for 271,525
shares of common stock.

         The Company applies an effective tax rate to interim periods that is
consistent with the Company's estimated annual tax rate. The tax credits
generated from synthetic fuel operations reduce the Company's overall effective
tax rate. The Company projects the effective tax rate for the year and records a
provision in that quarter to reflect the projected tax rate. Estimates of the
effective tax rate may change based upon synthetic fuel production and the
Company's projected income.

                                       8




<PAGE>


         The Company paid income taxes of approximately $2,390,000 and
$1,605,000 for the nine months ended October 31, 2004 and 2003, respectively.

Note 3. Revolving Line of Credit

         On September 14, 2004, the Company entered into an amended and restated
loan agreement which provides for a $115,000,000 five year revolving credit
facility through September 14, 2009. Amounts available for borrowing under the
loan agreement are subject to a borrowing base equal to the sum of 85% of net
appraised liquidation value of eligible inventory and 85% of eligible
receivables. Borrowings accrue interest at prime minus 0.5% or LIBOR plus 1.75%.
Borrowings are guaranteed by the Company and are presently secured by all of the
Company's non real estate assets and the capital stock of the Company's
subsidiaries. Aggregate commitments under the loan agreement may be increased by
up to an additional $50,000,000.

         The loan agreement replaces the Company's prior $130,000,000 bank
credit facility. The loan agreement does not contain any financial covenants.
The loan agreement requires the maintenance of excess borrowing availability of
10% of the borrowing base, contains covenants limiting indebtedness, liens,
mergers and permitted acquisitions, asset divestitures, dividends, loans,
investments and transactions with affiliates, and contains customary default
provisions including, but not limited to, failure to pay interest or principal
when due and failure to comply with covenants.


Note 4. Stock Option Plans

         The Company has stock-based compensation plans under which stock
options are granted to officers and key employees at the market price on the
date of the grant.

         The following summarizes options granted, exercised and canceled or
expired during the nine months ended October 31, 2004:

<TABLE>
<S>                                                                                                         <C>
                Outstanding at January 31, 2004 ($3.61 to $16.04 per share).............................    6,391,069
                Issued ($12.18 to $12.45 per share).....................................................      369,050
                Exercised ($3.61 to $10.14 per share)...................................................    (576,336)
                Canceled or expired ($8.01 to $14.745 per share)........................................     (22,900)
                                                                                                            ---------
                Outstanding at October 31, 2004 ($3.61 to $16.04 per share).............................    6,160,883
                                                                                                            =========
</TABLE>

         Pursuant to SFAS No. 123, "Accounting for Stock-Based Compensation,"
the Company has elected to account for its employee stock option plans under APB
Opinion No. 25, "Accounting for Stock Issued to Employees," which recognizes
expense based on the intrinsic value at date of grant. As stock options have
been issued with exercise prices equal to grant date fair value, no compensation
cost has resulted.

                                       9



<PAGE>



 Had compensation cost for all options granted been determined based on the fair
value at grant date consistent with SFAS No. 123, the Company's net earnings and
earnings per share would have been as follows (in thousands, except per share
amounts):


<TABLE>
<CAPTION>
                                                                       Three Months Ended             Nine Months Ended
                                                                           October 31                    October 31
                                                                           ----------                    ----------
                                                                       2004           2003         2004                2003
                                                                       ----           ----         ----                ----
<S>                                           <C>                     <C>            <C>         <C>                 <C>
Net Income                                          As Reported       $3,381         $4,081      $10,750             $10,386
                                              Compensation Cost          821            664        2,361               2,086
                                                      Pro forma        2,560          3,417        8,389               8,300

Basic net income per share                          As Reported       $ 0.31         $ 0.38       $ 0.97              $ 0.96
                                              Compensation Cost          .08            .06          .21                 .19
                                                      Pro forma         0.23           0.32         0.76                0.77

Diluted net income per share                        As Reported       $ 0.27         $ 0.32       $ 0.84              $ 0.82
                                              Compensation Cost          .07            .05          .18                 .16
                                                      Pro forma         0.20           0.27         0.66                0.66
</TABLE>


The assumptions used to calculate the fair value of options granted are
evaluated and revised, as necessary, to reflect market conditions and
experience.

                                       10



<PAGE>


Note 5. Income Per Share from Continuing Operations

         The following table reconciles the basic and diluted net income per
share from continuing operations computation for each period presented (in
thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                          Three Months Ended                      Nine Months Ended
                                                           October 31, 2004                       October 31, 2004
                                                           ----------------                       ----------------
                                                                              Per                                     Per
                                                   Income       Shares       Share        Income        Shares        Shares
                                                   ------       ------       -----        ------        ------        ------
<S>                                                <C>          <C>          <C>          <C>           <C>           <C>
Basic income per share from continuing
operations                                         $3,499       10,897       $0.32        $11,180       11,092        $1.01
                                                                             =====                                    =====
Effect of stock options                                          1,713                                   1,686
                                                   ------       ------                    -------       ------
Diluted income per share from continuing
operations                                         $3,499       12,610       $0.28        $11,180       12,778        $0.87
                                                   ======       ======       =====        =======       ======        =====
</TABLE>



<TABLE>
<CAPTION>
                                                          Three Months Ended                      Nine Months Ended
                                                           October 31, 2003                       October 31, 2003
                                                           ----------------                       ----------------
                                                                               Per                                      Per
                                                    Income       Shares       Share        Income         Shares       Share
                                                    ------       ------       -----        ------         ------       -----
<S>                                                 <C>          <C>          <C>          <C>            <C>          <C>
Basic income per share from continuing
operations                                          $4,177       10,819       $0.39        $10,618        10,820       $0.98
                                                                              =====                                    =====
Effect of stock options                                           2,047                                    1,788
                                                    ------       ------                    -------        ------
Diluted income per share from continuing
operations                                          $4,177       12,866       $0.33        $10,618        12,608       $0.84
                                                    ======       ======       =====        =======        ======       =====
</TABLE>

         For the three months ended October 31, 2004 and 2003, a total of
333,536 shares and 337,136 shares, respectively, and for the nine months ended
October 31, 2004 and 2003, a total of 333,536 and 667,136 shares, respectively,
subject to outstanding options were not included in the common equivalent shares
outstanding calculation as the exercise prices were above the average trading
price of the Company's common stock for that period.

