UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2003
OR
_ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
--------------- ---------------
Commission File Number: 1-5571
________________________
RADIOSHACK CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 75-1047710
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Throckmorton Street, Suite 1800, Fort Worth, Texas 76102
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (817) 415-3700
________________________
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No __
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes X No __
The number of shares outstanding of the issuer's Common Stock, $1 par value, on
April 30, 2003 was 168,409,768.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
RADIOSHACK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
Three Months Ended
March 31,
(In millions, except per share amounts) 2003 2002
--------------------------------------- -------- --------
Net sales and operating revenues $1,070.3 $1,034.4
Cost of products sold 542.9 514.7
-------- --------
Gross profit 527.4 519.7
-------- --------
Operating expenses:
Selling, general and administrative 407.8 393.2
Depreciation and amortization 22.6 24.6
-------- --------
Total operating expenses 430.4 417.8
-------- --------
Operating income 97.0 101.9
Interest income 1.5 1.8
Interest expense (9.6) (10.8)
Other income 2.4 --
-------- --------
Income before income taxes 91.3 92.9
Provision for income taxes 34.7 35.3
-------- --------
Net income 56.6 57.6
Preferred dividends -- 1.2
-------- --------
Net income available to common stockholders $ 56.6 $ 56.4
======== ========
Net income available per common share:
Basic $ 0.33 $ 0.32
======== ========
Diluted $ 0.33 $ 0.31
======== ========
Shares used in computing earnings per common share:
Basic 171.4 176.8
======== ========
Diluted 171.8 183.6
======== ========
The accompanying notes are an integral part of these consolidated financial statements.
RADIOSHACK CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
March 31, December 31, March 31,
2003 2002 2002
(In millions, except for share amounts) (Unaudited) (Unaudited)
--------------------------------------- ----------- ------------ -----------
Assets
Current assets:
Cash and cash equivalents $ 456.7 $ 446.5 $ 434.4
Accounts and notes receivable, net 164.6 206.1 217.3
Inventories, net 844.3 971.2 831.1
Other current assets 84.2 83.1 88.8
---------- ---------- ----------
Total current assets 1,549.8 1,706.9 1,571.6
Property, plant and equipment, net 419.3 421.6 407.4
Other assets, net 98.1 99.4 108.9
---------- ---------- ----------
Total assets $ 2,067.2 $ 2,227.9 $ 2,087.9
========== ========== ==========
Liabilities and Stockholders Equity
Current liabilities:
Short-term debt, including current maturities of
long-term debt $ 16.0 $ 36.0 $ 72.2
Accounts payable 216.6 312.6 200.1
Accrued expenses 277.0 318.7 265.0
Income taxes payable 155.5 160.9 157.7
---------- ---------- ----------
Total current liabilities 665.1 828.2 695.0
Long-term debt, excluding current maturities 590.7 591.3 543.5
Other non-current liabilities 78.4 80.3 69.9
---------- ---------- ----------
Total liabilities 1,334.2 1,499.8 1,308.4
---------- ---------- ----------
Commitments and contingent liabilities
Stockholders' equity:
Preferred stock, no par value, 1,000,000 shares authorized:
Series A junior participating, 300,000 shares designated
and none issued -- -- --
Series B convertible (TESOP), 100,000 shares authorized;
63,200 shares issued as of March 31, 2002 -- -- 63.2
Common stock, $1 par value, 650,000,000 shares authorized;
236,033,000 shares issued 236.0 236.0 236.0
Additional paid-in capital 68.4 70.0 139.0
Retained earnings 2,059.1 2,002.5 1,841.9
Treasury stock, at cost; 66,883,000, 64,306,000
and 61,053,000 shares, respectively (1,630.0) (1,579.9) (1,497.1)
Unearned deferred compensation -- -- (2.8)
Accumulated other comprehensive loss (0.5) (0.5) (0.7)
---------- ---------- ----------
Total stockholders' equity 733.0 728.1 779.5
---------- ---------- ----------
Total liabilities and stockholders' equity $ 2,067.2 $ 2,227.9 $ 2,087.9
========== ========== ==========
The accompanying notes are an integral part of these consolidated financial statements.
