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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
REPORT PURSUANT TO
SECTION 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Nine-Month Period Ended December 31, 2003
RadioShack 401(k) Plan
(full title of Program)
RADIOSHACK CORPORATION
100 Throckmorton Street
Suite 1800
Fort Worth, Texas 76102
(Name of issuer and address of principal executive offices)
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RADIOSHACK 401(k) PLAN
FINANCIAL STATEMENTS
At December 31, 2003 and March 31, 2003 and for the
Nine-Month Period Ended December 31, 2003
Additional information required for Form 5500 at December 31, 2003
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INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
| Page Number | ||
| 1 | ||
Financial Statements: | ||
Statements of Net Assets Available for Benefits at December 31, 2003 and March 31, 2003 | 2 | |
| 3 | ||
| 4 | ||
Supplemental Schedule: | ||
Schedule of Assets (Held at End of Period) at December 31, 2003 | 10 | |
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Report of Independent Registered Public Accounting Firm
To the Participants and Administrative Committee of the
RadioShack 401(k) Plan
In our opinion, the accompanying statements of net assets available for benefits and the related statement of changes in net assets available for benefits present fairly, in all material respects, the net assets available for benefits of the RadioShack 401(k) Plan (the “Plan”) at December 31, 2003 and March 31, 2003, and the changes in net assets available for benefits for the nine-month period ended December 31, 2003 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets held for investment purposes at December 31, 2003 is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
/s/ PricewaterhouseCoopers LLP
Fort Worth, Texas
June 25, 2004
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STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
At December 31, 2003 and March 31, 2003
December 31, 2003 | March 31, 2003 | |||||
Assets | ||||||
Investments, at fair value: | ||||||
Participant-directed | $ | 413,367,171 | $ | 183,647,211 | ||
Company-directed: | ||||||
RadioShack Corporation common stock | — | 147,418,061 | ||||
Common stocks | — | 7,071 | ||||
Total investments | 413,367,171 | 331,072,343 | ||||
Non-interest bearing cash | 436,833 | — | ||||
Receivables: | ||||||
Participant contributions | 266,346 | 81,107 | ||||
Employer contributions | 4,044,409 | — | ||||
Total receivables | 4,310,755 | 81,107 | ||||
Net assets available for benefits | $ | 418,114,759 | $ | 331,153,450 | ||
The accompanying notes are an integral part of these financial statements
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STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Nine-Month Period Ended December 31, 2003
Additions: | |||
Investment income: | |||
Dividends-RadioShack Corporation common stock | $ | 2,289,648 | |
Dividends-All other investments | 602,793 | ||
Participant loan interest | 869,612 | ||
Net appreciation in fair value of RadioShack common stock | 80,161,872 | ||
Net appreciation in fair value of all other investments | 19,652,816 | ||
Total investment income | 103,576,741 | ||
Contributions: | |||
Participants | 13,400,070 | ||
Employer | 4,044,409 | ||
Rollovers | 242,971 | ||
Total contributions | 17,687,450 | ||
Total additions | 121,264,191 | ||
Deductions: | |||
Benefits paid to participants | 34,213,285 | ||
Administrative expenses | 89,597 | ||
Total deductions | 34,302,882 | ||
Net increase in plan assets | 86,961,309 | ||
Net assets available for benefits at beginning of period | 331,153,450 | ||
Net assets available for benefits at end of period | $ | 418,114,759 | |
The accompanying notes are an integral part of these financial statements
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NOTES TO FINANCIAL STATEMENTS
| 1. | Description of Plan: |
The following description of the RadioShack 401(k) Plan (the “Plan”) provides only general information. Participants should refer to the Summary Plan Description, which also constitutes the Plan’s prospectus, for a more complete description of the Plan’s provisions.
General
The Plan is a defined contribution employee benefit plan covering eligible employees of RadioShack Corporation, its divisions and subsidiaries (the “Company” or “RadioShack”). The Plan is an individual account plan with multiple, participant-directed investment options and is intended to conform to and qualify under Section 401 of the Internal Revenue Code (the “Code”), as amended. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”). At January 1, 2004, the Plan year was changed to a calendar year basis, resulting in a statement of changes in net assets available for benefits for a nine-month period ended December 31, 2003.
At December 31, 2003 and March 31, 2003, there were 9,814 and 10,648 employees of the Company participating in the Plan and 20,113 and 22,704 employees eligible to participate, respectively.