Note 6. Synthetic Fuel

         Net income for the third quarter and first nine months of fiscal 2004
includes approximately $5.2 million and $13.3 million, respectively, of pre-tax
investment income from the sales of the Company's entire Partnership interest in
Colona SynFuel Limited Partnership, L.L.L.P., a synthetic fuel limited
partnership. The Internal Revenue Service has completed an audit on the Colona
partnership. The audit was finalized in February 2004 and a closing agreement
was signed with the Internal Revenue Service that confirms that the Colona
facility was placed in service before July 1, 1998, and that the fuel produced
by the Colona facilities in 2001 is a "qualified fuel" for purposes of the
Section 29 federal income tax credits. Beginning in fiscal 2002, certain
quarterly payments from

                                       11



<PAGE>



the sales were being held in escrow pending the results of the audit. All
remaining funds were released from escrow upon the completion of the audit.

         Net income for the nine months ended October 31, 2004 also includes
approximately $468,000 of pre-tax investment income from the sale of the
Company's membership interest in the limited liability company that owns a
synthetic fuel facility in Gillette, Wyoming. The Company received $2,750,000 at
the time of sale on March 30, 2004 along with a secured contingent payment note
that could provide additional investment income to the Company if certain
federal income tax issues are favorably resolved for the buyer with the Internal
Revenue Service and/or the facility resumes commercial operations. If the issues
are favorably resolved prior to January 1, 2005, or if thereafter the facility
resumes commercial operations, the Company is eligible to receive an additional
$3.5 million; in addition the Company is eligible to receive $1.50 per ton of
"qualified production" produced by the facility and sold.

           The Company remains a limited partner in Somerset SynFuel, L.P., from
which we are receiving Section 29 federal income tax credits. In June 2004 the
Internal Revenue Service concluded its examination of the partnership's Section
29 federal income tax credits for certain years reporting no change in the
credits for those years. As a result, the effective tax rate was reduced for
fiscal 2004 by a $1.4 million reduction in the valuation allowance related to
alternative minimum tax carry forwards.

         A United States Senate Subcommittee has initiated an investigation into
federal income tax credits involving synthetic fuel operations.

         Under current law, credits under Section 29 are available for qualified
fuels sold before January 1, 2008. The tax credits begin to phase out if the
price of a barrel of oil exceeds certain levels adjusted annually for inflation.
The 2003 phase-out price started at $50.14 per barrel. The 2004 phase-out
price has not been determined.

Note 7. Discontinued Operations

         During the second and third quarters of fiscal 2004 the Company closed
six stores in which the Company vacated the market. Those stores and two stores
that are not closed were classified as discontinued operations for all periods
presented. Certain of the closed stores and certain other assets are classified
as held for sale. The net assets of those stores at October 31, 2004 were
approximately $2,569,000. The Company expects to sell the assets related to
these stores within the next twelve months through normal real estate channels.
No loss has been recognized as the estimated net realizable values exceed the
carrying values of these assets.

                                       12



<PAGE>



         Below is a table reflecting certain items of the income statement that
were reclassified as discontinued operations for the period indicated.

<TABLE>
<CAPTION>
                                                                        Three Months Ended     Nine Months Ended
                                                                            October 31             October 31
                                                                            ----------             ----------
                                                                          2004       2003       2004        2003
                                                                          ----       ----       ----        ----
                                                                                      (In Thousands)
<S>                                                                       <C>       <C>        <C>         <C>
Net sales......................................................           $771      $2,064     $4,239      $6,346
Loss before benefit for income taxes ..........................            193         157        704         380
Benefit for income taxes.......................................             75          61        274         148
Net loss.......................................................           $118      $   96     $  430      $  232
</TABLE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations.

         We are a specialty retailer in the consumer electronics/appliance
industry. As of October 31, 2004 we operated 238 stores in 37 states,
predominantly in small to medium-sized markets under the trade name "REX".

Fiscal Year

         All references in this report to a particular fiscal year are to REX's
fiscal year ended January 31. For example, "fiscal 2004" means the period
February 1, 2004 to January 31, 2005.

                                       13



<PAGE>


Results of Operations

         The following table sets forth, for the periods indicated, the relative
percentages that certain income and expense items bear to net sales:

<TABLE>
<CAPTION>
                                                                     Three Months Ended            Nine Months Ended
                                                                         October 31                    October 31
                                                                         ----------                    ----------
                                                                     2004           2003           2004           2003
                                                                     ----           ----           ----           ----
<S>                                                                 <C>            <C>            <C>            <C>
Net sales ................................................          100.0%         100.0%         100.0%         100.0%
Cost of merchandise sold .................................           73.1           70.2           71.8           70.0
                                                                    -----          -----          -----          -----
   Gross profit ..........................................           26.9           29.8           28.2           30.0
Selling, general and administrative expenses .............           27.5           26.9           27.7           27.4
                                                                    -----          -----          -----          -----
   Income (loss) from continuing operations
   before interest, other items, income taxes and
   discontinued operations ...............................           (0.6)           2.9            0.5            2.6
Interest expense .........................................           (0.8)          (1.3)          (0.9)          (1.4)
Loss on early termination of debt ........................            -              -             (0.2)            -
Gain on sale of real estate ..............................            0.1            0.4            -              0.3
Income from limited partnerships .........................            5.6            3.9            5.2            3.6
                                                                    -----          -----          -----          -----
    Income from continuing operations before provision
    for income taxes and discontinued operations..........            4.3            5.9            4.6            5.1
Provision for income taxes ...............................            0.6            1.5            0.4            1.3
                                                                    -----          -----          -----          -----
Income from continuing operations ........................            3.7            4.4            4.2            3.8
Loss from discontinued operations, net of tax ............            0.1            0.1            0.2            0.1
                                                                    -----          -----          -----          -----
Net income ...............................................            3.6%           4.3%           4.0%           3.7%
                                                                    =====          =====          =====          =====
</TABLE>