RADIOSHACK CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended
March 31,
(In millions) 2003 2002
------------- -------- --------
Cash flows from operating activities:
Net income $ 56.6 $ 57.6
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 22.6 24.6
Provision for uncollectible accounts (0.1) 1.5
Other items 3.3 1.7
Changes in operating assets and liabilities:
Receivables 41.6 59.3
Inventories 126.9 118.7
Other current assets (1.1) (1.8)
Accounts payable, accrued expenses and income taxes payable (146.5) (103.2)
-------- --------
Net cash provided by operating activities 103.3 158.4
-------- --------
Cash flows from investing activities:
Additions to property, plant and equipment (21.4) (16.0)
Proceeds from sale of property, plant and equipment 0.1 1.0
Other investing activities (0.1) --
-------- --------
Net cash used in investing activities (21.4) (15.0)
-------- --------
Cash flows from financing activities:
Purchases of treasury stock (62.5) (72.0)
Sale of treasury stock to stock plans 10.5 13.3
Proceeds from exercise of stock options 0.3 2.5
Dividends paid -- (0.8)
Repayments of long-term borrowings (20.0) (53.4)
-------- --------
Net cash used in financing activities (71.7) (110.4)
-------- --------
Net increase in cash and cash equivalents 10.2 33.0
Cash and cash equivalents, beginning of period 446.5 401.4
-------- --------
Cash and cash equivalents, end of period $ 456.7 $ 434.4
======== ========
The accompanying notes are an integral part of these consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
We prepared the accompanying unaudited consolidated financial statements, which
include the accounts of RadioShack Corporation and all domestic and foreign
subsidiaries, in accordance with the rules of the Securities and Exchange
Commission ("SEC"). Accordingly, we did not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In management's opinion, all adjustments (consisting only
of normal recurring adjustments) considered necessary for a fair presentation
are included. However, our operating results for the three months ended March
31, 2003, do not necessarily indicate the results you might expect for the year
ending December 31, 2003. If you desire further information, you should refer to
our consolidated financial statements and management's discussion and analysis
of financial condition and results of operations included in our Annual Report
on Form 10-K for the year ended December 31, 2002, in addition to our other SEC
filings such as those on Forms 10-Q and 8-K.
NOTE 2 - EARNINGS PER SHARE
The following schedule is a reconciliation of the numerators and denominators
used in computing our basic and diluted earnings per share ("EPS") calculations
for the three months ended March 31, 2003 and 2002. Basic EPS excludes the
effects of potentially dilutive securities, while diluted EPS reflects the
potential dilutive effects of stock options, awards and other securities.
Three Months Ended Three Months Ended
March 31, 2003 March 31, 2002
--------------------------------------- ---------------------------------------
Income Shares Per Share Income Shares Per Share
(In millions, except per share amounts) (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
--------------------------------------- ----------- ------------- ----------- ----------- ------------- -----------
Net income $ 56.6 $ 57.6
Less: Preferred dividends -- (1.2)
-------- --------
Basic EPS
Net income available to common
stockholders 56.6 171.4 $ 0.33 56.4 176.8 $ 0.32
======== ========
Effect of dilutive securities:
Plus: Dividends on Series B preferred stock -- 1.2
Additional contribution required for
TESOP if preferred stock had been
converted -- -- (1.2) 5.5
Stock options 0. 4 1.3
-------- -------- -------- --------
Diluted EPS
Net income available to common
stockholders plus assumed conversions $ 56.6 171.8 $ 0.33 $ 56.4 183.6 $ 0.31
======== ======== ======== ======== ======== ========
Options to purchase 24.0 million and 13.5 million shares of common stock for the
three months ended March 31, 2003 and 2002, respectively, were not included in
the computation of diluted earnings per common share because the exercise prices
of the options were greater than the average market price of the common stock
during the quarter.
