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 December 31, 1997 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 1-10062
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InterTAN, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 75-2130875
- ------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
201 Main Street, Suite 1805
Fort Worth, Texas 76102
- ---------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (817) 348-9701
-------------------
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
--- ---
At January 31, 1998, 12,196,013 shares of the registrant's common stock, par
value $1.00 per share, were outstanding.
TABLE OF CONTENTS
PART I
PAGE
1. ITEM 1 - Financial Statements and Supplementary Data
Consolidated Statements of Operations 3
Consolidated Balance Sheets 4
Consolidated Statements of Cash Flows 5
Consolidated Statements of Stockholders' Equity 6
2. ITEM 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II
1. ITEM 1 - Legal Proceedings 21
2. ITEM 4 - Submission of Matters to a Vote of Security Holders 21
3. ITEM 6 - Exhibits and Reports on Form 8-K 21
OTHER
1. Signatures 24
2
CONSOLIDATED STATEMENTS OF OPERATIONS
INTERTAN, INC.
- --------------------------------------------------------------------------------
(In thousands, except per share data)
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31 DECEMBER 31
---------------------- ----------------------
1997 1996 1997 1996
--------- --------- --------- ---------
Net sales and operating revenues ..... $ 192,559 $ 190,934 $ 314,268 $ 303,221
Other income ......................... 259 115 351 256
--------- --------- --------- ---------
192,818 191,049 314,619 303,477
--------- --------- --------- ---------
Operating costs and expenses:
Cost of products sold ............. 110,586 108,976 178,405 170,533
Selling, general and administrative
expenses ........................ 62,701 64,895 114,061 115,742
Depreciation and amortization ..... 1,873 2,379 3,792 4,596
--------- --------- --------- ---------
175,160 176,250 296,258 290,871
--------- --------- --------- ---------
Operating income ..................... 17,658 14,799 18,361 12,606
Foreign currency transaction gains ... (658) (731) (738) (926)
Interest expense, net ................ 1,893 1,908 3,536 3,505
--------- --------- --------- ---------
Income before income taxes ........... 16,423 13,622 15,563 10,027
Provision for income taxes ........... 5,076 4,145 7,125 5,157
--------- --------- --------- ---------
Net income ........................... $ 11,347 $ 9,477 $ 8,438 $ 4,870
========= ========= ========= =========
Basic net income per
average common share ............ $ 0.94 $ 0.83 $ 0.70 $ 0.43
Diluted net income per
average common share ............ $ 0.55 $ 0.50 $ 0.46 $ 0.33
Average common shares outstanding .... 12,024 11,366 11,995 11,298
Average common shares outstanding
assuming dilution ............... 19,814 20,317 19,780 20,249
The comments in Management's Discussion and Analysis of Financial Condition and
Results of Operations are an integral part of these statements.
3
CONSOLIDATED BALANCE SHEETS
INTERTAN, INC.
- -------------------------------------------------------------------------------------------------------------------------------
(In thousands, except share data)
DECEMBER 31 JUNE 30 DECEMBER 31
1997 1997 1996
-------------------------------------------------------------
ASSETS
Current Assets:
Cash and short-term investments........................ $ 26,025 $ 34,726 $ 53,302
Accounts receivable, less allowance for doubtful
accounts.......................................... 16,742 9,655 14,721
Inventories............................................ 169,512 170,594 185,292
Other current assets................................... 9,126 7,271 7,550
Deferred income taxes.................................. - 634 1,459
-------------------------------------------------------------
Total current assets............................... 221,405 222,880 262,324
Property and equipment, less accumulated
depreciation and amortization......................... 26,777 28,812 40,899
Other assets............................................... 1,172 2,615 2,767
-------------------------------------------------------------
$ 249,354 $ 254,307 $ 305,990
=============================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Short-term bank borrowings............................. $ 966 $ 9,821 $ 2,569
Current maturities of notes payable to Tandy
Corporation....................................... - 6,958 6,958
Accounts payable....................................... 38,785 25,215 44,943
Accounts payable to Tandy Corporation.................. 836 2,589 593
Accrued expenses....................................... 37,255 27,031 40,854
Income taxes payable................................... 18,226 12,734 12,402
-------------------------------------------------------------
Total current liabilities......................... 96,068 84,348 108,319
Long-term notes payable to Tandy Corporation,
less current maturities............................... - 16,420 19,745
9% convertible subordinated debentures..................... 39,723 41,138 41,456
Other liabilities.......................................... 6,152 6,167 6,329
-------------------------------------------------------------
141,943 148,073 175,849
-------------------------------------------------------------
Stockholders' Equity:
Preferred stock, no par value, 1,000,000 shares
authorized, none issued or outstanding............ - - -
Common stock, $1 par value, 40,000,000 shares
authorized, 12,130,270, 11,873,437 and
11,429,187 issued and outstanding................. 12,130 11,873 11,429
Additional paid-in capital............................. 114,429 114,350 112,959
Retained earnings...................................... 10,961 2,523 24,002
Foreign currency translation effects................... (30,109) (22,512) (18,249)
-------------------------------------------------------------
Total stockholders' equity........................ 107,411 106,234 130,141
-------------------------------------------------------------
Commitments and contingent liabilities.....................
$ 249,354 $ 254,307 $ 305,990
=============================================================
The comments in Management's Discussion and Analysis of Financial Condition and
Results of Operations are an integral part of these statements.
4
CONSOLIDATED STATEMENTS OF CASH FLOWS
INTERTAN, INC.