Comparison of Three and Nine Months Ended October 31, 2004 and 2003

         Net sales from continuing operations in the quarter ended October 31,
2004 were $93.6 million compared to $94.5 million in the prior year's third
quarter, representing a decrease of $0.9 million or 1.0%. This decline was
primarily caused by a reduction in stores since the end of the third quarter
of fiscal 2003. There was a decrease of ten stores since the end of the third
quarter of fiscal 2003, six of which are classified as discontinued operations.
Comparable store sales increased by 1.4% for the third quarter of fiscal 2004.
We consider a store to be comparable after it has been open six full fiscal
quarters. Comparable store sales comparisons do not include sales of extended
service contracts.

         Our strongest product category for the third quarter of fiscal 2004 was
the television category which positively impacted comparable store sales by
4.7%. This increase is primarily due to higher demand for the LCD, DLP and
plasma televisions. The "other" category also positively impacted comparable
store sales by 0.5% primarily due to higher sales of the ready to assemble
television furniture stands. The appliance category negatively impacted
comparable store sales by 0.6% for the third quarter of fiscal 2004. The audio
category negatively impacted comparable store sales by 1.5%

                                       14




<PAGE>



and the video category negatively impacted comparable store sales by 1.8% for
the third quarter of fiscal 2004.

         Net sales for the first nine months of fiscal 2004 were $267.6 million
compared to $277.1 million for the first nine months of fiscal 2003 net of the
impact of including eight stores as discontinued operations. This represents a
decrease of $9.5 million or 3.4%. Comparable store sales declined by
approximately 1.9% for the first nine months of fiscal 2004. There was a
decrease of ten stores since the end of the third quarter of fiscal 2003, six of
which were included as discontinued operations.

         Our strongest product category for the first nine months of fiscal 2004
was the television category which positively impacted comparable store sales by
0.6%. The "other" category also positively impacted comparable store sales by
0.3%. The audio category negatively impacted comparable store sales by 1.4%, the
video category negatively impacted comparable store sales by 0.8% and the
appliance category negatively impacted comparable store sales by 0.5%.

         The following table reflects the approximate percent of net sales for
each major product group for the periods presented.

<TABLE>
<CAPTION>
                                                                        Three Months Ended               Nine Months Ended
                                                                           October 31                       October 31
                                                                           ----------                       ----------
Product Category                                                      2004              2003           2004            2003
- ----------------                                                      ----              ----           ----            ----
<S>                                                                  <C>               <C>            <C>             <C>
Televisions...............................................            57.2%             53.5%          52.2%           50.6%
Appliances................................................             19.5              20.3           21.6            21.6
Audio.....................................................              9.9              11.4           11.8            12.9
Video.....................................................              5.6               7.1            6.3             6.9
Other.....................................................              7.8               7.7            8.1             8.0
                                                                     ------            ------         ------          ------
                                                                     100.0%            100.0%         100.0%          100.0%
                                                                     ======            ======         ======          ======
</TABLE>

         As of October 31, 2004, we had 238 stores compared to 248 stores one
year earlier. We did not open any stores and closed ten stores during the first
nine months of fiscal 2004. We did not open any stores and closed four stores
during the first nine months of fiscal 2003.

         Gross profit of $25.2 million (26.9% of net sales) from continuing
operations in the third quarter of fiscal 2004 was approximately $3.0 million
lower than the $28.2 million (29.8% of net sales) recorded from continuing
operations in the third quarter of fiscal 2003. Gross profit from continuing
operations for the first nine months of fiscal 2004 was $75.3 million (28.2% of
net sales) compared to $83.2 million (30.0% of net sales) for the first nine
months of fiscal 2003. Gross profit margin has been reduced primarily due to
more aggressive promotional activity and recognizing a lower amount of extended
service contract sales which generally have higher gross profit margin
associated with it.

         Selling, general and administrative expenses from continuing operations
for the third quarter of fiscal 2004 were $25.8 million (27.5% of net sales), an
increase of $0.3 million or 1.2% from $25.5 million (26.9% of net sales) for the
third quarter of fiscal 2003. The increase in expenditures was primarily a
result of costs associated with hurricane damage to stores in the southeastern
United

                                       15




<PAGE>



States and costs associated with abandoning leased locations. Selling, general
and administrative expenses from continuing operations were $74.0 million (27.7%
of net sales) for the first nine months of fiscal 2004 representing a reduction
of $2.1 million or 2.7% from $76.1 million (27.4% of net sales) for the first
nine months of fiscal 2003. The reduction in expenditures was primarily due to:
(i) lower salespeople commission costs due to lower gross profit margins which
generally results in lower commission cost; and (ii) lower advertising
expenditures primarily due to reduced television advertising.

         Interest expense from continuing operations was $716,000 (0.8% of net
sales) for the third quarter of fiscal 2004 compared to $1.2 million (1.3% of
net sales) for the third quarter of fiscal 2003. Interest expense from
continuing operations was $2.4 million (0.9% of net sales) for the first nine
months of fiscal 2004 compared to $3.7 million (1.4% of net sales) for the first
nine months of fiscal 2003. Interest expense for the current year has been
lowered due to lower average borrowings on the line of credit and the pay off of
approximately $24.2 million in mortgage debt in the current year. We incurred a
charge of approximately $614,000 in the current year related to the early
termination of approximately $21.6 million of mortgage debt.

         There were two parcels of land attached to owned properties sold in the
first nine months of fiscal 2004 for a gain of approximately $121,000. In the
first nine months of fiscal 2003 we sold three properties for gains of
approximately $779,000.

