Company: REX
Filing Date: 2025-12-04
Form Type: 10-Q
Source: 0000930413-25-003566
Chunk: 10

Company: REX AMERICAN RESOURCES Corp
Filing Date: 2025-12-04
Form: 10-Q
Item: Part I, Item 1
Chunk 10
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 and
approximately $99,000 at October 31, 2025 and January 31, 2025, respectively. If the Company were to prevail on all unrecognized
tax benefits recorded, the provision for income taxes would be reduced by approximately $18.8 million. In addition, the impact
of penalties and interest would also benefit the effective tax rate. Interest and penalties associated with unrecognized tax benefits
are recorded within income tax expense. On a quarterly basis, the Company accrues for the effects of open uncertain tax positions
and the related potential penalties and interest.

Inventory

Inventories
are carried at the lower of cost or net realizable value. Cost for all inventories is determined using the first-in, first-out
method. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonable predictable costs
of completion, disposal, and transportation. Inventory includes direct production costs and certain overhead costs such as depreciation,
property taxes and utilities related to producing ethanol and related by-products. Inventory is permanently written down in instances
when cost exceeds estimated net realizable value; such write-downs are based primarily upon commodity prices as the market value
of inventory is often dependent upon changes in commodity prices. 

11

The Company did not record any inventory write-downs at October
31, 2025. The Company recorded approximately $100,000 of inventory write-downs in cost of sales at January 31, 2025. Fluctuations
in the write-down of inventory generally relate to the levels and composition of such inventory and changes in commodity prices
at a given point in time.

The components of inventory are as follows
as of the dates presented (amounts in thousands):

    October
    31, 2025  
    January
    31, 2025 

    Ethanol and other finished goods 
    $4,162  
    $4,923 

    Work in process 
     4,671  
     5,185 

    Corn and other raw materials 
     18,842  
     21,568 

    Total 
    $27,675  
    $31,676 

Property and Equipment 

Property and equipment is recorded at cost
or the fair value on the date of acquisition (for property and equipment acquired in a business combination). Depreciation is computed
using the straight-line method. Estimated useful lives are 15 to 40 years for buildings and improvements,