- -------------------------------------------------------------------------------------------------------------------------
(In thousands) SIX MONTHS ENDED
DECEMBER 31
-----------------------------------
1997 1996
-----------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.......................................................... $ 8,438 $ 4,870
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation and amortization................................... 3,792 4,596
Deferred income taxes........................................... 594 4,773
Foreign currency transaction gains, unrealized.................. (1,397) (855)
Other........................................................... 1,071 1,336
Cash provided by (used for) current assets and liabilities:
Accounts receivable............................................. (7,680) (4,929)
Inventories..................................................... (6,975) (17,351)
Other current assets............................................ (2,622) 307
Accounts payable................................................ 14,691 18,587
Accounts payable to Tandy Corporation........................... (1,669) (316)
Accrued expenses................................................ 11,671 14,703
Income taxes payable............................................ 6,065 (505)
-----------------------------------
Net cash provided by operating activities....................... 25,979 25,216
-----------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment.................................. (3,279) (5,736)
Proceeds from sales of property and equipment........................ 28 54
Other investing activities........................................... 2,091 769
-----------------------------------
Net cash used in investing activities.............................. (1,160) (4,913)
-----------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Changes in short-term bank borrowings, net........................... (8,768) 1,407
Proceeds from issuance of common stock to employee plans............. 725 885
Principal repayments on long-term borrowings......................... (24,353) (3,487)
-----------------------------------
Net cash used in financing activities.............................. (32,396) (1,195)
-----------------------------------
Effect of exchange rate changes on cash................................ (1,124) 98
-----------------------------------
Net increase (decrease) in cash and short-term investments............. (8,701) 19,206
Cash and short-term investments, beginning of period................... 34,726 34,096
-----------------------------------
Cash and short-term investments, end of period......................... $ 26,025 $ 53,302
===================================
The comments in Management's Discussion and Analysis of Financial Condition and
Results of Operations are an integral part of these statements.
5
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
INTERTAN, INC.
- ------------------------------------------------------------------------------------------------------------------------------------
(In thousands)
Foreign
Currency Total
Common Stock Additional Retained Translation Stockholders'
Shares Amount Paid-in Capital Earnings Effects Equity
---------------------------------------------------------------------------------------------
Balance at June 30, 1997............ 11,873 $ 11,873 $ 114,350 $ 2,523 $ (22,512) $ 106,234
Net foreign currency
translation adjustments.......... - - - - (7,597) (7,597)
Issuance of common stock
to employee plans................ 257 257 977 - - 1,234
Retirement of warrants held by
Tandy Corporation.............. - - (898) - - (898)
Net income.......................... - - - 8,438 - 8,438
---------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1997 12,130 $ 12,130 $ 114,429 $ 10,961 $ (30,109) $ 107,411
=============================================================================================
The comments in Management's Discussion and Analysis of Financial Condition and
Results of Operations are an integral part of these statements.
6
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
INTRODUCTORY NOTE REGARDING FORWARD-LOOKING INFORMATION
-------------------------------------------------------
With the exception of historical information, the matters discussed herein are
forward-looking statements about the business, financial condition and prospects
of InterTAN, Inc. (the "Company" or "InterTAN"). The actual results of the
Company could differ materially from those indicated by the forward-looking
statements because of various risks and uncertainties including, but not limited
to, international economic conditions, interest and foreign exchange rate
fluctuations, various tax issues, including possible reassessments, changes in
product demand, competitive products and pricing, availability of products,
inventory risks due to shifts in market conditions, dependence on manufacturers'
product development, the regulatory and trade environment, real estate market
fluctuations and other risks indicated in the Company's previous filings with
the Securities and Exchange Commission. These risks and uncertainties are beyond
the ability of the Company to control, and in many cases the Company cannot
predict the risks and uncertainties that could cause its actual results to
differ materially from those indicated by the forward-looking statements.
RESULTS OF OPERATIONS
---------------------
InterTAN is engaged in the sale of consumer electronics products primarily
through company-operated retail stores and dealer outlets in Canada, the United
Kingdom and Australia. The Company's retail operations are conducted through
three wholly-owned subsidiaries: InterTAN Australia Ltd., which operates in
Australia under the trade name "Tandy Electronics"; InterTAN Canada Ltd., which
operates in Canada under the trade name "RadioShack"; and InterTAN U.K. Limited,
which operates in the United Kingdom under the "Tandy" trade name. All of these
trade names are used under exclusive license from Tandy Corporation ("Tandy") of
Fort Worth, Texas. In addition, during fiscal year 1996, the Company entered
into an agreement in Canada with Rogers Cantel Inc. ("Cantel") to operate
telecommunications stores ("Cantel stores") on its behalf. The first of these
stores was opened in August, 1996 and at December 31, 1997, 55 stores were in
operation.
The number of company-operated stores and dealers at December 31, 1997 and 1996,
as well as the number of locations opened and closed during the three-month
periods then ended, is presented in the following table:
7
SALES OUTLETS
THREE MONTHS ENDED THREE MONTHS ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
------------------------------------- --------------------------------------
ENDING OPENED CLOSED ENDING OPENED CLOSED
CANADA
Company-operated 461* 12 1 455* 2 1
Dealers 386 1 8 426 20 4
------------------------------------- --------------------------------------
847 13 9 881 22 5
===================================== ======================================
AUSTRALIA
Company-operated 217 - - 213 3 -
Dealers 142 2 - 210 6 2
------------------------------------- --------------------------------------
359 2 - 423 9 2
===================================== ======================================
UNITED KINGDOM
Company-operated 338 - 1 351 6 1
Dealers 130 3 1 175 3 1
------------------------------------- --------------------------------------
468 3 2 526 9 2
===================================== ======================================
TOTAL
Company-operated 1,016 12 2 1,019 11 2
Dealers 658 6 9 811 29 7
------------------------------------- --------------------------------------
1,674 18 11 1,830 40 9
===================================== ======================================
*In addition, at December 31, 1997 and December 31, 1996, the Company operated
55 and 46 stores, respectively, on behalf of Cantel. Since these locations are
not company-owned, they are not included in the above table.
As described under "Recently Announced United Kingdom Restructuring Plan", the
Company will close 69 under-performing stores in the United Kingdom. The impact
of the closure of these stores is not reflected in the above table.