         Results for the third quarter and first nine months of fiscals 2004 and
2003 also reflect the impact of our equity investment in two limited
partnerships, Colona SynFuel Limited Partnership, L.L.L.P., and Somerset
SynFuel, L.P., which produce synthetic fuels. We remain a limited partner in the
Somerset limited partnership but have sold our ownership interest in the Colona
limited partnership through a series of three sales. We expect to receive
payments from the sales on a quarterly basis through 2007, which will range from
74.25% to 82.5% of the federal income tax credits attributable to the interest
sold. The Colona partnership had been under audit by the Internal Revenue
Service. As a result, certain proceeds from the sales were held in escrow
beginning in fiscal 2002 pending the results of the audit. The audit was
finalized and a closing agreement was signed with the Internal Revenue Service
in February 2004. All remaining proceeds were released from escrow and letters
of credit were cancelled.

                                       16



<PAGE>



          Below is a table summarizing the income from the sales, net of certain
expenses. The higher income for the current year generally reflects higher
production levels compared to the previous year.

<TABLE>
<CAPTION>
                                                                          Three Months Ended              Nine Months Ended
                                                                             October 31                       October 31
                                                                             ----------                       ----------
                                                                       2004               2003           2004            2003
                                                                       ----               ----           ----            ----
                                                                                             (In Thousands)
<S>                                                                   <C>                <C>            <C>             <C>
February 1, 1999 sale.......................................          $2,083             $1,489          $5,260         $3,955
July 31, 2000 sale..........................................           1,660              1,188           4,298          3,139
May 31, 2001 sale...........................................           1,476              1,056           3,772          2,822
                                                                      ------             ------         -------         ------
                                                                      $5,219             $3,733         $13,330         $9,916
                                                                      ======             ======         =======         ======
</TABLE>

         Income from synfuel investment for the first nine months of fiscal 2004
also includes income of approximately $468,000 from our sale of our membership
interest in the limited liability company that owns a synthetic fuel facility in
Gillette, Wyoming. We also received a secured contingent payment note that could
provide additional investment income for the Company if certain tax issues are
favorably resolved for the buyer with the Internal Revenue Service and/or the
facility resumes commercial operation. If the tax issues are favorably resolved
with the Internal Revenue Service prior to January 1, 2005, or, if thereafter
the facility resumes commercial operations, we are eligible to receive an
additional $3.5 million; in addition, we are eligible to receive $1.50 per ton
of "qualified production" produced by the facility and sold.

         Our effective tax rate was 13.2% and 25.4% for the third quarter of
fiscals 2004 and 2003, respectively, and 9.4% and 25.4% for the first nine
months of fiscals 2004 and 2003, respectively, after reflecting our share of
federal income tax credits earned by the limited partnerships under Section 29
of the Internal Revenue Code. Our effective tax rate was reduced in fiscal 2004
as a result of a $1.4 million reduction in the valuation allowance related to
alternative minimum tax credit carry forwards as a result of the conclusion in
June 2004 of the Internal Revenue Service audit of the Somerset partnership for
certain years. The audit resulted in no change in federal income tax credits
under Section 29 taken for the period audited.

         During the third quarter and first nine months of fiscal 2004, we
closed one and six stores, respectively, that were classified as discontinued
operations. We also reported two stores that did not close as discontinued
operations as we have executed contracts to sell the properties. As a result, we
had a loss from discontinued operations, net of tax benefit, of $118,000 and
$96,000 for the third quarter of fiscals 2004 and 2003, respectively, and
$430,000 and $232,000 for the nine months ended October 31, 2004 and 2003,
respectively.

         As a result of the foregoing, net income for the third quarter of
fiscal 2004 was $3.4 million, a 17.2% decrease from $4.1 million for the third
quarter of fiscal 2003. Net income for the first nine months of fiscal 2004 was
$10.8 million, a 3.5% increase from $10.4 million for the first nine months of
fiscal 2003.

                                       17



<PAGE>



Liquidity and Capital Resources

         Net cash used in operating activities was approximately $21.5 million
for the first nine months of fiscal 2004, compared to $4.5 million for the first
nine months of fiscal 2003. For the first nine months of fiscal 2004, cash was
provided by net income of $10.8 million, adjusted for the impact of $13.8
million for gains on our installment sales of the limited partnership interest,
non-cash items of $0.8 million, which consisted of deferred income, deferred
taxes, loss on disposal of fixed assets and depreciation and amortization.
The primary use of cash was an increase in inventory of $35.5 million
primarily due to seasonal fluctuations. The other use of cash was a
decrease in other current liabilities of $2.1 million. Cash was provided
by an increase in accounts payable of $16.5 million due to the increase
in inventory and the timing of purchases and payments to vendors. Cash
was also provided by a decrease in other long term assets of $2.9 million.

         At October 31, 2004, working capital was $81.5 million compared to
$98.5 million at January 31, 2004. This decline is primarily caused by seasonal
fluctuations as we build inventory levels for the fourth quarter. The ratio of
current assets to current liabilities was 1.9 to 1 at October 31, 2004 and 2.6
to 1 at January 31, 2004.

         During the first nine months of fiscal 2004, we received proceeds of
$15.0 million from installment sales of our ownership interest in the Colona
synfuel limited partnership. We had capital expenditures of approximately $5.4
million during the first nine months of fiscal 2004, primarily related to the
relocation of eight retail stores.

         Cash used in financing activities totaled approximately $13.4 million
for the first nine months of fiscal 2004. Cash was provided by increased
borrowings of approximately $15.2 million on the line of credit. We received
proceeds of approximately $2.0 million from the exercise of stock options by
employees and directors. We also recorded a tax benefit of approximately $2.1
million during the first nine months of fiscal 2004 from the exercise of
non-qualified stock options as an increase in additional paid-in capital. Cash
of $24.2 million was used for scheduled payments of mortgage debt and the early
payoff of mortgage debt of approximately $21.6 million. Cash of approximately
$8.4 million was also used to acquire 647,000 shares of our common stock. We
currently have approximately 523,000 authorized shares remaining available for
purchase under the stock buy-back program.

