UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2001
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: 1-5571
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RADIOSHACK CORPORATION
(Exact name of registrant as specified in our charter)
Delaware 75-1047710
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Throckmorton Street, Suite 1800, Fort Worth, Texas 76102
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (817) 415-3700
------------------------
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 __
The number of shares outstanding of the issuer's Common Stock, $1 par value, on
April 30, 2001 was 185,442,885.
Index to Exhibits is on Sequential Page No. 13. Total pages 14.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
RADIOSHACK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
Three Months Ended
March 31,
(In millions, except per share amounts) 2001 2000
--------- ---------
Net sales and operating revenues $ 1,139.5 $ 1,047.3
Cost of products sold 593.0 531.3
--------- ---------
Gross profit 546.5 516.0
--------- ---------
Operating expenses (income):
Selling, general and administrative 405.2 374.0
Depreciation and amortization 27.7 25.7
Restricted stock awards -- (1.0)
--------- ---------
Total operating expenses 432.9 398.7
--------- ---------
Operating income 113.6 117.3
Interest income 4.4 4.6
Interest expense (13.0) (9.5)
Provision for loss on Internet-related investment (30.0) --
--------- ---------
Income before income taxes 75.0 112.4
Provision for income taxes 28.5 42.7
--------- ---------
Net income 46.5 69.7
Preferred dividends 1.3 1.4
--------- ---------
Net income available to common shareholders $ 45.2 $ 68.3
========= =========
Net income available per common share:
Basic $ 0.24 $ 0.36
========= =========
Diluted $ 0.23 $ 0.35
========= =========
Shares used in computing earnings per common share:
Basic 186.6 188.9
========= =========
Diluted 195.5 198.9
========= =========
Dividends declared per common share $ 0.055 $ 0.055
========= =========
The accompanying notes are an integral part of these consolidated financial
statements.
RADIOSHACK CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
March 31, December 31, March 31,
2001 2000 2000
(In millions, except for share amounts) (Unaudited) (Unaudited)
- -------------------------------------- ----------- ----------- -----------
Assets
Current assets:
Cash and cash equivalents $ 113.9 $ 130.7 $ 87.2
Accounts and notes receivable, net 351.9 464.7 234.2
Inventories, at lower of cost or market 1,061.0 1,164.3 967.6
Other current assets 68.8 58.5 77.8
----------- ----------- -----------
Total current assets 1,595.6 1,818.2 1,366.8
Property, plant and equipment, net 453.5 456.8 448.3
Other assets, net of accumulated amortization 274.3 301.5 286.9
----------- ----------- -----------
Total assets $ 2,323.4 $ 2,576.5 $ 2,102.0
=========== =========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Short-term debt, including current maturities of
long-term debt $ 407.5 $ 478.6 $ 267.9
Accounts payable 203.5 234.8 272.1
Accrued expenses 239.7 330.1 242.2
Income taxes payable 140.7 188.9 139.7
----------- ----------- -----------
Total current liabilities 991.4 1,232.4 921.9
Long-term debt, excluding current maturities 249.8 302.9 318.3
Other non-current liabilities 66.1 60.9 51.4
----------- ----------- -----------
Total liabilities 1,307.3 1,596.2 1,291.6
----------- ----------- -----------
Minority interest in consolidated subsidiary 100.0 100.0 100.0
Common stock put options -- -- 14.0
Stockholders' equity:
Preferred stock, no par value, 1,000,000 shares
authorized:
Series A junior participating, 300,000 shares
designated and none issued -- -- --
Series B convertible (TESOP), 100,000 shares
authorized; 68,200, 68,800 and 72,200 shares
issued, respectively 68.2 68.8 72.2
Common stock, $1 par value, 650,000,000 shares
authorized and 236,033,000 shares issued 236.0 236.0 236.0
Additional paid-in capital 125.8 116.1 95.9
Retained earnings 1,694.9 1,661.5 1,409.1
Treasury stock, at cost; 50,234,000, 50,269,000
and 49,197,000 shares, respectively (1,198.4) (1,189.6) (1,097.5)
Unearned deferred compensation (9.2) (11.5) (18.2)
Accumulated other comprehensive loss (1.2) (1.0) (1.1)
----------- ----------- -----------
Total stockholders' equity 916.1 880.3 696.4
Commitments and contingent liabilities
----------- ----------- -----------
Total liabilities and stockholders' equity $ 2,323.4 $ 2,576.5 $ 2,102.0
=========== =========== ===========
The accompanying notes are an integral part of these consolidated financial statements.
