SECURITIES AND EXCHANGE COMMISSION
----------------------------------
Washington, D.C. 20549
FORM 10-Q
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(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended September 30, 2001 or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
for the transition period from to
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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
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
279 Bayview Avenue
Barrie, Ontario Canada L4M 4W5
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (705) 728-6242
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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 October 31, 2001, 25,607,588 shares of the registrant's common stock, par
value $1.00 per share, were outstanding.
PART I
Page
Introductory note regarding forward-looking information 3
ITEM 1 - Financial Statements and Supplementary Data
Consolidated Statements of Operations 4
Consolidated Balance Sheets 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 7
ITEM 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
PART II
ITEM 1 - Legal Proceedings 23
ITEM 4 - Submission of Matters to a Vote of Security Holders 23
ITEM 6 - Exhibits and Reports on Form 8-K 23
OTHER
Signatures 25
2
Introductory Note Regarding Forward-Looking Information
Certain statements in this Report on form 10-Q constitute forward-looking
statements that involve risks and uncertainties. The forward-looking statements
include statements regarding:
o The resolution of the Company's dispute with the purchaser of its
former subsidiary in Australia.
o The outcome of various Australian, Canadian and United States income
tax issues.
o Hardware pricing in the satellite category.
o The impact on sales of computers of the introduction of Windows XP and
the availability of computers with Pentium 4 technology.
o Estimates of the gross margin percentage for the second quarter.
o The Company's ability to open additional stores in time for the
holiday selling season.
o The benefits of the Company's investment in human resources in both
sales and non-sales areas of responsibility.
o The effects of the expansion, broader distribution and later release
of the Company's annual catalog.
o The impact on selling, general and administrative expenses of the
restructuring program implemented during the quarter.
o Future levels of interest income and expense.
o The adequacy of the Company's liquidity and its short-term borrowing
requirements.
o The adequacy of the indemnity obtained from the purchaser of the
Company's former subsidiary in the United Kingdom.
o Possible payments under indemnities provided to the purchaser of
InterTAN Australia Ltd.
o Forecasted capital expenditures for fiscal year 2002.
o Estimates of cash required to fund the repurchase of common stock.
Important factors that could cause actual results to differ materially from
those indicated in the forward-looking statements include, but are not limited
to:
o International political, military and economic conditions.
o Interest and foreign exchange rate fluctuations.
o Actions of United States and foreign taxing authorities, including
computations of balances owing.
o Changes in consumer demand and preference.
o Consumer confidence.
o Competitive products and pricing.
o Availability of products.
o Inventory risks due to shifts in market conditions.
o Dependence on manufacturers' product development.
o The regulatory and trade environment.
o The value of the Company's common stock and the general condition of
the stock market.
o Real estate market fluctuations and
o Other risks indicated in InterTAN's previously filed periodic reports
with the Securities and Exchange Commission, including its Form 10-K
for the 2001 fiscal year.
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.
3
ITEM 1 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Consolidated Statements of Operations
(U.S. dollars in thousands, except per share data)
(Unaudited)
Three months ended
September 30
2001 2000
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Net sales and operating revenues $ 90,365 $ 119,951
Other income 11 59
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90,376 120,010
Operating costs and expenses:
Cost of products sold 54,862 72,202
Selling, general and administrative expenses 27,702 36,879
Depreciation and amortization 1,349 1,592
Restructuring charge 3,213 -
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87,126 110,673
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Operating income 3,250 9,337
Foreign currency transaction gains (losses) 139 (126)
Interest income 726 434
Interest expense (104) (124)
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Income before income taxes 4,011 9,521
Income taxes 2,155 4,196
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Net income $ 1,856 $ 5,325
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Basic net income per average common share $ 0.07 $ 0.19
Diluted net income per average common share $ 0.07 $ 0.18
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Average common shares outstanding 27,835 28,032
Average common shares outstanding assuming dilution 28,308 28,950
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The accompanying notes are an integral part of these consolidated
financial statements.
4
Consolidated Balance Sheets
(U.S. dollars in thousands, except share amounts)
(Unaudited)
September 30 June 30 September 30
2001 2001 2000
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Assets
Current Assets
Cash and short-term investments $ 55,299 $ 86,233 $ 10,302
Accounts receivable, less allowance for doubtful accounts 21,390 12,598 22,132
Inventories 88,519 90,394 140,103
Other current assets 2,651 1,151 1,499
Deferred income taxes 2,196 2,290 2,248
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Total current assets 170,055 192,666 176,284
Property and equipment, less accumulated depreciation and amortization 19,660 19,817 24,061
Other assets 13 16 28
Deferred income taxes 2,907 3,031 2,445
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Total Assets $ 192,635 $ 215,530 $ 202,818
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Liabilities and Stockholders' Equity
Current Liabilities
Short-term bank borrowings $ - $ - $ 6,655
Accounts payable 13,490 20,034 35,000
Accrued expenses 16,971 13,650 13,882
Income taxes payable 21,242 24,913 25,343
Deferred service contract revenue - current portion 5,418 5,507 5,756
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Total current liabilities 57,121 64,104 86,636
Deferred service contract revenue - non current portion 4,490 4,599 4,887
Other liabilities 2,245 2,518 5,851
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Total liabilities 63,856 71,221 97,374
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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,
31,495,255, 31,225,048 and 30,638,135, respectively, issued 31,495 31,225 30,638
Additional paid-in capital 153,820 151,744 147,303
Common stock in treasury, at cost, 5,010,168, 3,101,818
and 3,027,150 shares, respectively (51,079) (35,405) (34,529)
Retained earnings (deficit) 15,608 13,752 (4,450)
Accumulated other comprehensive loss (21,065) (17,007) (33,518)
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Total stockholders' equity 128,779 144,309 105,444
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Commitments and contingencies (See Notes 3, 8 and 9)
Total Liabilities and Stockholders' Equity $ 192,635 $ 215,530 $ 202,818
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The accompanying notes are an integral part of these consolidated financial
statements.