On April 1, 2003, the Plan consisted of both a Company-directed feature and a participant-directed feature. The Company-directed feature consisted solely of RadioShack common stock and the participant-directed feature consisted of a number of mutual funds, common/collective trusts and money market funds. The Plan was amended, effective December 1, 2003, to enable employees to sell the Company-directed investment and reinvest the funds into any of the participant-directed investment vehicles mentioned above, thus rendering all investments participant-directed as of December 31, 2003.
Administration
The Company’s Board of Directors has appointed Putnam Fiduciary Trust Company (“Putnam”) as the Plan’s trustee and record keeper. The Plan is administered by an Administrative Committee appointed by the Board of Directors of the Company.
Eligibility
An employee is eligible to participate in the Plan at the beginning of the calendar quarter in which they are expected to complete one year of service of at least 1,000 hours, as defined in the Summary Plan Description, and attain the age of 18. Temporary employees are excluded from participation in the Plan.
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RADIOSHACK 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
Participant Contributions
Through authorized payroll deductions, participants may contribute to the Plan, on a pre-tax basis, up to 8%, in increments of 1%, of their annual compensation. Participant contributions are limited to certain annual maximums as set forth by the Code.
Participants may direct their contributions into various investment options. Participants may elect to allocate their total contributions to the various investment options in increments of 5%.
Participants are not subject to federal income taxation on their contributions and earnings thereon until withdrawn from the Plan.
Company Contributions
All Company contributions are discretionary and are made in the form of RadioShack common stock equal to 30% of a participant’s contribution.
Participants’ Accounts
Each participant’s account is credited with the participant’s contribution and allocations of (a) the Company’s discretionary matching contribution, and (b) Plan earnings. Allocations are based on the participant’s contribution or number of shares held, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.
The common stock account represents the participants’ interest in RadioShack common stock that has been allocated on a pro rata basis to the participants’ individual accounts.
Vesting
Participants are immediately vested in their contributions to the Plan plus actual earnings thereon. All participants become fully vested in the Company’s contributions, plus actual earnings thereon, upon completion of three years of service with the Company.
Benefits Paid to Participants
Participants who withdraw from the Plan may receive the vested portion of their accounts under one of four withdrawal methods, which are summarized below:
| (a) | Single lump sum payment in cash ; |
| (b) | Purchase of an annuity contract to provide regular monthly income over a designated period of time, of not less than two years nor more than fifteen years (or the participant’s actual life expectancy, if shorter) ; |
| (c) | Equal monthly cash installments for a period of up to ten years (or the participant’s actual life expectancy, if shorter) ; or |
| (d) | Part cash and part securities . |
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RADIOSHACK 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
Forfeited Accounts
Forfeited nonvested accounts of terminated participants are allocated among the remaining participants’ accounts. A total of $351,847 was forfeited and reallocated for the nine-month period ended December 31, 2003.
Loans to Participants
Up to two times per each twelve month period, a participant may borrow from his or her vested account in the Plan. The loan amount may not exceed the lesser of $50,000 or 50% of the value of the participant’s vested accounts. The minimum loan amount is $500. Additionally, no loan may exceed an amount that would cause the total of principal and interest payments on all outstanding loans to exceed 25% of the participant’s regular payroll period earnings. Loans are repaid through authorized payroll deductions. The term of the loan must be at least six months (or multiples thereof) and may not exceed five years. The loans are collateralized by the balance in the participant’s account and bear interest at rates fixed by the Administrative Committee. The determination of these rates is based upon the interest rates currently being charged on similar commercial loans. For the nine-month period ended December 31, 2003, interest rates on participant loans ranged from 5.00% to 10.50%.
Plan Termination
Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will immediately become fully vested in their accounts.
2. Summary of Significant Accounting Policies:
Basis of Accounting
The Plan’s accompanying financial statements have been prepared under the accrual basis of accounting.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of additions and deductions during the reporting period. Actual results could differ from those estimates.
Investment Valuation and Income Recognition
The Plan’s investments are stated at fair value and valued daily. Shares of registered investment companies are valued at quoted market prices, which represents the net asset value of shares held by the Plan at year-end. Units of common/collective trust funds are valued based on the current market values of the underlying assets of the fund. Common stock is valued at its closing market price. Participant loans are valued at cost plus accrued interest, which approximates fair value. Purchases and sales of securities are recorded on a trade-date basis. Dividends are recorded on the ex-dividend date and interest income is recorded on the accrual basis.