OPERATING INCOME
The Company's operating income (loss) for each geographic segment for the three
and six-month periods ended December 31, 1997 and 1996 is presented in the
following table (in thousands):
OPERATING INCOME (LOSS)
-----------------------
UNITED CORPORATE
CANADA AUSTRALIA KINGDOM EXPENSES TOTAL
------ --------- ------- -------- -----
Three months ended
December 31, 1997 $ 11,331 $ 2,881 $ 4,428 $ (982) $ 17,658
Three months ended
December 31, 1996 $ 10,297 $ 2,778 $ 2,749 $ (1,025) $ 14,799
Six months ended
December 31, 1997 $ 16,286 $ 3,709 $ 574 $ (2,208) $ 18,361
Six months ended
December 31, 1996 $ 13,037 $ 3,367 $ (1,749) $ (2,049) $ 12,606
8
The improvement in operating results in all three countries was due to a
combination of higher sales and an improvement in the operating margin. In the
United Kingdom, part of the operating margin improvement resulted from lower
depreciation expense arising from the effects of an impairment charge recorded
pursuant to Financial Accounting Standard No. 121 ("FAS 121") during the fourth
quarter of fiscal year 1997.
The Canadian and Australian dollars were weaker against the U.S. dollar during
both the second quarter and the first six months of fiscal year 1998 than in the
same periods a year ago. Consequently, the local currency operating incomes in
those countries translate into fewer U.S. dollars. At the same time, the United
Kingdom pound sterling was stronger against the U.S. dollar, resulting in the
operating income (loss) in local currency in that country translating into more
U.S. dollars. Had last year's operating results been translated into U.S.
dollars at this year's exchange rates, the consolidated improvement in operating
results for the three and six months ended December 31, 1997 would have been
increased by an additional $922,000 and $1,201,000, respectively.
RECENTLY ANNOUNCED UNITED KINGDOM RESTRUCTURING PLAN
As part of its on-going efforts to improve the financial performance of its
United Kingdom operation, the Company recently carried out a review of the
performance of all of its U.K. stores. Consequently, in January, 1998 a plan to
close 69 consistently under-performing stores was approved. Most of these stores
have already closed. Several stores will remain open as inventory clearance
centers until early in the fourth quarter. As a consequence of this
restructuring plan, the Company will record a charge to operating income in the
third quarter of fiscal year 1998 of $13 to 16 million, at current exchange
rates, representing primarily lease disposal, employee severance and inventory
clearance costs.
NET SALES
Net sales for the quarter ended December 31, 1997 were $192,559,000, an increase
of 0.9% over the sales for the same quarter in the prior year of $190,934,000.
When the impact of fluctuations in the value of the U.S. dollar in relation to
the currencies of the countries in which the Company operates is removed, the
sales gain over the same quarter last year increases to 5.3%. Comparative store
sales, measured at the same exchange rate, increased by 4.1% from the same
quarter in the prior year. Year to date, sales have increased by 3.6% and 6.7%
in U.S. dollars and local currency, respectively. Comparative store sales for
the six months ended December 31, 1997 have increased 4.6% over the same period
a year ago.
The table which follows shows by country the percentage changes in net sales for
the quarter and six months ended December 31, 1997 compared to the corresponding
period in the prior year. Changes are presented in both U.S. dollars and local
currencies to illustrate the effects of exchange rate fluctuations. The change
in comparative store sales, measured at the same exchange rates, is also shown:
9
NET SALES
---------
PERCENTAGE INCREASE (DECREASE)
------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, 1997 DECEMBER 31, 1997
LOCAL COMPARATIVE LOCAL COMPARATIVE
US$ CURRENCY STORE US$ CURRENCY STORE
--------------------------- ------------------------------
Canada 2.2 % 6.8 % 4.1 % 7.0 % 10.5 % 6.5 %
Australia (7.8)% 7.1 % 3.7 % (5.4)% 6.2 % 3.2 %
United Kingdom 3.3 % 2.3 % 4.2 % 3.8 % 1.5 % 2.8 %
-----------------------------------------------------------
Consolidated 0.9 % 5.3 % 4.1 % 3.6 % 6.7 % 4.6 %
Increased cellular revenue was the major factor contributing to Canada's second
quarter local currency sales gain. The introduction of PCS/digital technology
continues to create demand for these products. RadioShack Canada experienced an
increase in the number of units sold of over 28%, with most of this increase
arising in the 55 company-operated Cantel stores. Sales of government-approved
direct to home satellite dishes, which were introduced into Canadian stores for
the first time late in fiscal 1997, made a contribution to revenue growth for
the quarter. The sale of batteries as well as portable CD players and toys were
also important contributors to the Canadian sales performance. Although the
number of computers sold increased over a year ago, this improvement was offset
by the effects of significantly reduced pricing.
Sales growth at Tandy Electronics Australia also continued during the second
quarter. As has been the case in recent quarters, this growth has come from a
number of categories, including telephony. The Company has been emphasizing this
category in all its markets as a second "anchor" to the ever-important parts and
accessories category. This program has been particularly successful in
Australia. Increased sales of fax machines, small screen TV's and portable CD
players also contributed to positive Australian sales performance. Sales of
cellular phones declined, reflecting lower pricing and possible early signs of
market saturation. Cellular phones have now reached 30% market penetration in
Australia - the second highest in the world. Lower pricing also affected
computer sales; however, the effect of this price deflation was partially offset
in the computer category by increases in the sale of printers and accessories.
In the United Kingdom, this was another difficult Christmas for consumer
electronics retailers, particularly in the downtown or so-called "High Street"
market in which InterTAN operates. Of the Company's major competitors in the
U.K., one reported a Christmas season comparative store sales decline, while
another posted a very small gain. Against this background, the Company's United
Kingdom subsidiary achieved positive comparative store sales gains in all three
months of the quarter. A major contributor to the United Kingdom sales
improvement during the Christmas period was a significant increase in the volume
of cellular phone sales. An attractively priced product assortment, combined
with a pre-paid air time package, continues to attract the consumer's interest.
InterTAN U.K. moved these products in record volumes over Christmas, despite
vendor supply shortages in the market place as a whole.
The stores to be closed under the United Kingdom restructuring plan accounted
for approximately 5% of consolidated sales during fiscal year 1997. While
management anticipates that a portion of the sales from these stores will be
transferred to continuing units, there can be
10
no assurance that this will occur, nor is it practical to estimate the impact
that the closure of these stores will have on future sales.