5
Consolidated Statements of Cash Flows
Three months ended
(U.S. dollars in thousands) September 30
(Unaudited) 2001 2000
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Cash flows from operating activities:
Net income $ 1,856 $ 5,325
Adjustments to reconcile net income to cash
used in operating activities:
Depreciation and amortization 1,349 1,592
Stock-based compensation 310 373
Other 17 51
Cash provided by (used in) assets and liabilities:
Accounts receivable (9,416) (9,998)
Inventories (1,805) (23,007)
Other current assets (1,558) (471)
Accounts payable (5,854) 10,160
Accrued expenses 4,053 (2,160)
Income taxes payable (2,738) (4,330)
Deferred service contract revenue (198) 525
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Net cash used in operating activities (13,984) (21,940)
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Cash flows from investing activities:
Additions to property and equipment (2,216) (4,014)
Proceeds from sales of property and equipment 107 27
Other investing activities (32) 327
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Net cash used in investing activities (2,141) (3,660)
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Cash flows from financing activities:
Changes in short-term borrowings, net - 6,748
Proceeds from issuance of common stock to employee plans 383 472
Proceeds from exercise of stock options 1,474 83
Purchase of treasury stock (15,496) (15,529)
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Net cash used in financing activities (13,639) (8,226)
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Effect of exchange rate changes on cash (1,170) (622)
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Net decrease in cash and short-term investments (30,934) (34,448)
Cash and short-term investments, beginning of year 86,233 44,750
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Cash and short-term investments, end of year $ 55,299 $ 10,302
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The accompanying notes are an integral part of these consolidated financial
statements.
6
Notes to Consolidated Financial Statements
Note 1 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 InterTAN, Inc.'s ("InterTAN" or the
"Company") Annual Report on Form 10-K for the fiscal year ended June 30, 2001,
and, in the opinion of the Company, include all adjustments necessary for a fair
presentation of the Company's financial position as of September 30, 2001 and
2000 and the results of its operations for the three months ended September 30,
2001 and 2000 and its cash flows for the three months ended September 30, 2001
and 2000. Such adjustments are of a normal and recurring nature. Operating
results for the three months ended September 30, 2001 are not necessarily
indicative of the results that can be expected for the fiscal year ending June
30, 2002. 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, 2001.
Note 2 New Accounting Standards
In June 2001, the FASB issued Financial Accounting Standards Nos. 141 and 142
("FAS 141" and "FAS 142"). FAS 141 provides for new rules to be used in
accounting for business combinations and is effective for business combinations
initiated after June 30, 2001. FAS 142 changes the accounting treatment of both
existing and newly-acquired goodwill. FAS 142 is effective for fiscal years
beginning after December 15, 2001. However, early adoption is permitted. The
Company adopted both of these new accounting standards in the first quarter of
fiscal year 2002. The adoption of FAS 141 and FAS 142 did not have a material
effect on the Company's financial statements.
Note 3 Disposal of Australian Subsidiary
During the fourth quarter of fiscal year 2001, the Company sold its former
subsidiary in Australia. The consolidated balance sheet as at September 30, 2000
and the consolidated statements of operations and cash flows for the three
months then ended include the results of the Australian subsidiary.
The gain on disposal reported in the fourth quarter of fiscal year 2001 was
based on management's calculation of certain adjustments to be paid following
completion of the sale. The purchaser has advised the Company that it disagrees
with management's calculation of those adjustments. Management believes that its
calculation of the adjustments is appropriate and that there are strong
arguments against the position adopted by the purchaser and is in the process of
vigorously defending its position. Should the purchaser prevail in this dispute,
the Company would have an additional liability of approximately $2,000,000.
Under the terms of the sale agreement, the Company has indemnified the purchaser
against any inaccuracies in the Completion Accounts. Claims made on any matter,
other than taxes, during the first nine months following closing may not exceed
A$8,000,000 (approximately $4,000,000). Layered on top of this indemnity is a
second two-year indemnity covering tax matters only. This second indemnity has a
limit of A$4,000,000 (approximately $2,000,000). While management believes that
adequate provision was made in the Completion Accounts for necessary accruals,
reserves and allowances, such balances are based on estimates and the actual
results could differ from those estimates, subjecting the Company to the
indemnification provisions. In addition, the Company has indemnified the
purchaser against termination costs with respect to certain
7
employees in Australia. The maximum exposure with respect to this matter is
approximately A$300,000 (approximately $150,000).
Management believes there are authoritative arguments in support of the position
that this transaction is exempt from Australian capital gains tax by virtue of
the tax treaty between the United States and Australia, and, accordingly, no
Australian tax was recorded with respect to the sale. However, there can be no
assurance that the Australian tax authorities will not challenge this position.
If Australian tax were to apply to the gain on sale, the Company would have an
additional liability of approximately $7,000,000.
Note 4 Restructuring Charge
During the first quarter of fiscal year 2002, the Company recorded a
restructuring charge of $3,213,000. Approximately $500,000 of this charge
related to the write-off of costs incurred in connection with the study of
various alternatives to enhance shareholder value. This study began during
fiscal year 2001 and was concluded during the first quarter of fiscal year 2002.
The remainder represents the cost of restructuring the Company's Board of
Directors and streamlining the Company's Corporate Office and integrating it
with InterTAN's operating subsidiary, InterTAN Canada Ltd.