The Plan presents, in the statement of changes in net assets available for benefits, the net appreciation in the fair value of its investments, which consists of the realized gains or losses and the unrealized appreciation on those investments.
Concentration, Market and Credit Risk
Approximately two thirds of the investments of the Plan consist of securities of its sponsor, RadioShack, at December 31, 2003 and March 31, 2003. The Plan provides for various investment options in a variety of stock, mutual funds and other investment securities. Stock, mutual funds, and other investment securities are exposed to various risks, such as interest rate, market and credit risk. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amount reported in the Plan’s statement of net assets available for benefits.
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RADIOSHACK 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
Benefits Paid to Participants
Benefits are recorded when paid.
Administrative Expenses
For the nine-month period ended December 31, 2003, Putnam was responsible for both the management and recordkeeping of the Plan’s assets. Administrative expenses of the Plan are generally paid directly to Putnam by the Company and thus are not a component of the changes in net assets available for Plan benefits. Administrative expenses paid by participants are summarized in the statement of changes in net assets available for benefits, and include loan origination and withdrawal processing fees.
3. Investments
The following table presents the individual investments that exceed 5% or more of the Plan’s net assets at December 31, 2003 and March 31, 2003:
| December 31, 2003 | March 31, 2003 | |||||||||
| Shares | Fair Value | Shares | Fair Value | |||||||
RadioShack Common Stock | ||||||||||
Participant-Directed | 9,007,062 | $ | 276,336,667 | 3,254,693 | $ | 72,557,909 | ||||
Company-Directed | — | — | 6,613,641 | 147,418,061 | ||||||
Putnam Voyager Fund | 2,638,311 | 41,817,232 | 2,617,252 | 32,768,001 | ||||||
Participant Loans | — | — | — | 17,342,727 | ||||||
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RADIOSHACK 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
During the nine-month period ended December 31, 2003, the Plan’s investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value by $99,814,688 as follows:
Common stock | $ | 80,161,872 | |
Common/collective trusts | 3,064,897 | ||
Mutual funds | 16,587,919 | ||
| $ | 99,814,688 | ||
4. Company-Directed Investments
As discussed in Note 1, effective December 1, 2003, the Plan was amended to allow participants to sell investments in previously Company-directed RadioShack common stock and reinvest the proceeds in other investment options. As a result of this amendment, the value of the Company-directed RadioShack common stock on December 1, 2003, was reclassified to the participant-directed investments, as indicated below.
Information about the net assets and the significant components of the changes in net assets relating to the Company-directed investments is as follows:
| December 31, 2003 | March 31, 2003 | |||||
Net Assets: | ||||||
RadioShack common stock | $ | — | $ | 147,418,061 | ||
| Nine-month period ended December 31, 2003 | ||||
Net appreciation in common stock | $ | 48,336,578 | ||
Benefits paid to participants | (15,330,383 | ) | ||
Transfer to participant-directed investments | (180,424,256 | ) | ||
| $ | (147,418,061 | ) | ||
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RADIOSHACK 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
5. Tax Status of the Plan:
The Plan received a determination letter from the Internal Revenue Service (“IRS”) dated April 28, 1998. The Plan has subsequently been amended and the Administrative Committee has applied for a similar determination letter from the IRS for the Plan. However, the Administrative Committee and the Plan’s legal counsel believe that the Plan remains qualified under Section 401(a) of the Code and applicable sections of ERISA and, therefore, the trust is exempt from taxation under Section 501(a) of the Code. Accordingly, employee contributions, employer contributions and investment earnings of the Plan are not taxable to participants until distributed.
6. Related Party Transactions:
Certain Plan investments are shares of mutual funds and common/collective trusts managed by Putnam Investments, an affiliate of Putnam and, therefore, these transactions qualify as party-in-interest. In addition, the Plan invests in common stock of the Company. At December 31, 2003 and March 31, 2003, the Plan held 9,007,062 and 9,868,334 shares of Radio Shack common stock, respectively, which represented 5.5% and 5.8%, respectively, of the outstanding shares of the Company at those dates.
7. Reconciliation of Financial Statements to Form 5500:
The financial statements of the Plan, as prepared under accounting principles generally accepted in the United States of America, includes benefit payments to participants as deductions when paid. The Department of Labor requires that amounts allocated to participants who have elected to withdraw from the Plan, but have not been paid, be recorded as a liability on the Form 5500.