GROSS MARGIN AND COST OF PRODUCTS SOLD
The gross margin percentage for the quarter was 42.6%, down 30 basis points from
42.9% a year ago. Australia, which showed a margin improvement of 30 basis
points, had the only increase. The increase of cellular in the sales mix in
Canada, in particular in the company-operated Cantel stores, was an important
factor in a Canadian margin decline of 20 basis points. In addition, two new
carriers have entered the cellular market in Canada. Both have adopted very
aggressive pricing strategies in an attempt to build market share quickly. The
traditional carriers, including Cantel, have responded to this pricing pressure,
with the result that margins have suffered. The gross margin percentage declined
in the U.K. by 70 basis points. However, this reduction was more than
attributable to a change in the supplier and the method of distribution of
computers, which resulted in computer sales being reported at full retail value
this year. In the prior year, only a sales commission was earned.
The portion of the restructuring provision to be recorded in the United Kingdom
in the third quarter relating to inventory clearance costs, which is estimated
to be $1.5 to $2.5 million, at current exchange rates, will be charged to cost
of products sold. Except for the initial effects of this charge, the store
closure program in the U.K. is not expected to have a material effect on the
gross margin percentage in future periods.
The effect of a lower gross margin percentage, combined with the effect of
overall weaker currencies, was offset by the positive impact of increased sales.
Overall, gross margin dollars for the quarter were substantially even with the
prior year, showing an increase of $15,000:
Decrease in margin percentage $ (543,000)
Increase in sales 4,134,000
Foreign exchange rate effects (3,576,000)
-----------
$ 15,000
===========
Year to date, the gross margin percentage is 60 basis points below the prior
year.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative ("SG&A") expenses for the quarter in U.S.
dollars decreased to $62,701,000 from $64,895,000 a year ago, a reduction of
$2,194,000. Year to date, SG&A expenses have decreased from $115,742,000 for the
six months ended December 31, 1996 to $114,061,000, a decrease of $1,681,000 or
1.5%. These reductions are more than attributable to foreign currency rate
effects. When the effects of generally weaker currencies are eliminated, an
increase in SG&A spending, measured at the same exchange rates, of less than 1%
results for both periods. This control in the rate of increase in SG&A spending
is reflective of steps taken by management in prior periods to monitor and
control these costs. Consequently, the SG&A
11
percentage for the quarter declined by 1.4 percentage points from the prior year
level to 32.6% of sales, with all three countries showing improvement.
The restructuring plan being implemented in the United Kingdom will have a
direct bearing on SG&A expenses in future periods as the costs of operating the
stores identified for closure are removed from the business.
The following table provides a breakdown of SG&A expenses by major category
(percentages shown are as a rate to sales):
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
--------------------------------------------
(In thousands, except percents)
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31 DECEMBER 31
1997 1996 1997 1996
------------------------------ -------------------------------
AMOUNT PCT. AMOUNT PCT. AMOUNT PCT. AMOUNT PCT.
------------------------------ -------------------------------
Advertising $ 9,461 4.9 $10,397 5.4 $ 14,994 4.8 $ 16,856 5.6
Rent 11,205 5.8 11,329 5.9 21,883 7.0 21,803 7.2
Payroll 25,885 13.4 26,340 13.8 47,063 15.0 46,959 15.5
Taxes
(other than
income taxes) 5,250 2.7 5,148 2.7 9,552 3.0 9,378 3.1
Telephone &
utilities 1,763 0.9 1,946 1.0 3,562 1.1 3,720 1.2
Other 9,137 4.9 9,735 5.2 17,007 5.4 17,026 5.6
------------------------------ -------------------------------
Total $62,701 32.6 $64,895 34.0 $114,061 36.3 $115,742 38.2
============================== ===============================
NET INTEREST EXPENSE
Net interest expense was $1,893,000 for the three months ended December 31, 1997
compared with $1,908,000 for the same quarter last year. Net interest expense
for the six months ended December 31, 1997 of $3,536,000 was $31,000 lower than
in the same period last fiscal year. These decreases reflect the effects of a
reduction in a long-term loan (the "Series A Note") owing under a loan agreement
with Tandy (the "Secured Loan Agreement"), partially offset by the effects of
higher short-term borrowings in the United Kingdom. On December 30, 1997, the
Series A Note was repaid in full and any remaining unamortized costs associated
with this debt were expensed. The Series A Note, together with the Company's
then existing revolving credit arrangements, were replaced by a three-year
revolving facility with a new syndicate of three lenders. Management believes
that replacing the Company's fixed term financing with a revolving credit
facility better reflects the seasonal borrowing needs of its retail business.
Additionally, the amortization of costs associated with the Company's new credit
facility will be lower than under prior credit arrangements. Consequently,
management anticipates that net interest expense will be lower in future periods
than has been the Company's recent experience.
12
PROVISION FOR INCOME TAXES
A net income tax provision of $5,076,000 was recorded during the quarter
compared with a provision of $4,145,000 a year ago. For the six months ended
December 31, 1997, income tax expense of $7,125,000 was recorded compared to
$5,157,000 in the first six months of the prior year. These increases primarily
reflect higher profits in Canada and Australia, offset partially by the
recognition of tax benefits associated with the loss carry forwards and other
deferred tax assets in Australia. No credit is currently available for the tax
losses being generated in the United Kingdom.
NET INCOME PER AVERAGE COMMON SHARE
In February 1997, the Financial Accounting Standards Board issued Financial
Accounting Standard No. 128, "Earnings per Share" ("FAS 128"), which is
effective for financial statements issued for periods ending after December 15,
1997, including interim periods. Effective December 31, 1997, the Company
adopted FAS 128, which established new standards for computing and presenting
earnings per share ("EPS"). The statement requires dual presentation of basic
and diluted EPS on the face of the income statement for entities with complex
capital structures and requires a reconciliation of the numerator and
denominator of the basic EPS computation to the numerator and denominator of the
diluted EPS computation. Basic EPS excludes the effect of potentially dilutive
securities while diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised, converted,
or resulted in the issuance of common stock that would then share in the
earnings of the entity. In accordance with FAS 128, EPS amounts for the prior
period have been restated.