Balance
Original September 30
(U.S. dollars in thousands) Provision Paid 2001
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Professional fees and related expenses $ 505 $ 498 $ 7
Retirement, severance and other
compensation costs 2,664 285 2,379
Other charges 44 - 44
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$ 3,213 $ 783 $ 2,430
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The following is a summary of activity within this reserve during the quarter:
Note 5 Treasury Stock Repurchase Program
By June 30, 2001, the Company had completed two previously announced share
repurchase programs. Under the two programs combined, a total of 3,000,000
shares were acquired an aggregate cost of $34,162,000. During the first quarter
of fiscal year 2002, the Company's Board of Directors announced a third share
repurchase program under which management was authorized to purchase up to
2,800,000 shares of the Company's common stock. By September 30, 2001, 1,894,100
shares had been acquired at an aggregate cost of $15,496,000. During early
October, the remaining 905,900 shares were purchased for a total consideration
of $7,650,000. On October 25, 2001, the Company's Board of Directors announced a
fourth share repurchase program. Under this program, management is authorized,
subject to appropriate market conditions and obtaining applicable securities
regulators' approval, to repurchase up to 2,600,000 shares of the Company's
common stock, approximately 10% of shares currently outstanding.
Note 6 Net Income per average Common share
8
Basic earnings per share ("EPS") is calculated by dividing the net income or
loss for a period by the weighted average number of common shares outstanding
for the period. Diluted EPS reflects the potential dilution that would occur if
securities or other contracts to issue common stock were exercised or converted.
Basic and diluted net income per average common share and 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:
Three months ended September 30
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(U.S.dollars in thousands, 2001 2000
----------------------------------------- ---------------------------------------
except for per share data) Income Shares Per Share Income Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------------------------------------- ---------------------------------------
Net income $1,856 $ 5,325
============ ============
Basic EPS
Income available to
common stockholders $1,856 27,835 $ 0.07 $ 5,325 28,032 $ 0.19
========= ==========
Effect of Dilutive Securities
Stock options - 473 - 918
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Diluted EPS
Income available to
common stockholders including
assumed conversions $1,856 28,308 $ 0.07 $ 5,325 28,950 $ 0.18
============ ============ ========= ============ =========== ==========
At September 30, 2001 and 2000, the Company's directors and employees held
options to purchase 1,548,398 and 1,930,627 common shares, respectively, at
prices ranging from $2.4792 to $14.75. During the three months ended September
30, 2001 and 2000, all but 596,922 and 750 of such options were considered in
calculating diluted EPS. These options were excluded because the option exercise
price was greater than than the average market price of the Company's common
stock during such periods. The dilutive effect of these options in future
periods will depend on the average price of the Company's common stock during
such periods.
Note 7 Comprehensive Income (Loss)
Comprehensive income is defined as the change in equity (net assets) of a
business enterprise during a period from transactions and other events and
circumstances from non-owner sources. For the Company, comprehensive income
(loss) includes net income and the net change in foreign currency translation
effects. The comprehensive income (loss) for the three months ended September
30, 2001 and 2000 was $(2,202,000) and $1,268,000, respectively.
Note 8 Income Taxes
The provision for domestic and foreign income taxes for the three-month period
ended September 30, 2001 was $2,155,000, representing Canadian income tax on the
profits of the Company's Canadian subsidiary. For the three-month period ended
September 30, 2000, the provision was $4,196,000, including Canadian income tax
on the profits of the Canadian subsidiary as well as Australian income tax on
the profits of the Company's former subsidiary in Australia. The effective rate
of tax during the first quarter of fiscal year 2002 was
9
unusually high because a full valuation allowance was recorded against the
deferred tax asset arising from certain components of the restructuring charge
which were not currently tax deductible.
During fiscal year 1999, the Company reached an agreement with the Canadian tax
authorities relating to the settlement of a dispute regarding the 1990 to 1993
taxation years resulting in a charge of $8,039,000. While the amount in dispute
has been agreed and a settlement agreement has been executed, the Company has
not yet been fully reassessed and, accordingly, this amount has not been paid.
Management estimates the remaining payment relating to these issues to be
approximately $11,000,000.
Late in fiscal year 2001, the Company reached an agreement with both the
Canadian and United States tax authorities, settling substantially all of its
remaining outstanding tax issues and recorded an additional provision of
$700,000. Although agreement in principle has been reached on these issues,
final statements summarizing amounts owing have not been received from either
government. Because of the age of these issues and the terms of the settlements,
there are complex interest computations to be made. Accordingly, it is not
practical for management to determine with precision the exact liability
associated with these matters. Management estimates that the liability to settle
all outstanding tax issues, including the matter described immediately above, is
in the range of $23 million to $26 million. Management further believes that it
has a provision recorded sufficient to pay the estimated liability resulting
from these issues; however, the amount ultimately paid could differ from
management's estimate.
The Company has one remaining issue in dispute with the Internal Revenue Service
("IRS") in the United States. The Company disagrees with the position of the IRS
on this issue and, on the advice of legal counsel, believes it has meritorious
arguments in its defense and is in the process of vigorously defending its
position. It is management's determination that no additional provision need be
recorded for this matter. However, should the IRS prevail in its position, the
Company could potentially have an additional maximum liability $1,700,000.
Note 9 Commitments and Contingencies
In connection with the sale of its former United Kingdom subsidiary during
fiscal year 1999, the Company remains contingently liable as guarantor of
certain leases of InterTAN U.K. Limited. At September 30, 2001 the remaining
lease obligation assumed by the purchaser and guaranteed by the Company was
approximately $19,000,000 and the average remaining life of such leases was
approximately 5 years. If the purchaser were to default on the lease
obligations, management believes the Company could reduce the exposure through
assignment, subletting and other means. The Company has obtained an indemnity
from the purchaser for an amount equal to management's best estimate of the
Company's potential exposure under these guarantees. At September 30, 2001, the
amount of this indemnity was approximately $7,400,000. The amount of this
indemnity declines over time as the Company's risk diminishes. Apart from this
matter and the issues discussed in Notes 3 and 8, there are no material pending
proceedings or claims, other than routine matters 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.