The following is a reconciliation of the net assets available for benefits from the financial statements to the Form 5500:
December 31, 2003 | March 31, 2003 | ||||||
Net assets available for benefits from the financial statements | $ | 418,114,759 | $ | 331,153,450 | |||
Amounts related to withdrawing participants | (137,116 | ) | — | ||||
Net assets available for benefits from Form 5500 | $ | 417,977,643 | $ | 331,153,450 | |||
The following is a reconciliation of benefit payments to participants from the financial statements to the Form 5500:
| For the Nine Month Period Ended December 31, 2003 | |||
Benefit payments to participants from the financial statements | $ | 34,213,285 | |
Plus: Amounts related to withdrawing participants at December 31, 2003 | 137,116 | ||
Less: Amounts related to withdrawing participants at March 31, 2003 | — | ||
Benefit payments to participants from the Form 5500 | $ | 34,350,401 | |
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RADIOSHACK 401(k) PLAN | EIN - 75-1047710 |
Schedule H, line 4i | Plan Number - 001 |
Schedule of Assets (Held at End of Period)
At December 31, 2003
| (a) | (b) | (c) | (d) | (e) | |||||
Identity of issue, borrower, lessor or similar party | Description of investment including maturity date, rate of interest, collateral, par or maturity date | Cost | Current Value | ||||||
* | RadioShack Corporation | Common stock, 9,007,062 shares | (i) | $ | 276,336,667 | ||||
Royce Total Return Fund | Mutual Fund | (i) | 225,616 | ||||||
MSIF Small Company Growth Fund | Mutual Fund | (i) | 1,163,100 | ||||||
* | Putnam Retirement Ready Maturity | Common/Collective Trust | (i) | 2,802,598 | |||||
* | Putnam Retirement Ready 2010 | Common/Collective Trust | (i) | 5,498,680 | |||||
* | Putnam Retirement Ready 2015 | Common/Collective Trust | (i) | 7,883,995 | |||||
* | Putnam Retirement Ready 2020 | Common/Collective Trust | (i) | 8,342,240 | |||||
* | Putnam Retirement Ready 2025 | Common/Collective Trust | (i) | 7,655,782 | |||||
* | Putnam Retirement Ready 2030 | Common/Collective Trust | (i) | 3,644,483 | |||||
* | Putnam Retirement Ready 2035 | Common/Collective Trust | (i) | 1,940,245 | |||||
* | Putnam Retirement Ready 2040 | Common/Collective Trust | (i) | 924,475 | |||||
* | Putnam Retirement Ready 2045 | Common/Collective Trust | (i) | 336,431 | |||||
* | Putnam Investors Fund | Mutual Fund | (i) | 3,567,769 | |||||
* | Putnam Income Fund | Mutual Fund | (i) | 9,437,821 | |||||
* | Putnam Voyager Fund | Mutual Fund | (i) | 41,817,232 | |||||
* | S&P 500 | Common/Collective Trust | (i) | 3,610,496 | |||||
* | Putnam International Equity | Mutual Fund | (i) | 3,280,642 | |||||
* | Putnam International US Gov. Income | Mutual Fund | (i) | 1,744,334 | |||||
* | Putnam Money Market Fund | Money Market Fund | (i) | 12,968,335 | |||||
* | Putnam Equity Income Fund | Mutual Fund | (i) | 2,373,983 | |||||
* | Participant Loans | Participant loans receivable – terms of 6 months– 5 years, interest rates of 5.00%—10.50% | — | 17,812,247 | |||||
| $ | 413,367,171 | ||||||||
| * | Denotes a party-in-interest to the Plan as defined by ERISA. |
| (i) | Cost omitted for participant directed investments. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Administrative Committee has duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized.
RADIOSHACK 401(K) PLAN | ||
| By: | /s/ A. Grothues | |
A. Grothues | ||
Administrative Committee Member | ||
| By: | /s/ D. Johnson | |
D. Johnson | ||
Administrative Committee Member | ||
| By: | /s/ R. Ray | |
R. Ray | ||
Administrative Committee Member | ||
Date: June 28, 2004
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Index to Exhibits
| Exhibit Number | Description of Exhibit | |
| 23 | Consent of Independent Registered Public Accounting Firm |