Basic and diluted net income per average common share were $0.94 and $0.55,
respectively, for the three-month period ended December 31, 1997, as compared to
$0.83 and $0.50 for the same quarter in the prior year. For the six-month period
ended December 31, 1997, basic and diluted net income per average common share
were $0.70 and $0.46, respectively, compared to $0.43 and $0.33, respectively,
for the same period a year ago. A reconciliation of the numerator and
denominator of the basic EPS computation to the numerator and denominator of the
diluted EPS computation is set out below:
13
(In thousands, except for per THREE MONTHS ENDED
share data)
DECEMBER 31, 1997 DECEMBER 31, 1996
--------------------------------------------- ----------------------------------------------
Income Shares Per Share Income Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
------------ -------------- ------------ ------------ -------------- ------------
Net Income $ 11,347 $ 9,477
============ ============
BASIC EPS
Income available to
common stockholders $ 11,347 12,024 $ 0.94 $ 9,477 11,366 $ 0.83
============ ============
EFFECT OF DILUTIVE
SECURITIES
9% convertible debentures* (451) 7,779 782 8,951
Stock options - 11 - -
------------ -------------- ------------ --------------
DILUTED EPS
Income available to common
stockholders including
assumed conversions $ 10,896 19,814 $ 0.55 $ 10,259 20,317 $ 0.50
============ ============== ============ ============ ============== ============
(In thousands, except for per SIX MONTHS ENDED
share data)
DECEMBER 31, 1997 DECEMBER 31, 1996
--------------------------------------------- ----------------------------------------------
Income Shares Per Share Income Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
------------ -------------- ------------ ------------ -------------- ------------
Net Income $ 8,438 $ 4,870
============ ============
BASIC EPS
Income available to
common stockholders $ 8,438 11,995 $ 0.70 $ 4,870 11,298 $ 0.43
============ ============
EFFECT OF DILUTIVE
SECURITIES
9% convertible debentures * 731 7,779 1,861 8,951
Stock options - 6 - -
------------ -------------- ------------ --------------
DILUTED EPS
Income available to common
stockholders including
assumed conversions $ 9,169 19,780 $ 0.46 $ 6,731 20,249 $ 0.33
============ ============== ============ ============ ============== ============
* The income adjustments relating to the 9% convertible debentures include
interest expense, amortization of financing costs and foreign currency
transaction gains and losses.
The adjustments to shares in the computation of diluted EPS for the three
and six-month periods ended December 31, 1997 relate to options to
purchase 244,000 shares held by directors and employees of the Company at
prices ranging from $3.50 to $5.50 per share. In addition, at December
31, 1997, directors and employees of the Company and its subsidiaries
held options to
14
purchase 731,000 shares, at prices ranging from $6.00 to $8.1875 per share. At
December 31, 1996, 718,000 employee and director options were outstanding at
prices ranging from $5.31 to $8.1875. These options were not included in the
computation of diluted EPS because the options' exercise price was more than the
average price of the Company's common stock during the respective periods.
FINANCIAL CONDITION
-------------------
Most balance sheet accounts are translated from their values in local currency
to U.S. dollars at the respective month end rates. The table below outlines the
percentage change, to December 31, 1997, in exchange rates as measured against
the U.S. dollar:
FOREIGN EXCHANGE RATE FLUCTUATIONS
----------------------------------
% INCREASE % INCREASE
(DECREASE) (DECREASE)
FROM DECEMBER 31, 1996 FROM JUNE 30, 1997
---------------------- ------------------
Canada (4.2) (3.4)
Australia (18.2) (13.7)
United Kingdom (3.6) (0.8)
ACCOUNTS RECEIVABLE
Accounts receivable were $16,742,000 at December 31, 1997 compared with
$9,655,000 and $14,721,000 at June 30, 1997 and December 31, 1996, respectively.
Increases in the level of cellular phone sales, partially offset by the effects
of weaker foreign currencies contributed to both of these increases. Seasonal
increases in dealer receivables also contributed to the increase from June 30,
1997.
INVENTORIES
Inventories at December 31, 1997 were $169,512,000 compared to $170,594,000 and
$185,292,000 at June 30 ,1997 and December 31, 1996 respectively. The decrease
from the June 30, 1997 level is more than explained by foreign currency rate
effects. Measured at the same exchange rates, inventories increased by
approximately 4% to December 31, 1997. Most of this increase results from lower
than anticipated sales in the United Kingdom, as well as the fact that the
inventory of computers in that country was unusually low at June 30, 1997.
Weaker foreign currencies also explains approximately 80% of the reduction in
inventories from December 31, 1996. The balance of the reduction is more than
attributable to steps taken by management to more closely control the level of
inventories in the United Kingdom.
PROPERTY AND EQUIPMENT
Property and equipment, less accumulated depreciation and amortization, totaled
$26,777,000 at December 31, 1997, compared with $40,899,000 at December 31,
1996, a reduction of $14,122,000. This decrease relates primarily to an
impairment charge of $10,042,000 recorded
15
pursuant to FAS 121 in the fourth quarter of fiscal 1997. This charge reduced
the carrying value of the Company's investment in store assets in the United
Kingdom to their estimated fair value. The balance of the reduction relates to
foreign currency effects and depreciation expense, partially offset by planned
additions. Foreign currency effects and depreciation expense, partially offset
by planned additions, primarily on store refits and improvements, also explain
the reduction in property and equipment from the June 30, 1997 level of
$28,812,000.
ACCOUNTS PAYABLE
The level of accounts payable has increased from $25,215,000 at June 30, 1997 to
$38,785,000 at December 31, 1997, primarily as a result of seasonal inventory
purchases. At December 31, 1997, accounts payable were $6,158,000 lower than at
December 31, 1996. This decrease in accounts payable results primarily from the
reduction in the level of inventories and from foreign currency rate effects.
ACCRUED EXPENSES
Accrued expenses have increased from $27,031,000 at June 30, 1997 to $37,255,000
at December 31, 1997. This increase primarily results from seasonal increases in
sales related accruals, including commissions, bonuses and sales taxes. Accrued
expenses were $3,599,000 lower at December 31, 1997 than a year ago. This
reduction results principally from foreign currency rate effects.