Note 10 Segment Reporting
The Company is managed along geographic lines. All references in these notes to
"Canada", "Australia", and "Corporate Headquarters" refer to the Company's
reportable segments, unless otherwise noted. Transactions between segments are
not common and are not material to the segment information. The table below
summarizes net sales and operating revenues, operating income (loss) and
identifiable assets for the
10
Company's segments. Consolidated operating income is reconciled to the Company's
income before income tax:
Net Sales and Operating Revenues and
Operating Results by Segment
Three months ended
September 30
(US dollars in thousands) 2001 2000
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Net sales and operating revenues:
Canada $ 90,365 $ 92,859
Australia -/1/ 27,092
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$ 90,365 $ 119,951
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Operating income (loss):
Canada $ 7,486 $ 9,240
Australia -/1/ 1,237
Corporate Headquarters expenses (1,023) (1,140)
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Operating income before restructuring charge 6,463 9,337
Restructuring charge 3,213 -
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Operating income 3,250 9,337
Foreign currency transaction gains (losses) 139 (126)
Interest income 726 434
Interest expense (104) (124)
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Income before income taxes $ 4,011 $ 9,521
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Identifiable Assets by Segment
September 30 June 30 September 30
(U.S. dollars in thousands) 2001 2001 2000
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Canada $154,269 $163,016 $149,391
Australia -/1/ -/1/ 50,263
Corporate Headquarters 38,366 52,514 3,164
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$192,635 $215,530 $202,818
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/1/ The Company's subsidiary in Australia was sold during the fourth quarter of
fiscal year 2001.
11
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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
Company's retail operations are conducted through a wholly-owned subsidiary,
InterTAN Canada Ltd., which operates under the trade name "RadioShack". During
fiscal year 2001, the Company also had retail and dealer outlets in Australia.
Operations in Australia were carried out through a wholly-owned subsidiary,
InterTAN Australia Ltd. The Company's Australian subsidiary was sold effective
April, 2001. Operations in Australia were conducted under the trade name
"Tandy". The "RadioShack" and "Tandy" trade names are used under license from
RadioShack Corporation ("RadioShack U.S.A."). In addition, the Company has
entered into an agreement in Canada with Rogers Wireless Inc. ("Rogers") to
operate telecommunications stores ("Rogers AT&T" stores) on its behalf. At
September 30, 2001, 57 Rogers AT&T stores were in operation.
Overview
There were a number of special factors and charges in the first quarter of
fiscal years 2002 and 2001 that significantly impacted the Company's results of
operations and affected the comparability of reported results for the two
periods.
As previously discussed, effective April 30, 2001, the Company sold its
subsidiary in Australia. The consolidated balance sheet as at September 30, 2000
and the consolidated statements of operations and cash flows for the three
months then ended include the results of the Australian subsidiary.
During the first quarter of fiscal year 2002, the Company recorded a
restructuring charge of $3,213,000. See "Restructuring Charge". Management
estimates that the tax provision for the quarter was reduced by approximately
$1,030,000 as a result of the deductibility for tax purposes of a portion of the
restructuring costs.
The tables below reflect the Company's sales, operating income, net income, and
net income per share for the three month periods ended September 30, 2001 and
2000, adjusted to eliminate the following: sales and results of InterTAN
Australia Ltd. for the three-month period ended September 30, 2000; the
restructuring charge during the three month-period ended September 30, 2001; and
the adjustment to the tax provision during the first quarter of fiscal year 2001
as a result of the restructuring charge.
12
Three months ended
(U.S. dollars in thousands, except Canadian sales and September 30
per share amounts) 2001 2000
-------------------------------
Sales and other operating revenues $ 90,365 $ 119,951
Adjustments
Sales of Australian subsidiary
- (27,092)
--------- ---------
Canadian sales, in U.S. dollars $ 90,365 $ 92,859
========= =========
Canadian sales, in Canadian dollars $ 139,768 $ 137,619
========= =========
Operating income $ 3,250 $ 9,337
Adjustments
Restructuring charge 3,213 -
Income of Australian subsidiary - (1,237)
--------- ---------
Comparable operating income $ 6,463 $ 8,100
========= =========
Net income $ 1,856 $ 5,325
Adjustments
Restructuring charge 3,213 -
Effect of restructuring charge on income taxes (1,030) -
Income of Australian subsidiary - (827)
--------- ---------
Comparable net income $ 4,039 $ 4,498
========= =========
Diluted earnings per share $ 0.07 $ 0.18
========= =========
Comparable diluted earnings per share $ 0.14 $ 0.16
========= =========
Restructuring Charge
During the first quarter of fiscal year 2002, the Company recorded a
restructuring charge of $3,213,000. Approximately $500,000 of this charge
related to the write-off of costs incurred in connection with the study of
various alternatives to enhance shareholder value. This study began during
fiscal year 2001 and was concluded during the first quarter of fiscal year 2002.
The remainder represents the cost of restructuring the Company's Board of
Directors and streamlining the Company's Corporate Office and integrating it
with InterTAN's operating subsidiary, InterTAN Canada Ltd. Management estimates
that as a result of this action, selling, general and administrative expenses
will be reduced on an annualized basis by approximately $1,300,000. The full
benefits of the plan will not be felt until the third quarter of fiscal year
2002.
13
The following is a summary of activity within this reserve during the quarter:
Balance
Original September 30
(U.S. dollars in thousands) Provision Paid 2001
- ------------------------------------------------------------------------------------------------------
Professional fees and related expenses $ 510 $ 503 $ 7
Retirement, severance and other
compensation costs 2,659 285 2,374
Other charges 44 - 44
- ------------------------------------------------------------------------------------------------------
$ 3,213 $ 788 $ 2,425
- ------------------------------------------------------------------------------------------------------
Foreign Exchange Effects
Profit and loss accounts, including sales, are translated from local currency
values to U.S. dollars at monthly average exchange rates. During the first
quarter of fiscal year 2002, the U.S. dollar was 4.2% stronger against the
Canadian dollar relative to the comparable value during the first quarter of the
prior year. As a result, the same local currency amounts in Canada translate
into less U.S. dollars as compared with the prior year. For example, if local
currency sales in Canada in the first quarter of fiscal year 2001 were the same
as those in the first quarter of the prior year, the fiscal year 2002 income
statement would reflect a 4.2% decrease in sales when reported in U.S. dollars.