         On September 14, 2004, we entered into an amended and restated loan
agreement which provides for a $115,000,000 five year revolving credit facility
through September 14, 2009. Amounts available for borrowing under the loan
agreement are subject to a borrowing base equal to the sum of 85% of net
appraised liquidation value of eligible inventory and 85% of eligible
receivables. Borrowings accrue interest at prime minus 0.5% or LIBOR plus 1.75%.
Borrowings are guaranteed by the Company and are presently secured by all of our
non real estate assets and the capital stock of our subsidiaries. Aggregate
commitments under the loan agreement may be increased by up to an additional
$50,000,000.

         The loan agreement replaces our prior $130,000,000 bank credit
facility. The loan agreement does not contain any financial covenants. The loan
agreement requires the maintenance of excess borrowing availability of 10% of
the borrowing base, contains covenants limiting indebtedness, liens,

                                       18




<PAGE>



mergers and permitted acquisitions, asset divestitures, dividends, loans,
investments and transactions with affiliates, and contains customary default
provisions including, but not limited to, failure to pay interest or principal
when due and failure to comply with covenants.


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. The words
"believes", "estimates", "plans", "expects", "intends", "anticipates" and
similar expressions as they relate to the Company or its management are intended
to identify such forward-looking statements. Forward-looking statements are
inherently subject to risks and uncertainties. These risks and uncertainties
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, new regulatory
restrictions or tax law changes relating to the Company's synthetic fuel
investments, the fluctuating amount of quarterly payments received by the
Company with respect to sales of its partnership interests in synthetic fuel
investments, the uncertain amount of synthetic fuel production and tax credits
received from time to time from the Company's synthetic fuel investments, and
the potential for Section 29 tax credits to phase out based on the price of
crude oil adjusted for inflation. Other factors that could cause actual
results to differ materially from those in the forward-looking statements
are set forth in Exhibit 99(a) to the Company's Annual Report on Form 10-K for
the fiscal year ended January 31, 2004 (File No. 001-09097).

Item 3. Quantitative and Qualitative Disclosures About Market Risk

         No material changes since January 31, 2004.

Item 4. Controls and Procedures

         The Company's management evaluated, with the participation of the
Company's Chief Executive Officer and Chief Financial Officer, the effectiveness
of the Company's 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 the Company's disclosure controls and
procedures are effective to ensure that information required to be disclosed by
the Company in the reports that it files or submits under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported within the
time periods specified in the Securities and Exchange Commission's rules and
forms.

         There were no changes in the Company's internal control over financial
reporting that occurred during the Company's last fiscal quarter that have
materially affected, or are reasonably likely to materially affect, the
Company's internal control over financial reporting.

                                       19



<PAGE>



                           PART II. OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

                      Issuer Purchases of Equity Securities

<TABLE>
<CAPTION>
                                                                         Total Number of Shares       Maximum Number
                                                                                Purchased         of Shares that May Yet
                                     Total Number       Average Price      as Part of Publicly    Be Purchased Under the
                                      of Shares           Paid per           Announced Plans               Plans
Period                              Purchased (1)          Share             or Programs (2)          or Programs (2)
- ------                              -------------          -----             ---------------          ---------------
<S>                                    <C>                 <C>                  <C>                       <C>
August 1-31, 2004                      103,235             $12.67               103,235                   596,845
September 1-30, 2004                    73,656             $13.88                29,300                   567,545
October 1-31, 2004                      44,500             $14.08                44,500                   523,045
                                        ------             ------                ------                   -------
Total                                  221,391             $13.35               177,035                   523,045
                                       =======             ======               =======                   =======
</TABLE>

- ------------------------

(1)  A total of 44,356 shares of common stock were purchased by the Company
     other than through a publicly announced plan or program. These shares were
     acquired on September 21, 2004 in payment of the exercise price of stock
     options exercised by Stuart A. Rose, Chairman, President and Chief
     Executive Officer of the Company. The purchase price was $13.91 per share.

(2)  On February 27, 2004, the Company announced it had authorized the purchase
     of up to 1,000,000 shares of its common stock from time to time in private
     or market transactions at prevailing market prices. At October 31, 2004, a
     total of 523,045 shares remained available to purchase under this
     authorization.

Item 6. Exhibits.

         The following exhibits are filed with this report:

         10(a)    Form of Stock Option Agreement under 1999 Omnibus Stock
                  Incentive Plan (Nonqualified Stock Option)

         10(b)    Form of Stock Option Agreement under 1999 Omnibus Stock
                  Incentive Plan (Nonemployee Director Stock Option)

         31       Rule 13a-14(a)/15d-14(a) Certifications

         32       Section 1350 Certifications

                                       20




<PAGE>



                                   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


<TABLE>
<CAPTION>
                Signature                               Title                                         Date
                ---------                               -----                                         ----
<S>                                        <C>                                                   <C>
             STUART A. ROSE                Chairman of the Board                                 December 9, 2004
             --------------                  (Chief Executive Officer)
            (Stuart A. Rose)

          DOUGLAS L. BRUGGEMAN              Vice President, Finance and Treasurer                December 9, 2004
          --------------------                (Chief Financial Officer)
         (Douglas L. Bruggeman)
</TABLE>


                                       21




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>2
<FILENAME>ex10-a.txt
<DESCRIPTION>EXHIBIT 10(A)
<TEXT>

<PAGE>


                                                                      NO. ______

                             REX Stores Corporation

                             STOCK OPTION AGREEMENT
                                    UNDER THE
                        1999 OMNIBUS STOCK INCENTIVE PLAN

                           (Nonqualified Stock Option)

          REX Stores Corporation (the "Company") hereby grants, effective
_____________ (the "effective date"), to ______________ (the "Optionee") an
option to purchase a maximum of ______ shares of its Common Stock, $.01 par
value, at a price of $______ per share, subject to the following:

          1. Relationship to Plan. This nonqualified stock option is granted
pursuant to the Company's 1999 Omnibus Stock Incentive Plan, a copy of which is
attached as Exhibit A hereto (the "Plan"), and is in all respects subject to the
terms, conditions and definitions of the Plan. The Optionee hereby accepts this
option subject to all the terms and provisions of the Plan, including those
relating to non-transferability and termination of the option and adjustment of
the number of shares subject to this option and the exercise price therefor. The
Optionee further agrees that all decisions under and interpretations of the Plan
by the Compensation Committee (the "Committee") shall be final, binding and
conclusive upon the Optionee and his heirs.