INCOME TAXES PAYABLE
Income taxes payable were $18,266,000 at December 31, 1997, up from $12,734,000
at June 30, 1997. This increase is reflective of the fact that available tax
loss carryforwards have now been fully utilized in both Canada and Australia and
the Company will be in a tax paying position in both of those countries for
fiscal 1998. Income taxes payable at December 31, 1996 were $12,402,000.
An audit of the Canadian income tax returns of the Canadian subsidiary for the
1987 to 1989 taxation years was completed during fiscal year 1994, resulting in
additional tax being levied against the Canadian subsidiary. The Company has
appealed these reassessments and, pending the outcome of these matters, the
Company, by Canadian law, was required to pay one-half of the tax in dispute.
The tax levied by Revenue Canada in reassessing those years was offset by
refunds arising from the carry-back of losses incurred in subsequent years.
Depending on the ultimate resolution of these issues, the Company could
potentially have an additional liability in the range of $0 to $11,600,000. The
Company believes it has meritorious arguments in defense of the issues raised by
Revenue Canada and it is in the process of vigorously defending its position. It
is management's determination that no additional provision need be recorded for
these reassessments. In order for the Company to succeed in appealing certain
aspects of these reassessments, it must succeed in defending the possible
reassessments discussed in the paragraph immediately below.
16
The Company was advised in August 1995 that Revenue Canada intended to extend
the scope of its 1987 to 1989 reassessments to raise certain issues flowing from
the spin-off of the Company from Tandy in fiscal year 1987. Management disagrees
with Revenue Canada's views on these issues and will vigorously defend the
Company's position should Revenue Canada pursue these issues. Management
believes it has meritorious arguments supporting its stance and, accordingly, no
additional provision has been recorded for these possible reassessments.
Depending on the ultimate resolution of these issues, the Company could
potentially have an additional liability in the range of $0 to $20,000,000. As
required by Canadian law, the Company would likely be required to post a deposit
of one-half of the tax in dispute, including interest, in order to appeal any
reassessment.
An audit of the Canadian income tax returns of the Canadian subsidiary for the
1990 to 1993 taxation years was commenced during the 1995 fiscal year. The
Company has been advised that Revenue Canada is challenging certain interest
deductions relating to the Canadian subsidiary's former operations in
continental Europe and is proposing to tax certain foreign exchange gains
related to such operations. Depending on the ultimate resolution of these
issues, the Company could potentially have an additional liability in the range
of $0 to $25,000,000. Assuming Revenue Canada pursues these issues, in order for
the Company to proceed with such appeals, the Company would likely be required
to post a cash deposit or letters of credit equal to one-half of the 1990-1993
tax in dispute, together with interest. Notwithstanding that the Company is
still in discussions with Revenue Canada regarding these issues, Revenue Canada
was required to issue a protective reassessment for one of the years because the
time period during which such reassessment could legally be issued was about to
expire. The amount of the reassessment, including interest, is approximately
$13,800,000. This amount relates to the 1992 taxation year only and is reflected
in the range described immediately above. The Company has appealed this
reassessment and, as indicated above, would normally be required to post a cash
deposit equal to one-half of the reassessment, pending the outcome of such
appeal. However, Revenue Canada has agreed to defer the posting of such deposit
pending the outcome of on-going discussions on this particular issue. Revenue
Canada has further agreed to accept a letter of credit in lieu of a cash deposit
should it be necessary for the Company to actively proceed with its appeal.
Management believes it has meritorious arguments in support of the deductibility
of such interest and in support of its treatment of the foreign exchange gains
and is prepared to vigorously defend its position should the Canadian tax
authorities proceed with such a challenge following the conclusion of
discussions with the Company and its advisors. Accordingly, it is management's
assessment that no provision need be recorded for these possible claims.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Operating activities generated $25,979,000 in cash during the six-month period
ended December 31, 1997 compared to $25,216,000 in the same period of the prior
year, an increase of $763,000. The seasonal increase in inventory levels used
$10,376,000 less cash than was the case in the six-month period ended December
31, 1996, when the effects of increased inventories to support a private label
merchandising strategy were felt in the United Kingdom. The deferred payment of
income tax installments also conserved an additional $6,570,000 in cash. The
benefits of the additional cash generated by these changes were partially offset
by the fact that the build-up of accrued expenses conserved $3,032,000 less in
cash for the period than in the previous year. Similarly, a reduction in the
build-up of accounts payable preserved $3,896,000 less in cash
17
during the six-month period ended December 31, 1996 than was the case in the
comparable period a year ago. Higher sales of cellular phones resulted in an
increase in the accounts receivable build-up, which resulted in $2,751,000 less
cash being generated than in the six months ended December 31, 1996. Net income,
adjusted to reconcile net income to cash, generated $2,222,000 less cash than in
the first six months of the prior year.
Cash flow from investing activities consumed $1,160,000 in cash during the
six-month period ended December 31, 1997, compared to $4,913,000 a year ago.
This change results from a planned reduction in capital spending as well as the
liquidation of certain other assets.
Financing activities resulted in cash outflows of $32,396,000 and $1,195,000
during the six-month periods ended December 31, 1997 and December 31, 1996,
respectively. This increase results from the repayment of the Series A Note
payable to Tandy as well as a decrease in the level of short-term borrowings
used to finance operations in the United Kingdom.
The Company's principal sources of liquidity during fiscal year 1998 are its
cash and short-term investments, its cash flow from operations and its banking
facilities.
In 1994, InterTAN Canada Ltd., InterTAN, Inc., and InterTAN U.K. Limited entered
into a one-year credit agreement with a syndicate of banks. In December, 1997
this credit agreement was replaced with a three-year revolving facility with a
syndicate of three new lenders (the "Syndicated Loan Agreement") in an amount
not to exceed $75,000,000 in the aggregate. The amount of credit actually
available at any particular time is dependent on a variety of factors including
the level of inventories and accounts receivable of InterTAN Canada and InterTAN
U.K. Limited (the "Borrowers"). The amount of available credit is then reduced
by the amount of trade accounts payable of the Borrowers then outstanding as
well as certain other reserves. The interest rate under the credit facility is
the Canadian prime rate plus 1.0% on loans to InterTAN Canada Ltd. and the
London Inter Bank Offered Rate plus 2.5% for loans to InterTAN U.K. Limited.