Sales Outlets
The Company's sales outlets by type and geographic region is summarized in the
following table:
14
June 30 Sept. 30 Sept. 30
2001 Opened Closed 2001 2000
-----------------------------------------------------------------------------------------------------------------------
Canada
Company-operated 473 3 1 475 460
Rogers AT&T 55 2 - 57 50
Dealer 360 4 1 363 360
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888 9 2 895 870
-----------------------------------------------------------------------------------------------------------------------
Australia/2/
Company-operated - - - 223
Dealer - - - 106
-----------------------------------------------------------------------------------------------------------------------
- - - 329
-----------------------------------------------------------------------------------------------------------------------
Total
Company-operated 473 3 1 475 683
Rogers AT&T 55 2 - 57 50
Dealer 360 4 1 363 466
-----------------------------------------------------------------------------------------------------------------------
888 9 2 895 1,199
-----------------------------------------------------------------------------------------------------------------------
Net Sales and Operating Revenues
Net sales at RadioShack Canada for the quarter in U.S. dollars were $90,365,000.
In local currency, this represents an increase over the prior year quarter of
2%. Measured on the same basis, comparable stores increased by 1%. The sales
comparison in Canada was adversely affected by a decline in sales of PC's of
over 30%. Had PC sales been flat with the prior year quarter, sales at
RadioShack Canada, in local currency, would have shown an increase of over 5%.
The sales comparison, measured in U.S. dollars was adversely affected by the
quarter on quarter decline in the value of the Canadian dollar of over 4%.
Taking this decline into consideration, sales in U.S. dollars for the first
quarter of fiscal year 2002 declined by 3% over the same quarter last year.
The expansion of the Company's range of digital accessories and software
continued to produce positive results, with sales in those two categories up 30%
and 25% respectively. Unit sales of satellite dishes were up over 30%. However,
retail prices were, on average, down about one-third over the prior year.
Nevertheless, retail sales in the category showed strong double-digit growth.
Importantly, the carriers protected retailers against the decline in retail
prices, resulting in an increase in the gross margin percentage of 30%.
Management expects that the trend toward lower retail prices in this category
will continue, as the carriers continue to use subsidized retail prices as a
marketing tool. In the cellular category, the Company's extensive marketing
campaign contributed to an increase in handset sales of over 30%. The increase
in the gross revenue line was about 14%, due to continuing lower retail prices
as a result of technological advances and competition among manufacturers. Sales
of the Company's more traditional parts and accessories and battery lines showed
mid- single to low double-digit growth for the quarter. The introduction of
video games into the assortment also was a contributor to sales growth.
As previously indicated, PC sales for the quarter were down 30% over the prior
year quarter. Demand for older generation machines fell off, as consumers
delayed major purchases in anticipation of the introduction of Windows XP and
machines with Pentium 4 technology. The effects of this drop in demand were
further increased by the fact that early offerings of Pentium 4 machines were
priced well above consumers' comfort level. The Company has managed its way
through the transition to Pentium 4 and its inventory of older machines is under
control and should sell through without the need for excessive discounting. With
the recent introduction of Windows XP and a reduction in the pricing of Pentium
4 machines, management expects that
15
consumer demand will be restored and that this should produce an improved sales
performance during the holiday selling season, provided manufacturers are able
to deliver product in sufficient quantities on a timely basis.
Gross Profit
The gross profit percentage for the quarter was 39.3%, flat with Canada's
performance in the first quarter a year ago. Gross profit dollars at RadioShack
Canada, measured in local currency increased by approximately 2% - the same as
the increase in local currency sales. The reduction in consolidated gross profit
dollars for the quarter is, therefore, more than attributable to the disposal of
InterTAN's Australian subsidiary and foreign currency effects in Canada.
The following analysis summarizes the components of the change in gross profit
dollars from the comparable prior year period:
(U.S. dollars in thousands)
Increase in sales $ 622
Increase in gross margin percentage 106
Foreign currency effects (1,723)
--------
(995)
Disposal of Australian subsidiary (11,251)
--------
Change in gross profit dollars $(12,246)
========
In evaluating the Canadian gross margin percentage with that of the prior year,
two observations are noteworthy. First of all, RadioShack Canada had been
reporting declining gross margin percentages for a number of quarters, primarily
as a result of sales growth in high tech, primarily digital product categories,
which carry lower than Company-average margins. Secondly, the gross margin
percentage for the quarter would have actually improved modestly if it were not
obscured by the effects of a one time rebate adjustment from one of our vendors
in the first quarter a year ago. Management believes that this is a positive
trend, and that margins should improve during the second quarter compared with
the same period last year, unless there are significant increases in the level
of CPU sales in the overall mix. However, such an event, if it were to occur,
would yield additional gross profit dollars. Margins for the quarter also
benefited from after the sale compensation in the form of volume rebates and
residuals. For the quarter, after the sale compensation was $1.4 million, or
1.5% of total revenue. Excluding the effects of the rebate adjustment described
above, after the sale compensation was up 20% over the same quarter last year.
Selling, General and Administrative Expenses
The following table provides a breakdown of selling, general and administrative
expense ("SG&A") by major category:
16
Three months ended September 30
2001 2000
(U.S. dollars in thousands, Dollars % of Sales Dollars % of Sales
except percents)
- -----------------------------------------------------------------------------------------------------------
Canadian and Corporate expenses
Payroll $12,647 14.0 $11,975 12.9/1/
Advertising 2,635 2.9 3,234 3.5/1/
Rent 4,437 4.9 4,233 4.6/1/
Taxes (other than income tax) 2,103 2.3 1,984 2.1/1/
Telephone and utlities 859 1.0 816 0.9/1/
Other 5,021 5.6 4,947 5.3/1/
- -----------------------------------------------------------------------------------------------------------
27,702 30.7 27,189 29.3/1/
Australian expenses - - 9,690 35.8/2/
- -----------------------------------------------------------------------------------------------------------
Consolidated expenses $27,702 30.7 $36,879 30.7/3/
- -----------------------------------------------------------------------------------------------------------
/1/ Percentages are of Canadian sales.