NOTE 3 - STOCK-BASED COMPENSATION
We account for our employee stock-based compensation plans under the intrinsic
value method. Accordingly, no compensation expense has been recognized for our
incentive stock plans, as the exercise price of options must be equal to or
greater than the stock price on the date of grant under these plans. The table
below illustrates the effect on net income and net income available per common
share as if we had accounted for our employee stock options under the fair value
recognition provisions of Statement of Financial Accounting Standards ("SFAS")
No. 123, "Accounting for Stock-Based Compensation."
Three Months Ended March 31,
----------------------------
(In millions, except per share amounts) 2003 2002
--------------------------------------- ------ ------
Net income, as reported $ 56.6 $ 57.6
Stock-based employee compensation expense included in reported
net income, net of related tax effects 2.6 3.2
Total stock-based compensation expense determined under fair
value method for all awards, net of related tax effects (20.6) (17.3)
------ ------
Pro forma net income $ 38.6 $ 43.5
====== ======
Net income available per common share:
Basic - as reported $ 0.33 $ 0.32
Basic - pro forma $ 0.23 $ 0.24
Diluted - as reported $ 0.33 $ 0.31
Diluted - pro forma $ 0.22 $ 0.24
NOTE 4 - COMPREHENSIVE INCOME
Comprehensive income for the three months ended March 31, 2003 and 2002, was
$56.6 million and $57.6 million, respectively.
NOTE 5 - BUSINESS RESTRUCTURINGS
In 1996 and 1997, we initiated certain restructuring programs in which a number
of our former McDuff, Computer City and Incredible Universe retail stores were
closed. We still have certain real estate obligations related to some of these
stores and at March 31, 2003, the balance in the restructuring reserve was $16.3
million, consisting of the remaining estimated real estate obligations to be
paid. During the three months ended March 31, 2003, an additional provision of
$0.9 million was recorded and costs of $0.9 million were charged to this
liability. The balance in the restructuring reserve at March 31, 2003, includes
$9.6 million in accrued expenses and $6.7 million in other non-current
liabilities in the accompanying 2003 Consolidated Balance Sheet. These reserves
represent our revised expected loss on the eventual disposition of these real
estate obligations and are based on current comparable rates for leases in their
respective markets. If these facilities' sublease income continues to decrease
in their respective markets or if it takes longer than expected to sublease or
dispose of these facilities, the actual losses could exceed this reserve
estimate. Costs will continue to be incurred over the remaining terms of the
related leases, the longest of which is 17 years.
In 2001 we initiated an additional restructuring program related primarily to a
general reduction of our corporate management and administrative labor force,
mainly for early retirement and involuntary and voluntary employee severance,
closure of our national commercial installation business, and closure of 35
underperforming stores. During the first quarter of 2002, we completed a
significant portion of the remaining restructuring program, utilizing the
reserves established in 2001. As of December 31, 2002, we considered these
restructuring activities to be substantially complete and transferred the
remaining restructuring reserve of $3.8 million to accrued expenses and $2.8
million to other non-current liabilities in the accompanying Consolidated
Balance Sheet at December 31, 2002, to be used principally for the remaining
cash commitments associated with long term compensation and lease commitment
obligations.
NOTE 6 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No.
143, "Accounting for Asset Retirement Obligations," which is effective for
fiscal years beginning after June 15, 2002. SFAS No. 143 establishes financial
accounting and reporting standards for obligations associated with the
retirement of tangible long-lived assets and the associated asset retirement
costs. We adopted SFAS No. 143 effective January 1, 2003, and made no material
adjustments to our consolidated financial statements as a result of this
adoption.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities." SFAS No. 146 addresses significant issues
relating to the recognition, measurement, and reporting of costs associated with
exit and disposal activities, including restructuring activities, and nullifies
the guidance in Emerging Issues Task Force ("EITF") Issue No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring)." The provisions
of SFAS No. 146 are effective for exit or disposal activities initiated after
December 31, 2002. Retroactive application of SFAS No. 146 is prohibited and,
accordingly, liabilities recognized prior to the initial application of SFAS No.