          2. Time of Exercise. This option may not be exercised prior to the
first anniversary of the effective date of this Agreement. It may thereafter be
exercised, from time to time, in full or in part, by the Optionee to the extent
of the Optionee's then "Vested Percentage" of the maximum number of shares of
Common Stock subject to this option as determined in accordance with the
following schedule, and shall remain exercisable (subject to the provisions of
Section 6 hereof and the Plan) until it has been exercised as to all shares
subject hereto or has expired, whichever occurs first.

<TABLE>
<CAPTION>
          Anniversary of Effective
              Date of Agreement               Vested Percentage
          -------------------------           -----------------
         <S>           <C>                           <C>
          First        (12th month)                   20%
          Second       (24th month)                   40%
          Third        (36th month)                   60%
          Fourth       (48th month)                   80%
          Fifth        (60th month)                  100%
</TABLE>

          Notwithstanding anything to the contrary herein contained, so long as
the Optionee shall be employed by the Company or any of its subsidiaries, this
option may not be exercised if, in the opinion of counsel for the Company, the
issuance of the shares pursuant hereto, either alone or in combination with the
issuance of other securities by the Company, would constitute a violation of
applicable federal or state securities laws or regulations or orders thereunder.
In the event this option may not otherwise be exercised by reason of the
foregoing sentence, the Company shall use its best efforts to register said
shares with the Securities and Exchange





<PAGE>


Commission on Form S-8 (or successor form) and, concurrently therewith, to take
such steps as may be necessary to comply with applicable state securities laws
in connection with such issuance.

          3. Term of Option. This option shall expire on the tenth anniversary
of the effective date of this Agreement.

          4. Methods of Exercise. This option shall be exercisable by a written
notice in the form adopted by the Committee, as attached hereto as Exhibit B,
which specifies the number of shares to be purchased. Upon receipt of payment
for the shares, the Company will thereafter deliver or cause to be delivered to
the Optionee (or if any other individual or individuals are exercising this
option, to such individual or individuals) at the office of the Company, a
certificate or certificates for the number of shares with respect to which this
option is being exercised, registered in the name or names of the individual or
individuals exercising the option, provided, however, that if any law or
regulation or order of the Securities and Exchange Commission or other body
having jurisdiction in the premises shall require the Company or Optionee (or
other individual or individuals exercising this option) to take any action in
connection with the shares then being purchased, the delivery of the certificate
or certificates for such shares shall be delayed for the period necessary to
take and complete such action.

          5. Purchase for Investment. This option is granted on the condition
that the purchase of shares of stock hereunder shall be for the account of the
Optionee (or other individual or individuals exercising this option) for
investment purposes and not with a view to resale or distribution, except that
such condition shall be inoperative if the offering of shares subject to the
option is registered under the Securities Act of 1933, as amended, or if in the
opinion of counsel for the Company such shares may be resold without
registration. At the time of any exercise of the option, the Optionee (or other
individual or individuals exercising this option) will execute such further
agreements as the Company may require to implement the foregoing condition and
to acknowledge the Optionee's (or such other individual's) familiarity with
restrictions on the resale of the shares under applicable securities laws.

          6. Termination of Option. This Agreement, and the option granted
hereunder, shall terminate and may no longer be exercised if the Optionee ceases
for any reason to be an employee of the Company, or any of its subsidiaries,
except that:

             (i) If the Optionee's employment shall have terminated for any
reason other than cause, disability (as defined below) or death, the Optionee
may at any time within a period of six months after such termination of
employment exercise the option to the extent of the Optionee's Vested Percentage
on the date of termination of employment; and/or

             (ii) If the Optionee's employment shall have been terminated
because of disability within the meaning of Section 22(e)(3) of the Code, the
Optionee may at any time within a period of one year after such termination of
employment exercise the option to the extent of the Optionee's Vested Percentage
on the date of termination of employment; and/or





<PAGE>


            (iii) If the Optionee dies at a time when the option was exercisable
by the Optionee, the Optionee's estate, personal representative or beneficiary
to whom it has been transferred pursuant to the Plan may, within six months
following the death, exercise the option to the extent of the deceased
Optionee's Vested Percentage at the time of death;

Provided, however, that no option may be exercised to any extent by anyone after
the date of expiration of the option.

          7. Acceleration of Exercise Date Upon Change In Control.
Notwithstanding anything to the contrary herein, upon the occurrence of a Change
in Control (as defined in the Plan), this option, if outstanding at such time,
shall become fully and immediately exercisable and shall remain exercisable
until its expiration, termination or cancellation.

          8. General. This Agreement shall be construed as a contract under the
laws of the State of Ohio. It shall bind and, subject to the terms of the Plan,
benefit the parties and their respective successors, assigns and legal
representatives.

          IN WITNESS WHEREOF, the Company and the Optionee have caused this
Agreement to be executed as of the date first above written.

                             REX Stores Corporation


                             By:_________________________________

                             Its:________________________________


                             ____________________________________
                             Name of Employee








<PAGE>


                                    EXHIBIT B

                          WRITTEN NOTICE OF EXERCISE OF
                          STOCK OPTION AGREEMENT UNDER
                        1999 OMNIBUS STOCK INCENTIVE PLAN
                             REX Stores Corporation


          The undersigned hereby exercises, according to the terms and
conditions thereof, his option pursuant to the 1999 Omnibus Stock Incentive
Plan, No. ____ for ______________ shares of the Common Stock of REX Stores
Corporation, at a price of $______ per share, said number of shares not to
exceed the Vested Percentage as set forth in said option. The undersigned hereby
makes payment to REX Stores Corporation of the purchase price in full. Kindly
issue all shares to the undersigned and deliver to the undersigned at the
address stated below.