/2/ Percentage is of Australian sales.
/3/ Percentage is of consolidated sales.
SG&A expenses at RadioShack Canada and Corporate Headquarters in U.S. dollars
increased by $513,000 over the comparable quarter last year. This comparison was
influenced by the effects of a weaker Canadian dollar. Measured at the same
exchange rates, SG&A expense in these two segments increased by $1,604,000 or
about 6%.
The following is a breakdown of the same-exchange-rate increase in SG&A expense
in Canada and Corporate Headquarters during the first quarter of fiscal year
2002 over the same quarter in the prior year:
(In thousands)
Payroll $ 1,153
Advertising (463)
Rent 379
Taxes (other than income taxes) 239
Telephone and utilities 76
Other 220
- --------------------------------------------------------
Increase $ 1,604
- --------------------------------------------------------
17
In Canada, rent and payroll were both up over the prior year. Rent expense was
driven primarily by an increase in retail square footage, both as a result of an
increase in the store count and as a result of increasing the size of selected
stores as strategic opportunities present themselves. The Company is currently
planning 20 new company-operated stores during this fiscal year 2002 and
management anticipates that 15 of those stores will be open in time for the
holiday selling season. At lease renewal, management will continue to pursue
opportunities to increase the size of the Company's stores in strategic
locations where it believes such action would result in profitable sales growth.
The Company also made an investment in its people, both in central units and in
stores. The investment in people involved in sales support functions has
resulted in a dramatic reduction in inventory levels. See "Financial Condition -
Inventories." Management believes that the benefits of the Company's investment
in people in the field will be evident during the holiday selling season. The
effects of higher rent and payroll costs were partially offset by a reduction in
advertising expense. This year, management made the strategic decision to delay
the release of RadioShack Canada's annual catalog from the first quarter to the
second quarter. Not only is the catalog bigger than last year, but also
management expects that a later release will have more impact on the important
holiday selling season. Corporate expenses were down about 9%, reflecting, in
part, the early effects of the restructuring.
Foreign Currency Transaction Gains / Losses
Foreign currency transaction gains were $139,000 during the first quarter of
fiscal year 2002 compared with losses of $126,000 for the comparable quarter
last year.
Interest income and expense
Interest income for the quarter was $726,000 compared with $434,000 a year ago.
The increase results primarily from the investment of proceeds from the sale of
the Australian subsidiary. Interest income will likely be lower in future
periods as a substantial portion of these funds have already been used to fund
the purchase of treasury stock. Additional funds will also be required to
finance the recently announced new treasury stock repurchase program. See
"Liquidity and Capital Resources." Interest expense for the quarter was $104,000
and consisted entirely of commitment fees and loan amortization charges, as
there were no borrowings during the quarter. Last year, RadioShack Canada
borrowed under its credit line during the second quarter, to finance the
seasonal build of inventories. Based on current projections and trends
management does not believe that external borrowing will be required during the
second quarter of fiscal year 2002.
Provision for Income Taxes
The provision for income taxes for the quarter was $2,155,000, and consisted
exclusively of Canadian taxes on the profits of RadioShack Canada. The effective
rate for the quarter was 53.7%, reflecting the fact that a full valuation
allowance was recorded against the deferred tax asset arising from certain
components of the restructuring charge for which were not currently tax
deductible. If the effects of the restructuring charge were eliminated, the
effective rate would have been 44.1%. Last year, the provision for tax was
$4,196,000 and included Australian tax on the profits of InterTAN Australia. If
the income and tax provision of InterTAN Australia were excluded from the prior
year's results, the effective tax rate last year would have been 46.3%.
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 September 30, 2001, in the value of the
18
Canadian dollar as measured against the U.S. dollar:
- ------------------------------------------------------------------------
Percentage decrease from Setember 30, 2000 4.9%
Percentage decrease from June 30, 2001 4.1%
- ------------------------------------------------------------------------
Accounts Receivable
Accounts receivable were $21,390,000 at September 30, 2001 compared with
$22,132,000 at September 30, 2000 and $12,598,000 at June 30, 2001. The decrease
from September 30, 2000 is attributable to the sale of the Australian subsidiary
and foreign currency effects. The increase from June 30, 2001 resulted from the
seasonal build up of dealer receivables in advance of the holiday selling
season.
Inventories
Inventories at RadioShack Canada, measured in local currency were approximately
14% lower at September 30, 2001 than at the same date a year ago and days sales
in inventory is down 27% from the prior year. These improvements are direct
result of the Company's investment in people involved in sales support
functions. The Company is now sourcing locally-purchased inventory more
frequently, and purchasing in smaller quantities. This strategy will reflect
positively on both cash flow requirements and the risk of obsolescence. The
benefits of the new inventory strategy are also demonstrated by the fact that
inventories at September 30, 2001 are up, in local currency, only 2% from June
30, 2001 levels, despite the seasonal build for the holiday selling season.
Accounts Payable
Accounts payable were $13,490,000 at September 30, 2001 compared to $35,000,000
at September 30, 2000 and $20,034,000 at June 30, 2001. The reduction in the
level of Canadian inventories was the major factor contributing to these
decreases. The sale of the Australian subsidiary was also a factor in explaining
the reduction from September 30, 2000.
Accrued Expenses
Accrued expenses were $16,971,000 at September 30, 2001 compared with
$13,882,000 at September 30, 2000 and $13,650,000 at June 30, 2001. These
increases relate primarily to the restructuring charge recorded during the first
quarter of fiscal year 2001.
Income Taxes Payable
Income taxes payable were $21,242,000 at September 30, 2001 compared with
$25,343,000 at September 30, 2000 and $24,913,000 at June 30, 2001. The
reduction from September 30, 2000 reflects the sale of the Australian subsidiary
and lower profits in the Canadian subsidiary. The reduction from June 30, 2001
is due to the payment of the final balance of Canadian tax owing for fiscal year
2001 and the fact that installments of Canadian tax for fiscal year 2002 during
the first quarter exceeded the provision for tax during the same period as a
result of the seasonality of the business.