146 should continue to be accounted for in accordance with EITF 94-3 or other
applicable preexisting guidance. We adopted SFAS No. 146 effective January 1,
2003, and made no material adjustments to our consolidated financial statements
as a result of this adoption.
In November 2002, the FASB issued Interpretation No. ("FIN") 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Guarantees of
Indebtedness of Others." FIN 45 is effective for guarantees issued or modified
after December 31, 2002. The disclosure requirements were effective for certain
guarantees existing at December 31, 2002, and expand the disclosures required by
a guarantor about its obligations under a guarantee. FIN 45 also requires that
we recognize guarantees entered into or modified after December 31, 2002, as a
liability for the fair value of the obligation undertaken in the issuance of the
guarantee. FIN 45 became effective January 1, 2003. We adopted FIN 45 effective
January 1, 2003, and, aside from the disclosure provisions which we adopted as
of December 31, 2002, made no material adjustments to our consolidated financial
statements as a result of this adoption.
In January 2003, the FASB issued FIN 46, "Consolidation of Variable Interest
Entities - An Interpretation of ARB No. 51." FIN 46 addresses consolidation by
business enterprises of variable interest entities that have certain
characteristics. The consolidation requirement of FIN 46 is applicable
immediately to variable interest entities created or obtained after January 31,
2003. We have not obtained or created any entities after January 31, 2003, and,
therefore, have made no adjustments to our consolidated financial statements.
For variable interest entities acquired before February 1, 2003, the
consolidation requirement of FIN 46 is applicable to us as of July 1, 2003. We
are currently analyzing FIN 46 for entities acquired before February 1, 2003;
however, we do not believe there will be any material adjustments to our
consolidated financial statements as a result of this analysis.
In November 2002, the Emerging Issues Task Force ("EITF") reached a consensus on
Issue No. 02-16, "Accounting for Consideration Received from a Vendor by a
Customer (Including a Reseller of the Vendor's Products)." EITF 02-16 provides
guidance on how cash consideration received by a customer from a vendor should
be classified in the customer's statement of income. EITF 02-16 is effective
prospectively for new arrangements, including modification of existing
arrangements, entered into after December 31, 2002. We adopted EITF No. 02-16
effective January 1, 2003, and made no material adjustments to our consolidated
financial statements as a result of this adoption.
NOTE 7 - COMMITMENTS AND CONTINGENT LIABILITIES
We have contingent liabilities related to retail leases of locations which were
assigned to other businesses. The majority of these contingent liabilities
relate to various lease obligations arising from leases that were assigned to
CompUSA, Inc. as part of the sale of our Computer City, Inc. subsidiary to
CompUSA, Inc. in August 1998. In the event CompUSA or the other assignees, as
applicable, are unable to fulfill these obligations, we would be responsible for
rent due under the leases. Our rent exposure from the remaining undiscounted
lease commitments with no projected sublease income is approximately $206
million. However, we have no reason to believe that CompUSA or the other
assignees will not fulfill their obligations under these leases or that we would
be unable to sublet the properties; consequently, we do not believe there will
be a material impact on our consolidated financial statements as a result of the
contingent liabilities relating to these lease obligations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS ("MD&A")
FACTORS THAT MAY AFFECT FUTURE RESULTS
Matters discussed in MD&A and in other parts of this document include
forward-looking statements within the meaning of the federal securities laws.
This includes statements concerning management's plans and objectives relating
to our operations or economic performance and related assumptions.
Forward-looking statements are made based on management's current expectations
and beliefs concerning future events and, therefore, involve a number of risks
and uncertainties. Management cautions that forward-looking statements are not
guarantees and actual results could differ materially from those expressed or
implied in the forward-looking statements. Important factors that could cause
our actual results of operations or financial condition to differ include, but
are not necessarily limited to, the following factors.