               Name:     _____________________________________

               Address:  _____________________________________

                         _____________________________________

               Social Security Number: _______________________

               Signature:_____________________________________

               Purchase Price:________________________________


Dated:____________________________



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>3
<FILENAME>ex10-b.txt
<DESCRIPTION>EXHIBIT 10(B)
<TEXT>

<PAGE>


                                                                       NO. _____

                             REX Stores Corporation

                             STOCK OPTION AGREEMENT
                                    UNDER THE
                        1999 OMNIBUS STOCK INCENTIVE PLAN
                       (Nonemployee Director Stock Option)

          REX Stores Corporation (the "Company") hereby grants, effective
____________ (the "effective date"), to _____________ (the "Optionee") an option
to purchase a maximum of _____ shares of its Common Stock, $.01 par value, at a
price of $______ per share, subject to the following:

          1. Relationship to Plan. This nonqualified stock option is granted
pursuant to the Company's 1999 Omnibus Stock Incentive Plan, a copy of which is
attached as Exhibit A hereto (the "Plan"), and is in all respects subject to the
terms, conditions and definitions of the Plan. The Optionee hereby accepts this
option subject to all the terms and provisions of the Plan, including those
relating to non-transferability and termination of the option and adjustment of
the number of shares subject to this option and the exercise price therefor. The
Optionee further agrees that all decisions under and interpretations of the Plan
by the Compensation Committee (the "Committee") shall be final, binding and
conclusive upon the Optionee and his heirs.

          2. Time of Exercise. This option may not be exercised prior to the
first anniversary of the effective date of this Agreement. It may thereafter be
exercised, from time to time, in full or in part, by the Optionee to the extent
of the Optionee's then "Vested Percentage" of the maximum number of shares of
Common Stock subject to this option as determined in accordance with the
following schedule, and shall remain exercisable (subject to the provisions of
Section 6 hereof and the Plan) until it has been exercised as to all shares
subject hereto or has expired, whichever occurs first.

<TABLE>
<CAPTION>
          Anniversary of Effective
              Date of Agreement                                    Vested Percentage
          ------------------------                                 -----------------
         <S>          <C>                                               <C>
          First        (12th month)                                       20%
          Second       (24th month)                                       40%
          Third        (36th month)                                       60%
          Fourth       (48th month)                                       80%
          Fifth        (60th month)                                      100%
</TABLE>

          Notwithstanding anything to the contrary herein contained, so long as
the Optionee shall be a member of the Board of Directors of the Company, this
option may not be exercised if, in the opinion of counsel for the Company, the
issuance of the shares pursuant hereto, either alone or in combination with the
issuance of other securities by the Company, would constitute a violation of
applicable federal or state securities laws or regulations or orders thereunder.
In the event this option may not otherwise be exercised by reason of the
foregoing sentence, the Company shall use its best efforts to register said
shares with the Securities and Exchange





<PAGE>


Commission on Form S-8 (or successor form) and, concurrently therewith, to take
such steps as may be necessary to comply with applicable state securities laws
in connection with such issuance.

          3. Term of Option. This option shall expire on the tenth anniversary
of the effective date of this Agreement.

          4. Methods of Exercise. This option shall be exercisable by a written
notice in the form adopted by the Committee, as attached hereto as Exhibit B,
which specifies the number of shares to be purchased. Upon receipt of payment
for the shares, the Company will thereafter deliver or cause to be delivered to
the Optionee (or if any other individual or individuals are exercising this
option, to such individual or individuals) at the office of the Company, a
certificate or certificates for the number of shares with respect to which this
option is being exercised, registered in the name or names of the individual or
individuals exercising the option, provided, however, that if any law or
regulation or order of the Securities and Exchange Commission or other body
having jurisdiction in the premises shall require the Company or Optionee (or
other individual or individuals exercising this option) to take any action in
connection with the shares then being purchased, the delivery of the certificate
or certificates for such shares shall be delayed for the period necessary to
take and complete such action.

          5. Purchase for Investment. This option is granted on the condition
that the purchase of shares of stock hereunder shall be for the account of the
Optionee (or other individual or individuals exercising this option) for
investment purposes and not with a view to resale or distribution, except that
such condition shall be inoperative if the offering of shares subject to the
option is registered under the Securities Act of 1933, as amended, or if in the
opinion of counsel for the Company such shares may be resold without
registration. At the time of any exercise of the option, the Optionee (or other
individual or individuals exercising this option) will execute such further
agreements as the Company may require to implement the foregoing condition and
to acknowledge the Optionee's (or such other individual's) familiarity with
restrictions on the resale of the shares under applicable securities laws.

          6. Termination of Option.

             (i) In the event of the Optionee's termination of service on the
Board of Directors of the Company other than by reasons of retirement,
disability (as defined below) or death, the Optionee may at any time within a
period of six months after such termination of service exercise this option to
the extent of the Optionee's Vested Percentage on the date of termination of
service.

             (ii) In the event of the Optionee's termination of service on the
Board of Directors by reason of retirement, or disability within the meaning of
Section 22(e)(3) of the Code, this option shall continue to become exercisable
in accordance with the schedule set forth in Section 2 hereof.

             (iii) In the event of the death of the Optionee, this option shall
become immediately exercisable in full (100% Vested Percentage) and may be
exercised by the Optionee's estate,





<PAGE>


personal representative or beneficiary to whom it has been transferred pursuant
to the Plan at any time within two years after death.

             (iv) This option may not be exercised to any extent by anyone after
the date of expiration of the option.