19
During fiscal year 1999, the Company reached an agreement with the Canadian tax
authorities relating to the settlement of a dispute regarding the 1990 to 1993
taxation years resulting in a charge of $8,039,000. While the amount in dispute
has been agreed and a settlement agreement has been executed, the Company has
not yet been fully reassessed and, accordingly, this amount has not been paid.
Management estimates the remaining payment relating to these issues to be
approximately $11,000,000.
Late in fiscal year 2001, the Company reached an agreement with both the
Canadian and United States tax authorities, settling substantially all of its
remaining outstanding tax issues and recorded an additional provision of
$700,000. Although agreement in principle has been reached on these issues,
final statements summarizing amounts owing have not been received from either
government. Because of the age of these issues and the terms of the settlements,
there are complex interest computations to be made. Accordingly, it is not
practical for management to determine with precision the exact liability
associated with these matters. Management estimates that the liability to settle
all outstanding tax issues, including the matter described immediately above, is
in the range of $23 million to $26 million. Management further believes that it
has a provision recorded sufficient to pay the estimated liability resulting
from these issues; however, the amount ultimately paid could differ from
management's estimate.
The Company has one remaining issue in dispute with the Internal Revenue Service
("IRS") in the United States. The Company disagrees with the position of the IRS
on this issue and, on the advice of legal counsel, believes it has meritorious
arguments in its defense and is in the process of vigorously defending its
position. It is management's determination that no additional provision need be
recorded for this matter. However, should the IRS prevail in its position, the
Company could potentially have an additional maximum liability $1,700,000.
Other Liabilities
Other liabilities were $2,245,000 at September 30, 2001 compared with $5,851,000
at September 30, 2000 and $2,518,000 at June 30, 2001. The reduction in the
level of other liabilities relates to the disposal of the Australian subsidiary.
Liquidity and Capital Resources
- -------------------------------
Cash flows from operating activities during the three-month period ended
September 30, 2001 consumed $13,984,000 in cash, compared with $21,940,000 in
cash during the comparable quarter last year. This reduction was due primarily
to changes in working capital requirements, partially offset by a decrease in
net income, adjusted for non-cash items. In the three months ended September 30,
2001, changes in working capital consumed $17,516,000 in cash compared with
$29,281,000 in the comparable prior year period. This reduction is due primarily
to the effects of lower inventories at RadioShack Canada and the disposal of the
Australian subsidiary. Net income, adjusted for non-cash items, generated
$3,532,000 in cash during the quarter, compared with $7,341,000 a year ago.
Cash flow from investing activities consumed $2,141,000 and $3,660,000 in cash
during the three months ended September 30, 2001, and 2000 respectively, as the
effects of routine additions to property and equipment were partially offset by
the proceeds from the sale of property and equipment and from other investing
activities. The reduction is partially attributable to the effects of the
disposal of the Australian subsidiary.
During the three-month period ended September 30, 2001, cash flow from financing
activities consumed $13,639,000 in cash. In August 2001, the Company's Board of
Directors announced a third share repurchase program under which management was
authorized to purchase up to 2,800,000 shares of the Company's
20
common stock. By September 30, 2001, 1,894,100 shares had been acquired at an
aggregate cost of $15,496,000. This cash outflow was partially offset by
proceeds from the issuance of common stock to employee plans and from the
exercise of stock options. During the three-month period ended September 30,
2000, cash flow from financing activities consumed $8,226,000 in cash. In April
2000, the Company announced that the Board of Directors had authorized a program
for the repurchase of up to 1,500,000 common shares. By June 30, 2000, 285,200
shares had been acquired under this program. During the first quarter of fiscal
year 2001, the remaining 1,214,800 shares were acquired at an aggregate cost of
$15,529,000. This cash outflow was partially offset by borrowings under banking
facility of the Company's Canadian subsidiary and by proceeds from the issuance
of stock to employee plans and from the exercise of stock options.
On May 4, 2001, InterTAN Canada Ltd. and InterTAN, Inc. extended its revolving
credit facility (the "Revolving Loan Agreement") in an amount not to exceed
C$75,000,000 (approximately $47,500,000 at September 30, 2001 exchange rates).
The Revolving Loan Agreement matures March 22, 2003. The amount of credit
actually available at any particular time is dependent on a variety of factors,
including the level of eligible inventories and accounts receivable of InterTAN
Canada Ltd. The amount of available credit is then reduced by the amount of
trade accounts payable then outstanding as well as certain other reserves. A
loan origination fee of C$37,500 (approximately $24,000 at September 30, 2001
exchange rates) was payable on closing. A further payment of C$37,500 is
required on March 22, 2002. Borrowing rates under the facility range from prime
to prime plus 0.75%, based on the Company's quarterly performance against
predetermined EBITDA to fixed charge ratios. Using the same criteria, the
Company may borrow at bankers' acceptance and LIBOR rates plus from 0.75% to
2.0%. Letters of credit are charged at rates ranging from 0.75% per annum to
2.0% per annum, using the same performance criteria. In addition, a standby fee
of 0.65% is payable on the unused portion of the credit facility. The Revolving
Loan Agreement is collateralized by a first priority lien over all of the assets
of InterTAN Canada Ltd. and is guaranteed by InterTAN, Inc. This facility will
be used primarily to finance seasonal inventory build up and, from time to time,
to provide letters of credit in support of purchase orders. At September 30,
2001, there were no borrowings against the Revolving Loan Agreement, nor was any
amount committed in support of letters of credit. There was approximately
C$71,000,000 (approximately $45,000,000 at September 30, 2001 exchange rates) of
credit available for use at September 30, 2001 under this facility.