RADIOSHACK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended
March 31,
(In millions) 2001 2000
- -------------- ---------- ----------
Cash flows from operating activities:
Net income $ 46.5 $ 69.7
Adjustments to reconcile net income to net cash provided
(used) by operating activities:
Provision for loss on Internet-related investment 30.0 --
Depreciation and amortization 27.7 25.7
Restricted stock awards -- (1.0)
Other items 5.8 6.7
Changes in operating assets and liabilities:
Receivables 113.4 58.3
Inventories 103.3 (106.2)
Other current assets (11.2) (2.0)
Accounts payable, accrued expenses and income taxes (161.0) (51.5)
---------- ----------
Net cash provided (used) by operating activities 154.5 (0.3)
---------- ----------
Investing activities:
Additions to property, plant and equipment (24.4) (29.8)
Proceeds from sale of property, plant and equipment 0.2 0.5
Proceeds from sale of minority interest in consolidated
subsidiary -- 100.0
Proceeds from sale of equity securities -- 17.4
Other investing activities (4.1) (2.5)
---------- ----------
Net cash (used) provided by investing activities (28.3) 85.6
---------- ----------
Financing activities:
Purchases of treasury stock (28.2) (238.3)
Exercise of common stock put options -- (8.6)
Proceeds from sale of common stock put options 0.3 0.5
Sales of treasury stock to employee stock plans 17.7 16.9
Proceeds from exercise of stock options 3.5 1.2
Dividends paid (11.0) (11.4)
Changes in short-term borrowings, net (124.0) 78.2
Repayments of long-term borrowings (1.3) (1.2)
---------- ----------
Net cash used by financing activities (143.0) (162.7)
---------- ----------
Decrease in cash and cash equivalents (16.8) (77.4)
Cash and cash equivalents, beginning of period 130.7 164.6
---------- ----------
Cash and cash equivalents, end of period $ 113.9 $ 87.2
========== ==========
The accompanying notes are an integral part of these consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 - PLAIN ENGLISH DISCLOSURE
You may notice that we changed some of the text in the notes, as well as the
management's discussion section of this document. The substance is the same, but
we have made it more readable using the "plain English" guidelines issued by the
Securities and Exchange Commission. We hope this is helpful to you. Throughout
this report, the terms "our," "we," and "us" refer to RadioShack Corporation,
including its subsidiaries.
NOTE 2 - BASIS OF FINANCIAL STATEMENTS
We prepared the accompanying unaudited consolidated financial statements in
accordance with the instructions to Form 10-Q and we did not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In management's opinion, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation are included. However, our operating results for the three months
ended March 31, 2001 do not necessarily indicate the results you may expect for
the year ending December 31, 2001. If you desire further information, you should
refer to our consolidated financial statements and management's discussion and
analysis of financial condition and results of operations included in our 2000
Annual Report on Form 10-K for the year ended December 31, 2000.
NOTE 3 - PROVISION FOR LOSS ON INTERNET-RELATED INVESTMENT
During the second quarter of 2000, we made a $30.0 million investment in
Digital:Convergence Corporation, a privately-held Internet technology company.
We believe that our investment has experienced a decline in value that, in our
opinion, is other than temporary. This belief is due to the uncertainty
surrounding Digital:Convergence's ability to secure sufficient additional
funding or to complete an IPO. As such, in the first quarter of 2001 we recorded
a loss provision equal to our initial investment.
NOTE 4 - EARNINGS PER SHARE
The following schedule is a reconciliation of the numerators and denominators
used in computing our basic and diluted EPS calculations for the three months
ended March 31, 2001 and 2000. Basic EPS excludes the effect of potentially
dilutive securities, while diluted EPS reflects the potential dilution that
would have occurred if our securities or other contracts to issue common stock
were exercised, converted, or resulted in the issuance of our common stock that
would have then shared in our earnings.
Three Months Ended Three Months Ended
March 31, 2001 March 31, 2000
------------------------------------- ----------------------------------------
Income Shares Per Share Income Shares Per Share
(In millions except per share amounts) (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
- ------------------------------------- ----------- ----------- ---------- ----------- ----------- -----------
Net income $ 46.5 $ 69.7
Less: Preferred stock dividends (1.3) (1.4)
----------- -----------
Basic EPS
Net income available to common shareholders 45.2 186.6 $ 0.24 68.3 188.9 $ 0.36
========== ===========
Effect of dilutive securities:
Plus dividends on Series B preferred stock 1.3 1.4
Additional contribution required for TESOP
if preferred stock had been converted (0.9) 5.9 (0.9) 6.3
Stock options 3.0 3.7
----------- ----------- ----------- -----------
Diluted EPS
Net income available to common shareholders
plus assumed conversions $ 45.6 195.5 $ 0.23 $ 68.8 198.9 $ 0.35
=========== =========== ========== =========== =========== ===========
NOTE 5 - COMPREHENSIVE INCOME
Comprehensive income for the three months ended March 31, 2001 and 2000 was
$46.3 million and $69.4 million, respectively.