General Business Factors
o Changes in the national or regional U.S. economic conditions, including, but
not limited to, recessionary trends, level of the equity markets, consumer
credit availability, interest rates, inflation, consumers' disposable income
and spending levels, job security and unemployment, and overall consumer
confidence;
o continuing terrorist activities in the U.S., as well as the international war
on terrorism;
o the disruption of international, national or regional transportation systems;
o changes in the amount and degree of promotional intensity exerted by current
competitors and potential new competition from both retail stores and
alternative methods or channels of distribution, such as e-commerce,
telephone shopping services and mail order;
o the lack of availability or access to sources of inventory;
o changes in the financial markets that would reduce or eliminate access to
longer term capital or short-term credit availability;
o the inability to attract, retain and grow an effective management team in a
dynamic environment or changes in the cost or availability of a suitable work
force to manage and support our service-driven operating strategies;
o the imposition of new restrictions or regulations regarding the sale of
products and/or services we sell or changes in tax rules and regulations
applicable to us;
o the occurrence of severe weather events or natural disasters, which could
destroy outlets or prohibit consumers from traveling to our retail locations,
especially during the peak winter holiday season; and
o the inability to timely manufacture or receive Asian shipments due to the
SARS outbreak.
RadioShack Specific Factors
o The failure to differentiate ourselves as an electronics specialty retailer
in the U.S. marketplace;
o the inability to successfully execute our solutions strategy to dominate
cost-effective solutions to meet everyone's routine electronics needs and
families' distinct electronics wants;
o the inability to successfully execute our strategic initiatives, including
our Anchor, Participatory and Opportunistic ("APOS") business model and
emerging sales channels strategies, as well as new business arrangements
which may be formed with other retailers, distributors and third-party
service providers;
o the inability to maintain profitable contracts or execute business plans with
providers of third-party branded products and with service providers relating
to cellular and PCS telephones and direct-to-home ("DTH") satellite
programming;
o the presence or absence of new services or products and product features in
the merchandise categories we sell and unexpected changes in our actual
merchandise sales mix;
o the inability to collect the level of anticipated residual income, subscriber
acquisition fees and rebates for products and third-party services offered by
us;
o the inability to successfully maintain our business arrangements, including
those with Compaq, DirecTV, DISH Network, Thomson/RCA, Sprint, and Verizon
Wireless;
o the existence of contingent lease obligations related to our discontinued
retail operations arising from an assignee's or a sub-lessee's failure to
fulfill its lease commitments, or from our inability to identify suitable
sub-lessees for vacant facilities; and
o the inability to establish and implement our internal and external supply
chain initiatives.
RESULTS OF OPERATIONS
Net sales and operating revenues by channel of distribution are as follows:
Three Months Ended March 31,
----------------------------
(In millions) 2003 2002
------------- ------------- -------------
Company retail sales $ 1,012.5 $ 957.9
Dealer/franchise sales 40.5 54.2
------------- -------------
Total retail sales 1,053.0 1,012.1
Retail support operations sales 17.3 22.3
------------- -------------
Net sales and operating revenues $ 1,070.3 $ 1,034.4
============= =============
Net Sales and Operating Revenues
Net sales and operating revenues increased approximately 3.5% to $1,070.3
million for the three months ended March 31, 2003, from $1,034.4 million in the
corresponding prior year period. Additionally, we had a 5% increase in
comparable company store sales. These increases were primarily the result of
increased sales within the wireless and computer departments. Sales to our
dealer/franchise outlets declined 25.3% for the three months ended March 31,
2003, when compared to the same prior year period. The decrease in sales to our
dealer/franchise outlets was the result of a decline in DTH unit sales from the
loss of DirecTV as a service provider to rural markets and a low adoption rate
of the DISH Network in areas served by our dealer/franchise outlets. We expect a
sales gain for our overall operations for 2003, as discussed in further detail
below.
Retail support operations sales are generated from the outside sales of our
retail support operations, consisting primarily of RadioShack Installation
Services ("RSIS"), repair centers, and domestic and overseas manufacturing. The
22.4% decrease in retail support operations sales for 2003, when compared to the
corresponding 2002 period, primarily resulted from a decrease in RSIS sales
related to the decline in DTH home installations in our company stores and
dealer/franchise operations discussed above.