Under the terms of the Company's Merchandise Agreement with RadioShack U.S.A.,
purchase orders with Far Eastern suppliers must be supported, based on a formula
set out in the Merchandise Agreement, by letters of credit issued by banks on
behalf of InterTAN, by a surety bond, or backed by cash deposits. The Company
has secured surety bond coverage from a major insurer (the "Bond") in an amount
not to exceed $12,000,000. Use of the Bond gives the Company greater flexibility
in placing orders with Far Eastern suppliers by releasing a portion of the
credit available under the Revolving Loan Agreement for other purposes.
The Company's primary uses of liquidity during fiscal year 2002 will include the
funding of capital expenditures, the build up of inventories for the 2001
holiday selling season, funding the repurchase of common stock and payments in
settlement of tax issues. Management estimates that capital expenditures in
Canada during the remainder of fiscal 2002 will approximate $12,000,000. These
expenditures relate primarily to investments in store assets, including new
stores, renovating and relocating existing stores and store fixtures and
equipment, improvements to the Company's distribution center and enhancements to
management information systems. In August 2001, the Company's Board of Directors
announced a share repurchase plan under which management was authorized, from
time to time and subject to regulatory approval, to repurchase up to 2,800,000
of the Company's shares, approximately 10% of the shares outstanding at June 30,
2001. By September 30, 2001, 1,894,100 shares had been acquired at an aggregate
cost of 15,496,000. During early October, the remaining 905,900 shares were
purchased for total consideration of $7,650,000. On October 25, 2001, the
Company's Board of Directors announced an additional share repurchase program.
Under this program, management is authorized, subject to appropriate market
conditions and obtaining applicable securities regulators' approval, to
repurchase up to 2,600,000 shares of the Company's common stock, approximately
10% of shares currently outstanding. While purchases under this program will
depend on market
21
conditions, management estimates that the program could require between
$23,000,000 and $29,000,000 in cash during fiscal 2002. Late in fiscal year
2001, the Company reached agreements with both the Canadian and United States
tax authorities, settling certain outstanding tax issues. See "Income Tax".
Management estimates that during fiscal year 2002 payments flowing from these
settlements, together with other matters previously agreed, will be
approximately $23,000,000 to $26,000,000. Based on management's current
projections and assumptions regarding the timing of the tax reassessments and
the stock repurchase plan described above, management does not anticipate that
bank borrowings will be required to finance the seasonal build up of
inventories.
Management believes that the Company's cash and short-term investments on hand
and its cash flow from operations combined with its banking facilities and the
Bond will provide the Company with sufficient liquidity to meet its planned
requirements through fiscal year 2002.
22
PART II - OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
The various matters discussed in Notes 7 and 8 to the Company's
Consolidated Financial Statements on page 7, 9 and 10 of this Form
10-Q are incorporated herein by reference.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were put to a vote of the Company's stockholders during the
three-month period ended September 30, 2001.
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).
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).
23
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) Rights Agreement between InterTAN, Inc. and Bank Boston, NA
(filed as Exhibit 4 to the company's Form 8-A filed on
September 17, 1999 and incorporated herein by reference)
*10(a) First Amendment to Second Amended and Restated License
Agreement (Canada) between TRS Quality, Inc. and InterTAN
Canada Ltd. dated as of August 31, 2001.
*10(b) Third Amended and Restated Advertising Agreement among
InterTAN, Inc., InterTAN Canada Ltd., RadioShack Corporation
and TRS Quality, Inc. dated as of September 15, 2001.
*10(c) Employment Agreement between Jeffrey A. Losch and InterTAN,
Inc. dated September 11, 2001.
*10(d) Employment Agreement between James P. Maddox and InterTAN,
Inc. dated September 10, 2001.
*10(e) Employment Agreement between Heinz Stier and InterTAN, Inc.
dated September 10, 2001.
*10(f) Termination of Employment Letter Agreement between Douglas
C. Saunders and InterTAN, Inc. dated September 25, 2001.
*10(g) Retirement Letter Agreement between Douglas C. Saunders and
InterTAN, Inc. dated September 25, 2001.
- ----------
* Filed herewith
b) Reports on Form 8-K:
A Report on Form 8-K was filed on August 20, 2001 to report
that on August 14, 2001 the Board of Directors had
authorized management, subject to regulatory approval and
market conditions, to repurchase up to 2,800,000 shares of
the Company's common stock.
24
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: November 13, 2001 By: /s/ James G. Gingerich
----------------------
James G. Gingerich
Executive Vice-President and
Chief Financial Officer
(Chief Financial Officer)
By: /s/ Brian E. Levy
----------------------
Brian E. Levy
President and Chief Executive Officer
(Authorized Officer)
25
InterTAN, Inc.
Quarterly Report on Form 10-Q
Three Months Ended September 30, 2001
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).
4(a) Articles Fifth and Tenth of the Restated Certificate of
Incorporation (included in Exhibit 3(a)).
4(b) Rights Agreement between InterTAN, Inc. and Bank Boston, NA
(filed as Exhibit 4 to the company's Form 8-A filed on September
17, 1999 and incorporated herein by reference)
*10(a) First Amendment to Second Amended and Restated License Agreement
(Canada) between TRS Quality, Inc. and InterTAN Canada Ltd. dated
as of August 31, 2001.
*10(b) Third Amended and Restated Advertising Agreement among InterTAN,
Inc., InterTAN Canada Ltd., RadioShack Corporation and TRS
Quality, Inc. dated as of September 15, 2001.
*10(c) Employment Agreement between Jeffrey A. Losch and InterTAN, Inc.
dated September 11, 2001.
*10(d) Employment Agreement between James P. Maddox and InterTAN, Inc.
dated September 10, 2001.
*10(e) Employment Agreement between Heinz Stier and InterTAN, Inc. dated
September 10, 2001.
*10(f) Termination of Employment Letter Agreement between Douglas C.
Saunders and InterTAN, Inc. dated September 25, 2001.
*10(g) Retirement Letter Agreement between Douglas C. Saunders and
InterTAN, Inc. dated September 25, 2001.
- ----------
* Filed herewith