Letters of credit are charged at the rate of 1.5% per annum. In addition, a
standby fee is payable on the unused portion of the credit facility. The amount
of this fee is subject to certain thresholds and ranges from 0.375% to 0.50% of
the unused credit line. The Syndicated Loan Agreement is secured by a first
priority lien over all of the assets of the Borrowers and is guaranteed by
InterTAN, Inc. This facility will be used primarily to provide letters of credit
in support of purchase orders, to finance inventory purchases and for general
corporate purposes. At December 31, 1997, the maximum credit available under the
Syndicated Loan Agreement was $40,561,000 of which $4,700,000 was committed in
support of letters of credit. There were no borrowings against the facility at
December 31, 1997. Management estimates that the costs associated with putting
this credit facility into place will approximate $600,000. These costs will be
amortized over the term of the facility, commencing in January, 1998. In
September, 1997, the Company's Merchandise Agreement with Tandy was amended to
permit the Company to support purchase orders with a surety bond or bonds as
well as letters of credit. The Company has entered into an agreement with a
major insurer to provide such a surety bond (the "Bond") in an amount not to
exceed $15,000,000. Use of the Bond will give the Company greater flexibility in
placing orders with Far Eastern suppliers by releasing a portion of the credit
available under the Syndicated Loan Agreement for other purposes.
18
In fiscal year 1997, the Company's Australian subsidiaries, InterTAN Australia
Ltd. and Technotron Sales Corp. Pty. Ltd., entered into a credit agreement with
an Australian bank (the "Australian Facility"). This agreement established a
credit facility in the amount of A$12,000,000 ($7,800,000 at December 31, 1997
exchange rates). The Australian Facility has no fixed term and may be terminated
at any time upon five days prior written notice by the lender. All or any part
of the facility may be used to provide letters of credit in support of purchase
orders. A maximum amount of A$5,000,000 ($3,250,000 at December 31, 1997
exchange rates) may be used in support of short-term borrowings. At December 31,
1997, there were no borrowings outstanding against the Australian Facility;
A$6,150,000 ($4,000,000 at December 31, 1997 exchange rates) was committed in
support of letters of credit.
In addition to the credit facilities described above, the Company's principal
sources of outside financing have been from the Series A Note payable to Tandy
and from the Company's 9% subordinated convertible debentures (the
"Debentures"). In order to obtain a release of Tandy's security interests so
that security could be given under the Syndicated Loan Agreement, the Series A
Note was repaid in full in December, 1997. In consideration of the early
repayment of this loan, warrants to purchase 1,449,007 shares of the common
stock of the Company held by Tandy were surrendered for cancellation.
The Company's primary uses of liquidity during the remainder of fiscal year 1998
will include the funding of capital expenditures and the servicing of debt. The
Company anticipates that capital additions will approximate $4,600,000 during
the remainder of fiscal year 1998, mainly related to new store openings,
remodeling and upgrading. Management estimates that the effects of the recently
announced restructuring program in the United Kingdom will be cash neutral
during the remainder of fiscal year 1998 and cash positive thereafter, as cash
inflows from inventory reductions and improved operating results are expected to
exceed remaining store closure costs. The Company's debt servicing requirements,
consisting of interest on the Debentures, in the balance of fiscal year 1998 are
estimated to be approximately $2,000,000. As previously described, the Company
believes that it may be required to post additional tax deposits or letters of
credit with Revenue Canada in order to appeal existing, and, possibly,
additional reassessments of tax. See "Income Taxes Payable."
Management believes that the Company's cash and short-term investments on hand
and its cash flow from operations combined with the Syndicated Loan Agreement,
the Australian Facility and the Bond will provide the Company with sufficient
liquidity to meet its planned requirements throughout fiscal year 1998, provided
the amount of any additional tax deposits is not at the upper end of the ranges
described above under "Income Taxes Payable." If this were the case, the Company
would be required to seek additional sources of liquidity. There can be no
assurance that additional funding would be available, if required, on terms
acceptable to the Company.
CONTINGENCIES
-------------
In the fourth quarter of fiscal year 1993, the Company recorded a pre-tax charge
of $77,400,000 in connection with the Company's plan to close its continental
European retail operations. The shutdown process is now substantially complete.
Management believes that the remaining provision is adequate to provide for the
Company's remaining obligations in Europe, including claims brought against the
Company by certain trade creditors, former employees, dealers and franchisees.
19
Apart from this matter and those described under "Income Taxes Payable", there
are no material pending legal proceedings or claims, other than routine
litigation incidental to the Company's business, to which the Company or any of
its subsidiaries is a party, or to which any of its property is subject.
BASIS OF FINANCIAL STATEMENTS
-----------------------------
The accompanying unaudited financial statements have been prepared in accordance
with Rule 10-01 of Regulation S-X, "Interim Financial Statements", and do not
include all information and footnotes required by generally accepted accounting
principles for complete financial statements. The financial statements have been
prepared in conformity with accounting principles and practices (including
consolidation practices) as reflected in the Company's Annual Report on Form
10-K for the fiscal year ended June 30, 1997, and, in the opinion of the
Company, include all adjustments necessary for fair presentation of the
Company's financial position as of December 31, 1997 and 1996 and the results of
its operations for the three and six months ended December 31, 1997 and 1996 and
its cash flows for the six months ended December 31, 1997 and 1996. Such
adjustments are of a normal and recurring nature. Operating results for the
three and six months ended December 31, 1997 are not necessarily indicative of
the results that can be expected for the fiscal year ended June 30, 1998. For
further information, refer to the consolidated financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1997.
20
PART II - OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
The various matters discussed under the heading "Contingencies" on
page 19 of this Form 10-Q are incorporated herein by reference.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's Annual Meeting of Stockholders held on November 11,
1997, the following persons were elected to the Board of Directors:
John H. McDaniel
W. Darcy McKeough
Ron G. Stegall
In such connection, Messrs. McDaniel, McKeough and Stegall received
9,193,636, 9,210,376 and 9,210,510 votes, respectively, "For" election
and 88,349, 71,609 and 71,475 votes, respectively, were withheld. In
total, 12,009,208 shares were authorized to vote.