Sales in the wireless communication department, which consists of wireless
handsets (including related services), accessories, and wireless services such
as prepaid airtime and bill payments, increased approximately 14% for the
quarter, when compared to the first quarter of last year. This sales increase
was due to an increase in sales of wireless handsets, services and accessories,
as a result of our emphasis on national carrier service and product offerings
with desirable product features and content, such as color screens. Although we
have previously experienced sales gains in this department, we realize that the
overall wireless industry is experiencing a slow-down in net new customer
activations. While there is no assurance that we can maintain past sales gain
levels, we believe our plans, if executed successfully, will result in continued
wireless sales increases for 2003.
Sales in the wired communication department, which includes residential
land-line telephones, answering machines and other related telephony products,
decreased approximately 4% for the quarter, when compared to the first quarter
last year. The decrease in this department was primarily the result of a decline
in sales of wire-line accessories. The decrease was partially offset by sales
increases of cordless telephones and answering machines. We anticipate sales in
this department will be down slightly in 2003.
Sales in the radio communication department decreased 8% for the quarter, when
compared to the first quarter of last year. The decrease in this department was
primarily the result of a decrease in sales of Family Radio Service ("FRS") and
CB radios, scanners and radio communication accessories and was partially offset
by a sales increase of GPS devices. We believe sales in this department will
experience a recovery in the second half of 2003 due to the introduction of new
models and innovative packaging during that time period, resulting in
approximately flat sales for 2003 as compared to 2002.
Sales in the home entertainment department, which consists of all home audio and
video end-products and accessories, including DTH hardware and installation,
decreased approximately 17% for the quarter, when compared to the first quarter
of last year. This decrease was primarily attributable to a decrease in sales of
satellite dishes and related installation services, but was partially offset by
increased sales of DVD players and televisions. We expect that satellite dish
sales will continue to decline in 2003, but at a reduced rate, compared to the
prior year. We anticipate that other categories within the home entertainment
department will have gains that will offset most of this decline, resulting in
overall flat to slightly lower sales in this department for 2003 compared to
2002.
Sales in the computer department, which includes desktop, laptop, and handheld
computers and related accessories, in addition to digital cameras and home
networking products, increased approximately 13% for the quarter, when compared
to the first quarter of last year. This increase was due primarily to a sales
increase in laptop computers, digital cameras and related accessories, as well
as computer accessories. These increases were partially offset by a decline in
unit sales of desktop CPUs and monitors. We expect that sales in the computer
department will increase in 2003, driven by sales of the products discussed
above, particularly digital cameras and the related accessories, with this
increase partially offset by a planned decrease in sales of desktop computers.
Sales for the power and technical department increased 1% for the quarter, when
compared to the first quarter of last year. This increase was primarily due to
increased sales of general and special purpose batteries, which were
substantially offset by decreased sales of bulk and packaged wire, as well as
technical parts and related equipment. We anticipate a slight sales increase in
this department in 2003 compared to 2002.
Sales for the personal electronics, toys and personal audio department increased
21% for the quarter, when compared to the first quarter of last year, due
primarily to the 2003 sales of micro radio controlled cars and related
accessories not available in the first quarter of 2002. Additionally, sales in
this department increased as a result of deep discounts on discontinued toy
products and increased sales of unique giftables and radios. We expect that
sales in this department will continue to grow in 2003 as a result of new
innovative product offerings and planned product line extensions later in the
year.
RadioShack Retail Outlets
The table below shows RadioShack's retail locations categorized by company
stores and dealer/franchise outlets. While the dealer outlets represent
approximately 28% of the RadioShack locations, sales to dealer/franchisees are
less than 10% of our net sales and operating revenues.
March 31, December 31, September 30, June 30, March 31,
2003 2002 2002 2002 2002
------------ ------------ ------------ ------------ ------------
Company 5,146 5,161 5,146 5,144 5,125
Dealer/franchise 1,988 2,052 2,089 2,094 2,086
------------ ------------ ------------ ------------ ------------
Total number of retail outlets 7,134 7,213 7,235 7,238 7,211
============ ============ ============ ============ ============
In addition to our 5,146 company stores and 1,988 dealer/franchise outlets, our
sales channels include the www.radioshack.com Web site, foreign dealers and
catalog operations, as well as outbound and inbound telephone call centers.