          7. Acceleration of Exercise Date Upon Change In Control.
Notwithstanding anything to the contrary herein, upon the occurrence of a Change
in Control (as defined in the Plan), this option, if outstanding at such time,
shall become fully and immediately exercisable and shall remain exercisable
until its expiration, termination or cancellation.

          8. General. This Agreement shall be construed as a contract under the
laws of the State of Ohio. It shall bind and, subject to the terms of the Plan,
benefit the parties and their respective successors, assigns and legal
representatives.

          IN WITNESS WHEREOF, the Company and the Optionee have caused this
Agreement to be executed as of the date first above written.


                                         REX Stores Corporation


                                         By:______________________________

                                         Its: ____________________________


                                         _________________________________
                                         Name






<PAGE>


                                    EXHIBIT B

                          WRITTEN NOTICE OF EXERCISE OF
                          STOCK OPTION AGREEMENT UNDER
                        1999 OMNIBUS STOCK INCENTIVE PLAN
                             REX Stores Corporation


          The undersigned hereby exercises, according to the terms and
conditions thereof, his option pursuant to the 1999 OMNIBUS STOCK INCENTIVE
PLAN, No. _____, for _________ shares of the Common Stock of REX Stores
Corporation, at a price of $______ per share, said number of shares not to
exceed the Vested Percentage as set forth in said option. The undersigned hereby
makes payment to REX Stores Corporation of the purchase price in full. Kindly
issue all shares to the undersigned and deliver to the undersigned at the
address stated below.

               Name:     _____________________________________

               Address:  _____________________________________

                         _____________________________________

               Social Security Number: _______________________

               Signature:_____________________________________

               Purchase Price:________________________________


Dated:____________________________



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>4
<FILENAME>ex31.txt
<DESCRIPTION>EXHIBIT 31
<TEXT>

<PAGE>


                                                                      Exhibit 31
                                 CERTIFICATIONS

I, Stuart A. Rose, certify that:

     1. I have reviewed this quarterly report on Form 10-Q of REX Stores
Corporation;

     2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;

     3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;

     4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

          (a) Designed such disclosure controls and procedures, or caused such
     disclosure controls and procedures to be designed under our supervision, to
     ensure that material information relating to the registrant, including its
     consolidated subsidiaries, is made known to us by others within those
     entities, particularly during the period in which this report is being
     prepared;

          (b) Evaluated the effectiveness of the registrant's disclosure
     controls and procedures and presented in this report our conclusions about
     the effectiveness of the disclosure controls and procedures, as of the end
     of the period covered by this report based on such evaluation; and

          (c) Disclosed in this report any change in the registrant's internal
     control over financial reporting that occurred during the registrant's most
     recent fiscal quarter (the registrant's fourth fiscal quarter in the case
     of an annual report) that has materially affected, or is reasonably likely
     to materially affect, the registrant's internal control over financial
     reporting; and

     5. The registrant's other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):

          (a) All significant deficiencies and material weaknesses in the design
     or operation of internal control over financial reporting which are
     reasonably likely to adversely affect the registrant's ability to record,
     process, summarize and report financial information; and

          (b) Any fraud, whether or not material, that involves management or
     other employees who have a significant role in the registrant's internal
     control over financial reporting.


                                           Date: December 9, 2004

                                           STUART A. ROSE
                                           Stuart A. Rose
                                           Chairman of the Board, President and
                                           Chief Executive Officer





<PAGE>



I, Douglas L. Bruggeman, certify that:

     1. I have reviewed this quarterly report on Form 10-Q of REX Stores
Corporation;

     2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;

     3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;

     4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

          (a) Designed such disclosure controls and procedures, or caused such
     disclosure controls and procedures to be designed under our supervision, to
     ensure that material information relating to the registrant, including its
     consolidated subsidiaries, is made known to us by others within those
     entities, particularly during the period in which this report is being
     prepared;

          (b) Evaluated the effectiveness of the registrant's disclosure
     controls and procedures and presented in this report our conclusions about
     the effectiveness of the disclosure controls and procedures, as of the end
     of the period covered by this report based on such evaluation; and

          (c) Disclosed in this report any change in the registrant's internal
     control over financial reporting that occurred during the registrant's most
     recent fiscal quarter (the registrant's fourth fiscal quarter in the case
     of an annual report) that has materially affected, or is reasonably likely
     to materially affect, the registrant's internal control over financial
     reporting; and

     5. The registrant's other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):

          (a) All significant deficiencies and material weaknesses in the design
     or operation of internal control over financial reporting which are
     reasonably likely to adversely affect the registrant's ability to record,
     process, summarize and report financial information; and

          (b) Any fraud, whether or not material, that involves management or
     other employees who have a significant role in the registrant's internal
     control over financial reporting.


                                       Date: December 9, 2004

                                       DOUGLAS L. BRUGGEMAN
                                       Douglas L. Bruggeman
                                       Vice President, Finance, Treasurer and
                                       Chief Financial Officer



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>5
<FILENAME>ex32.txt
<DESCRIPTION>EXHIBIT 32
<TEXT>


<PAGE>


                                                                      Exhibit 32


                             REX Stores Corporation
                      CERTIFICATION PURSUANT TO SECTION 906
                        OF THE SARBANES-OXLEY ACT OF 2002

         The undersigned officers of REX Stores Corporation (the "Company")
hereby certify, to their knowledge, that the Company's Quarterly Report on Form
10-Q for the period ended October 31, 2004, which this certificate accompanies,
fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 and that the information contained therein fairly presents,
in all material respects, the financial condition and results of operations of
the Company.

         A signed original of this written statement required by Section 906, or
other document authenticating, acknowledging, or otherwise adopting the
signature that appears in typed form within the electronic version of this
written statement required by Section 906, has been provided to the Company and
will be retained by the Company and furnished to the Securities and Exchange
Commission or its staff upon request.



STUART A. ROSE
Stuart A. Rose


DOUGLAS L. BRUGGEMAN
Douglas L. Bruggeman


Dated: December 9, 2004




</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