NOTE 6 - 1996 BUSINESS RESTRUCTURING
In 1996 and 1997, we initiated certain restructuring programs in which a number
of our former McDuff, Computer City and Incredible Universe retail stores were
closed. We still have certain real estate obligations related to some of these
stores. At December 31, 2000, the balance in the restructuring reserve was $11.0
million and consisted of the remaining estimated real estate obligations to be
paid. During the three months ended March 31, 2001, the charges incurred from
the real estate obligations approximated the payments received from sublessees,
leaving a balance in the reserve of $11.0 million at March 31, 2001.
NOTE 7 - RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"),
which establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. We use derivatives only in limited circumstances. We adopted
SFAS 133 effective January 1, 2001 and the impact was not material.
NOTE 8 - SUBSEQUENT EVENT
On May 11, 2001, we issued $350,000,000 of 7 3/8% Notes due 2011. These notes
were privately offered only to qualified institutional buyers under Rule 144A.
The net proceeds from the sale of these notes was used to repay all of our
short-term debt, not including current maturities of long-term debt, and for
general corporate purposes.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS ("MD&A")
FACTORS THAT MAY AFFECT FUTURE RESULTS
Matters discussed in MD&A include forward-looking statements within the meaning
of the federal securities laws. This includes statements concerning management's
plans and objectives relating to our operations or economic performance and
related assumptions. Forward-looking statements are made based on management's
expectations and beliefs concerning future events and, therefore, involve a
number of risks and uncertainties. Management cautions that forward-looking
statements are not guarantees and actual results could differ materially from
those expressed or implied in the forward-looking statements. Important factors
that could cause our actual results of operations or financial condition to
differ include, but are not necessarily limited to:
o changes in the amount and degree of promotional intensity exerted by current
competitors and potential new competition from both retail stores and
alternative methods or channels of distribution, such as e-commerce,
telephone shopping services and mail order;
o the inability to successfully implement and execute our strategic
initiatives, including the development of our new strategic business units
("SBUs") and emerging sales channels, as well as new alliances which may be
formed with other retailers and third party service providers;
o changes in general U.S. or regional U.S. economic conditions, including, but
not limited to, consumer credit availability, interest rates, inflation,
personal discretionary spending levels and consumer sentiment and confidence
about the economy in general;
o the inability to successfully market and execute the www.RadioShack.com
website and its coordination with our retail outlets and/or our other
existing and emerging sales channels;
o the presence or absence of new services or products and product features in
the merchandise categories we sell and unexpected changes in our actual
merchandise sales mix;
o the inability to maintain profitable contracts or execute business plans
with providers of third party branded products and with service providers
relating to cellular and PCS telephones, direct-to-home ("DTH") satellite
programming, Internet access and high-speed bandwidth;
o the inability to collect the level of anticipated residual income, consumer
acquisition fees and rebates for products and third party services offered
by us;
o the inability to successfully implement and execute our strategic alliances,
including those with Microsoft, Verizon Wireless, Excite@Home and/or
Blockbuster;
o the lack of availability or access to sources of supply inventory;
o the inability to retain and grow an effective management team in a dynamic
environment or changes in the cost or availability of a suitable work force
to manage and support our service-driven operating strategies;
o the imposition of new restrictions or regulations regarding the sale of
products and/or services we sell or changes in tax rules and regulations
applicable to us;
o the adoption rate and market demand for high-speed Internet and other
Internet-related services; or
o the occurrence of severe weather events which prohibit consumers from
travelling to our retail locations, especially during the peak Christmas
season.
Both the United States retail industry and the specialty retail industry in
particular are dynamic by nature and have undergone significant changes over the
past several years. Our ability to anticipate and successfully respond to
continuing challenges is key to achieving our expectations.
RESULTS OF OPERATIONS
Net Sales and Operating Revenues
Our sales increased 8.8% to $1,139.5 million for the three months ended March
31, 2001, compared to $1,047.3 million in the corresponding prior year period.
