Company: REX
Filing Date: 2025-12-04
Form Type: 10-Q
Source: 0000930413-25-003566
Chunk: 9

Company: REX AMERICAN RESOURCES Corp
Filing Date: 2025-12-04
Form: 10-Q
Item: Part I, Item 1
Chunk 9
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 selling charges, operating lease expense, and certain payroll in SG&A expenses.

Financial Instruments

Certain of the forward corn and natural gas
purchase contracts and ethanol, distillers grains and distillers corn oil sale contracts are accounted for under the “normal
purchases and normal sales” scope

10

exemption of ASC 815 because these arrangements are for purchases
of corn that will be delivered in quantities expected to be used by the Company and sales of ethanol, distillers grains and distillers
corn oil in quantities expected to be produced by the Company over a reasonable period of time in the normal course of business.

The Company uses derivative financial instruments
(exchange-traded futures contracts and swaps) to manage a portion of the risk associated with changes in commodity prices, primarily
related to corn. The Company monitors and manages this exposure as part of its overall risk management policy. As such, the Company
seeks to reduce the potentially adverse effects that the volatility of these markets may have on its operating results. The Company
may take hedging positions in these commodities as one way to mitigate risk. While the Company attempts to link its hedging activities
to purchase and sales activities, there are situations in which these hedging activities can themselves result in losses. The Company
does not hold or issue derivative financial instruments for trading or speculative purposes. The changes in fair value of these
derivative financial instruments are recognized in current period earnings as the Company does not use hedge accounting.

Income Taxes

The Company applies an effective tax rate
to interim periods that is consistent with the Company’s estimated annual tax rate as adjusted for discrete items impacting
the interim periods. The Company provides for deferred tax liabilities and assets for the future tax consequences attributable
to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis
and operating loss and tax credit carryforwards. The Company provides for a valuation allowance if, based on the weight of available
positive and negative evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The
Company paid income taxes of approximately $3.1 million and $5.5 million and received no refunds during the nine months ended October
31, 2025 and October 31, 2024, respectively.

As of October 31, 2025, and January 31, 2025,
total unrecognized tax benefits were approximately $18.9 million. Accrued penalties and interest were approximately $118,000