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits Required by Item 601 of Regulation S-K:
Exhibit No. Description
3(a) Restated Certificate of Incorporation
(Filed as Exhibit 3(a) to InterTAN's
Registration Statement on Form 10 and
incorporated herein by reference).
3(a)(i) Certificate of Amendment of Restated
Certificate of Incorporation (Filed as
Exhibit 3(a)(i) to InterTAN's Annual Report
on Form 10-K for fiscal year ended June 30,
1995 and incorporated herein by reference).
3(a)(ii) Certificate of Designation, Preferences and
Rights of Series A Junior Participating
Preferred Stock (Filed as Exhibit 3(a)(i) to
InterTAN's Registration Statement on Form 10
and incorporated herein by reference).
3(b) Bylaws (Filed on Exhibit 3(b) to InterTAN's
Registration Statement on Form 10 and
incorporated herein by reference).
21
Exhibit No. Description
3(b)(i) Amendments to Bylaws through August 3, 1990
(Filed as Exhibit 3(b)(i) to InterTAN's
Annual Report on Form 10-K for fiscal year
ended June 30, 1990 and incorporated herein
by reference).
3(b)(ii) Amendments to Bylaws through May 15, 1995
(Filed as Exhibit 3(b)(ii) to InterTAN's
Annual Report on Form 10-K for fiscal year
ended June 30, 1995 and incorporated herein
by reference).
3(b)(iii) Amended and Restated Bylaws (filed as
Exhibit 3(b)(iii) to InterTAN's Annual
Report on Form 10-K for fiscal year ended
June 30, 1996 and incorporated herein by
reference).
4(a) Articles Fifth and Tenth of the Restated
Certificate of Incorporation (included in
Exhibit 3(a)).
4(b) Amended and Restated Rights Agreement
between InterTAN Inc. and The First National
Bank of Boston (Filed as Exhibit 4(b) to
InterTAN's report on Form 8-K dated
September 25, 1989 and incorporated herein
by reference).
4(c) Trust Indenture securing the issue of 9%
Convertible Subordinated Debentures due
August 30, 2000 (Filed as Exhibit 4(c) to
InterTAN's Annual Report on Form 10-K for
fiscal year ended June 30, 1993 and
incorporated herein by reference).
*10(a) Employment letter dated November 29, 1997
between InterTAN, Inc. and Brian E. Levy.
*10(b) Form of Omnibus Termination Agreement dated
December 30, 1997 between, among others,
InterTAN, Inc. and Tandy Corporation.
22
Exhibit No. Description
*10(c) Loan Agreement dated to be effective
December 22, 1997 among InterTAN, Inc., Bank
of America Canada, Bank of America N.T. &
S.A. (London England Branch Office) and
certain other Lenders as identified therein.
*27 Article 5, Financial Data Schedule.
- -----------------------
* Filed herewith
b) Reports on Form 8-K: No reports on Form 8-K were filed during the
quarter ended December 31, 1997.
23
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.
InterTAN, Inc.
(Registrant)
Date: February 12, 1998 By: /s/James T. Nichols
---------------------------------------
James T. Nichols
Chief Executive Officer
(Authorized Officer)
By: /s/Douglas C. Saunders
---------------------------------------
Douglas C. Saunders
Vice President and Corporate Controller
(Principal Accounting Officer)
24
INTERTAN, INC.
FORM 10-Q
INDEX TO EXHIBITS
Exhibit No. Description
3(a) Restated Certificate of Incorporation
(Filed as Exhibit 3(a) to InterTAN's
Registration Statement on Form 10 and
incorporated herein by reference).
3(a)(i) Certificate of Amendment of Restated
Certificate of Incorporation (Filed as
Exhibit 3(a)(i) to InterTAN's Annual Report
on Form 10-K for fiscal year ended June 30,
1995 and incorporated herein by reference).
3(a)(ii) Certificate of Designation, Preferences and
Rights of Series A Junior Participating
Preferred Stock (Filed as Exhibit 3(a)(i) to
InterTAN's Registration Statement on Form 10
and incorporated herein by reference).
3(b) Bylaws (Filed on Exhibit 3(b) to InterTAN's
Registration Statement on Form 10 and
incorporated herein by reference).
3(b)(i) Amendments to Bylaws through August 3, 1990
(Filed as Exhibit 3(b)(i) to InterTAN's
Annual Report on Form 10-K for fiscal year
ended June 30, 1990 and incorporated herein
by reference).
3(b)(ii) Amendments to Bylaws through May 15, 1995
(Filed as Exhibit 3(b)(ii) to InterTAN's
Annual Report on Form 10-K for fiscal year
ended June 30, 1995 and incorporated herein
by reference).
3(b)(iii) Amended and Restated Bylaws (filed as
Exhibit 3(b)(iii) to InterTAN's Annual
Report on Form 10-K for fiscal year ended
June 30, 1996 and incorporated herein by
reference).
Exhibit No. Description
4(a) Articles Fifth and Tenth of the Restated
Certificate of Incorporation (included in
Exhibit 3(a)).
4(b) Amended and Restated Rights Agreement
between InterTAN Inc. and The First National
Bank of Boston (Filed as Exhibit 4(b) to
InterTAN's report on Form 8-K dated
September 25, 1989 and incorporated herein
by reference).
4(c) Trust Indenture securing the issue of 9%
Convertible Subordinated Debentures due
August 30, 2000 (Filed as Exhibit 4(c) to
InterTAN's Annual Report on Form 10-K for
fiscal year ended June 30, 1993 and
incorporated herein by reference).
*10(a) Employment letter dated November 29, 1997
between InterTAN, Inc. and Brian E. Levy.
*10(b) Form of Omnibus Termination Agreement dated
December 30, 1997 between, among others,
InterTAN, Inc. and Tandy Corporation.
*10(c) Loan Agreement dated to be effective
December 22, 1997 among InterTAN, Inc., Bank
of America Canada, Bank of America N.T. &
S.A. (London England Branch Office) and
certain other Lenders as identified therein.
*27 Article 5, Financial Data Schedule.
- -----------------------
* Filed herewith