Comparable store sales increased 7.4% for the quarter, when compared to the
first quarter last year. Our comparable store sales increase was primarily
driven by increased sales of audio and video equipment, including DTH satellite
systems and services, wireless phones and personal computer products. Sales of
parts, batteries and accessories also contributed to our comparible store sales
increase.
Sales in our audio and video category increased approximately 17% in the first
quarter of 2001, compared to the first quarter of 2000. This sales increase was
due primarily to DTH satellite systems and services. The audio and video
category also benefited from increased sales of RCA-branded DVDs, VCRs, home
theater products and other digital equipment.
Sales in the communications category increased approximately 6% during the
quarter ended March 31, 2001, compared to the same period last year. This sales
increase was due primarily to increases in both unit and dollar sales of
wireless telephones. We expect unit and dollar sales of wireless products to
increase for the fiscal year 2001, though to a lesser extent than last year.
Sales in the personal computers and peripherals category increased approximately
16% during the first quarter of 2001, compared to the first quarter of 2000,
despite an 8% decrease in the average selling price of CPUs for the same period.
Our increased sales in CPUs and monitors, as well as an increase in sales of
handheld pocket PCs and Internet devices, contributed to our first quarter sales
increase.
Sales in the parts, accessories and specialty equipment category increased
approximately 8% during the three months ended March 31, 2001, compared to the
same period in the prior year. This increase was due primarily to increased
sales of video cables and accessories, batteries and, to a lesser extent, DC
adapters and computer accessories and supplies.
Sales in the personal electronics category increased slightly during the first
quarter of 2001, compared to the first quarter of 2000.
Our services and other category, which includes residuals and income from
prepaid wireless airtime, repair services and extended service contracts,
increased approximately 6% in the first quarter of 2001. Increases in residual
income, primarily from wireless service providers, were partially offset by a
decrease in sales of prepaid wireless airtime.
RadioShack Retail Outlets
March 31, December 31, September 30, June 30, March 31,
2001 2000 2000 2000 2000
-------- -------- -------- -------- --------
Company-owned 5,099 5,109 5,082 5,060 5,052
Dealer/Franchise 2,067 2,090 2,092 2,073 2,091
-------- -------- -------- -------- --------
Total number of retail outlets 7,166 7,199 7,174 7,133 7,143
======== ======== ======== ======== ========
Gross Profit
For the three months ended March 31, 2001, gross profit dollars increased 5.9%,
but decreased 1.3 percentage points, to 48.0% of net sales and operating
revenues, compared to 49.3% for the corresponding 2000 period. This percentage
point decrease was due primarily to increased margin pressures associated with
sales of DTH satellite systems and services and the markdowns taken on computers
as we introduced new models. In addition, both the audio/video and personal
computer categories increased as a percent of sales, further impacting our gross
profit percentage decline. The gross profit percent decreases in the audio and
video category and in the personal computer category were partially offset by
increased residuals, which have 100% gross margin, as well as by an increase in
the gross profit percentage for the parts and accessories category. We
anticipate that gross profit as a percentage of net sales and operating revenues
will continue to decrease slightly during the remainder of 2001, when compared
to the prior year, due to the sales mix described above.
Selling, General and Administrative Expense
For the first quarter of 2001, our SG&A expense in dollars increased 8.3% or
$31.2 million, when compared to the first quarter of 2000. However, SG&A expense
as a percentage of net sales and operating revenues decreased slightly when
compared to the quarter ended March 31, 2000. This decrease was primarily due to
increased comparable store sales in the first quarter of 2001, which had a
positive effect on our overall expense rate structure.
For the three months ended March 31, 2001, advertising expense increased in both
dollars and as a percentage of net sales when compared to the same period in the
prior year. This was due primarily to a shift from print to broadcast media.
Rent expense increased in dollars for the quarter ended March 31, 2001, but
remained at the same percentage of net sales as the March 2000 quarter. The
dollar increase was due to 47 new store openings, lease renewals at slightly
higher rates and, to a lesser extent, an increase in the average size of our
stores. Salary expense increased in dollars during the first quarter of 2001,
because of retail store expansions and increases in commission, bonuses and
other incentives resulting from comparable store sales and profits. However,
salary expense decreased as a percentage of net sales and operating revenues
during the same period, due to the positive leverage achieved from increased
sales.
Net Interest Expense
Interest expense, net of interest income, for the three months ended March 31,
2001 was $8.6 million versus $4.9 million for the first three months in 2000.