Gross Profit
For the three months ended March 31, 2003, gross profit dollars increased $7.7
million, but gross profit as a percent of net sales and operating revenues
decreased 0.9 percentage points to 49.3% from 50.2% in the corresponding 2002
period. This decrease was due in part to a decline in the gross profit
percentage of the personal electronics, toys and personal audio department as a
result of heavy promotional and rebate activity in the first quarter of 2003.
The decrease was also driven by a decline in wireless department gross profit
percentage combined with an increase in the department's percentage of the total
retail sales mix. Additionally, increased sales in our computer department
impacted the gross profit percentage, as the computer department has a lower
gross profit percentage than our overall average gross profit percentage. This
negative impact on the gross profit percentage was partially offset by the
increase in the gross profit percentage associated with sales within the power
and technical department, which had a positive effect on both gross profit
dollars and our overall gross profit percentage in the first quarter of 2003. We
anticipate that gross profit as a percentage of net sales and operating revenues
will improve by zero to 20 basis points by the end of 2003, compared to 2002,
due primarily to supply chain management initiatives.
Selling, General and Administrative Expense
For the first quarter of 2003, our selling, general and administrative ("SG&A")
expense increased 3.7% or $14.6 million, when compared to the first quarter of
2002. However, SG&A expense as a percentage of net sales and operating revenues
was approximately flat when compared to the quarter ended March 31, 2002, due to
higher overall sales in the current year quarter. The dollar increase was
primarily due to an increase in insurance expense, as well as increases in both
rent and payroll expenses. Insurance expense increased in both dollars and as a
percentage of net sales and operating revenues as a result of significant
increases in health related claims and costs for workers' compensation. Rent
expense increased in dollars as a result of slightly larger and better located
stores, as well as rent inflation at mall locations. However, rent expense
remained flat as a percentage of net sales and operating revenues due to
increased sales. Payroll expense increased in dollars, but decreased slightly as
a percentage of net sales and operating revenues, due primarily to increases in
commission, bonuses and other incentives, which resulted from higher store sales
in the first quarter of 2003. Management is currently reviewing opportunities to
reduce SG&A expense, including, among other items, analyzing employee headcount,
lowering our absorption of health insurance costs, and consolidating and
outsourcing certain functions and operations. For the year ending December 31,
2003, we expect SG&A expense to increase in dollars, but remain at a similar
percentage of net sales and operating revenues for 2003, as compared to 2002.
Net Interest Expense
Interest expense, net of interest income, for the three months ended March 31,
2003, was $8.1 million versus $9.0 million for the first three months in 2002.
Interest expense for the quarter decreased $1.2 million from last year as a
result of lower average outstanding debt for 2003, in addition to the
capitalization of $0.5 million of interest expense related to the construction
of our new corporate campus, which began in the first quarter of 2003.
Additionally, our interest rate swaps lowered interest expense for the three
months ended March 31, 2003, by $1.5 million, compared to $1.3 million in the
corresponding prior year period. Interest income decreased $0.3 million for the
three months ended March 31, 2003, compared to the prior year period, primarily
as a result of the decline in market interest rates. Interest expense, net of
interest income, is expected to be lower during 2003, when compared to 2002.
Other Income
During the first quarter of 2003, we received a payment and recorded income of
$2.4 million under the tax sharing agreement with O'Sullivan Industries
Holdings, Inc. ("O'Sullivan"). Future payments will vary based on the level of
O'Sullivan's future earnings. In the near term, we expect that the quarterly
payments to us will approximate those received to date; however, these payments
are dependent upon O'Sullivan's overall financial condition and ability to pay.
Consequently, there can be no assurances that we will receive each payment that
may be due to us under our tax sharing agreement in a timely manner.