Interest expense increased $3.5 million due to our higher average debt
outstanding during the first quarter of 2001, when compared to the first quarter
of 2000. Interest income decreased slightly for the three months ended March 31,
2001, compared to the prior year period. We expect interest expense, net of
interest income, to decrease slightly during the remainder of 2001, when
compared to the prior year due to an anticipated decrease in overall debt
levels.
Provision for Loss on Internet-Related Investment
During the second quarter of 2000, we made a $30.0 million investment in
Digital:Convergence Corporation, a privately-held Internet technology company.
We believe that our investment has experienced a decline in value that, in our
opinion, is other than temporary. This belief is due to the uncertainty
surrounding Digital:Convergence's ability to secure sufficient additional
funding or to complete an IPO. As such, in the first quarter of 2001 we recorded
a loss provision equal to our initial investment.
Provision for Income Taxes
Provision for income taxes for each quarterly period is based on the estimate of
the annual effective tax rate for the year, which we evaluate quarterly. The
effective tax rate for the first quarters of both 2001 and 2000 was 38.0%.
FINANCIAL CONDITION
Cash flow provided by operating activities approximated $154.5 million for the
three month period ended March 31, 2001, compared to a cash usage of $0.3
million in the prior year first quarter. This $154.8 million increase in
operating cash flow was primarily attributable to a $113.4 million decrease in
accounts receivable and a $103.3 million decrease in inventory for the first
quarter of 2001. These decreases were partially offset by a reduction in accrued
expenses and income taxes payable in the first three months of 2001.
Inventory at March 31, 2001 decreased $103.3 million or 8.9% since December 31,
2000, but increased $93.4 million or 9.7% since March 31, 2000. The decrease
since December 31, 2000 was primarily due to strong sales of wireless
telephones, computers and DTH satellite systems during the first quarter of
2001. The inventory increase since March 31, 2000 is in line with our sales
increase for the same period.
At March 31, 2001, accounts receivable decreased $112.8 million or 24.3% since
December 31, 2000, but increased $117.7 million or 50.3% since March 31, 2000.
The decrease in accounts receivable since December 31, 2000 was due primarily to
the collection of accounts receivable outstanding at year end. The increase
since March 31, 2000 resulted primarily from increased vendor and service
provider receivables related to increased sales of wireless communications and
services, DTH satellite systems and services and long distance service, as well
as rebates relating to internet access.
Cash used by investing activities for the three months ended March 31, 2001 was
$28.3 million, compared to cash provided by investing activities of $85.6
million in the previous year. Investing activities for the three months ended
March 31, 2001 included capital expenditures totaling $24.4 million, primarily
for retail expansion and upgrades of information systems. Management anticipates
that capital expenditure requirements will approximate $100.0 million to $110.0
million for the remainder of 2001, primarily to support our stores'
refurbishments as well as expansions to enhance our information systems.
Cash used by financing activities for the three months ended March 31, 2001 was
$143.0 million, compared to a $162.7 million cash usage in the previous year. We
purchased $28.2 million of treasury stock during the three months ended March
31, 2001, compared to $238.3 million during the same period of 2000. The net
decrease in short-term debt of $124.0 million since December 31, 2000 was due
primarily to collections of accounts receivable outstanding at year end.
Dividends used $11.0 million of cash for the three months ended March 31, 2001,
compared to $11.4 million in the same period of the prior year.
The net increase in short-term debt of $139.6 million since March 31, 2000 was
the result of $52.0 million of long-term debt maturing within the next twelve
months, as well as increased inventory and accounts receivable balances, when
compared to the same period of 2000. Total debt as a percentage of total
capitalization was 41.8% at March 31, 2001, compared to 47.0% at December 31,
2000 and 45.7% at March 31, 2000. Long-term debt as a percentage of total
capitalization was 15.9% at March 31, 2001, compared to 18.2% at December 31,
2000 and 24.8% at March 31, 2000.
On May 11, 2001, we issued $350,000,000 of 7 3/8% Notes due 2011. These notes
were privately offered only to qualified institutional buyers under Rule 144A.
The net proceeds from the sale of these notes was used to repay all of our
short-term debt, not including current maturities of long-term debt, and for
general corporate purposes.
During the first quarter of 2001, we repurchased 0.3 million shares of our
common stock for $9.6 million. This brought the total number of shares
repurchased since the inception of our existing 10.0 million share repurchase
program to 0.4 million shares totaling $16.2 million at March 31, 2001. In
connection with the share repurchase program, our Board of Directors has
authorized us to sell up to 4.0 million shares of our common stock, through both
equity forwards and put options, with an expiration date no later than December
31, 2002. We have sold approximately 1.5 million put options since the inception
of this program and 0.1 million put options remained outstanding at March 31,
2001.
We may continue to execute share repurchases, put options and equity forwards
from time to time in order to take advantage of attractive share price levels,
as determined by management. The timing and terms of the transactions, including
maturities, depend on market conditions, our liquidity and other considerations.
ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK.
We do not have any derivative instruments that materially increase our exposure
to market risks for interest rates, foreign currency rates, commodity prices or
other market price risks. In addition, we do not use derivatives for speculative
purposes.
Our exposure to market risks results from changes in interest rates. Interest
rate risk exists principally with respect to our short-term indebtedness, which
bears interest at floating rates. At March 31, 2001, we had $336.4 million of
indebtedness bearing interest at floating rates. If we were to assume an
unfavorable change of 100 basis points in the interest rate applicable to our
floating-rate indebtedness at March 31, 2001, we would have experienced
additional interest expense of $0.8 million for this three month period. This
assumption assumes no change in the principal or a reduction of such
indebtedness.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
We have various pending claims, lawsuits, disputes with third parties,
investigations and actions incident to the operation of our business. The
liability, if any, associated with these matters was not determinable at March
31, 2001. Although occasional adverse settlements or resolutions may occur and
negatively impact our earnings in the year of settlement, it is our opinion that
their ultimate resolution will not have a materially adverse effect on our
financial position.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a) Exhibits Required by Item 601 of Regulation S-K.
A list of the exhibits required by Item 601 of Regulation S-K and
filed as part of this report is set forth in the Index to Exhibits
on page 13, which immediately precede such exhibits.
b) Reports on Form 8-K.
On May 4, 2001, we announced a proposed note offering of
approximately $300.0 million. The Form 8-K was filed on May 4,
2001.
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.
RadioShack Corporation
(Registrant)
Date: May 11, 2001 By /s/ Richard L. Ramsey
-----------------------------
Richard L. Ramsey
Vice President and Controller
(Authorized Officer)
Date: May 11, 2001 By /s/ Loren K. Jensen
----------------------------
Loren K. Jensen
Vice President - Finance and
Acting Chief Financial Officer
(Principal Financial Officer)
RADIOSHACK CORPORATION
INDEX TO EXHIBITS
Exhibit
Number Description
3a Restated Certificate of Incorporation of RadioShack Corporation
dated July 26, 1999 (filed as Exhibit 3a(i) to RadioShack's Form
10-Q filed on August 11, 1999 for the fiscal quarter ended June
30, 1999 and incorporated herein by reference).
3a(i) Certificate of Amendment of Restated Certificate of Incorporation
dated May 18, 2000. (Filed as Exhibit 3a to RadioShack's Form
10-Q filed on August 11, 2000 for the fiscal quarter ended June
30, 2000.)
3b RadioShack Corporation Bylaws Amended and Restated as of July 22,
2000. (Filed as Exhibit 3b to RadioShack's Form 10-Q filed on
August 11, 2000 for the fiscal quarter ended June 30, 2000.)
11* Statement of Computation of Ratios of Earnings to Fixed Charges.
- ----------------------------
* filed with this report
EXHIBIT 11
RADIOSHACK CORPORATION
STATEMENT OF COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
AND RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS
Three Months Ended
March 31,
--------------------
(In millions, except ratios) 2001 2000
- --------------------------- -------- --------
Ratio of Earnings to Fixed Charges:
Net income $ 46.5 $ 69.7
Plus provision for income taxes 28.5 42.7
-------- --------
Income before income taxes 75.0 112.4
-------- --------
Fixed charges:
Interest expense and amortization, including debt discount 13.0 9.5
Amortization of issuance expense 0.2 0.2
Appropriate portion (33 1/3%) of rentals 18.8 17.6
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Total fixed charges 32.0 27.3
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Earnings before income taxes and fixed charges $ 107.0 $ 139.7
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Ratio of earnings to fixed charges 3.34 5.12
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Ratio of Earnings to Fixed Charges and Preferred Dividends:
Total fixed charges, as above $ 32.0 $ 27.3
Preferred dividends 1.3 1.4
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Total fixed charges and preferred dividends $ 33.3 $ 28.7
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Earnings before income taxes and fixed charges $ 107.0 $ 139.7
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Ratio of earnings to fixed charges and preferred dividends 3.21 4.87
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