Provision for Income Taxes
Provision for income taxes for each quarterly period is based on our current
estimate of the annual effective tax rate for the full year. Our effective tax
rate for the first quarters of both 2003 and 2002 was 38.0%.
Recently-Issued Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 143, "Accounting for Asset
Retirement Obligations," which is effective for fiscal years beginning after
June 15, 2002. SFAS No. 143 establishes financial accounting and reporting
standards for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. We adopted SFAS No. 143
effective January 1, 2003, and made no material adjustments to our consolidated
financial statements as a result of this adoption.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities." SFAS No. 146 addresses significant issues
relating to the recognition, measurement, and reporting of costs associated with
exit and disposal activities, including restructuring activities, and nullifies
the guidance in Emerging Issues Task Force ("EITF") Issue No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring)." The provisions
of SFAS No. 146 are effective for exit or disposal activities initiated after
December 31, 2002. Retroactive application of SFAS No. 146 is prohibited and,
accordingly, liabilities recognized prior to the initial application of SFAS No.
146 should continue to be accounted for in accordance with EITF 94-3 or other
applicable preexisting guidance. We adopted SFAS No. 146 effective January 1,
2003, and made no material adjustments to our consolidated financial statements
as a result of this adoption.
In November 2002, the FASB issued Interpretation No. ("FIN") 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Guarantees of
Indebtedness of Others." FIN 45 is effective for guarantees issued or modified
after December 31, 2002. The disclosure requirements were effective for certain
guarantees existing at December 31, 2002, and expand the disclosures required by
a guarantor about its obligations under a guarantee. FIN 45 also requires that
we recognize guarantees entered into or modified after December 31, 2002, as a
liability for the fair value of the obligation undertaken in the issuance of the
guarantee. FIN 45 became effective January 1, 2003. We adopted FIN 45 effective
January 1, 2003, and, aside from the disclosure provisions which we adopted as
of December 31, 2002, made no material adjustments to our consolidated financial
statements as a result of this adoption.
In January 2003, the FASB issued FIN 46, "Consolidation of Variable Interest
Entities - An Interpretation of ARB No. 51." FIN 46 addresses consolidation by
business enterprises of variable interest entities that have certain
characteristics. The consolidation requirement of FIN 46 is applicable
immediately to variable interest entities created or obtained after January 31,
2003. We have not obtained or created any entities after January 31, 2003, and,
therefore, have made no adjustments to our consolidated financial statements.
For variable interest entities acquired before February 1, 2003, the
consolidation requirement of FIN 46 is applicable to us as of July 1, 2003. We
are currently analyzing FIN 46 for entities acquired before February 1, 2003;
however, we do not believe there will be any material adjustments to our
consolidated financial statements as a result of this analysis.
In November 2002, the Emerging Issues Task Force ("EITF") reached a consensus on
Issue No. 02-16, "Accounting for Consideration Received from a Vendor by a
Customer (Including a Reseller of the Vendor's Products)." EITF 02-16 provides
guidance on how cash consideration received by a customer from a vendor should
be classified in the customer's statement of income. EITF 02-16 is effective
prospectively for new arrangements, including modification of existing
arrangements, entered into after December 31, 2002. We adopted EITF No. 02-16
effective January 1, 2003, and made no material adjustments to our consolidated
financial statements as a result of this adoption.
FINANCIAL CONDITION
Cash flow provided by operating activities approximated $103.3 million for the
quarter ended March 31, 2003, compared to $158.4 million in the prior year first
quarter.
At March 31, 2003, changes in accounts receivable provided $41.6 million in cash
since December 31, 2002, compared to $59.3 million in cash for the quarter ended
March 31, 2002. Cash provided by accounts receivable for these corresponding
periods was due to reductions in vendor and service provider receivables and
dealer/franchise receivables as a result of an increase in collections and lower
sales of satellite television hardware.
At March 31, 2003, changes in inventory provided $126.9 million for the quarter
ended March 31, 2003, compared to $118.7 million in cash for the quarter ended
March 31, 2002. The decrease in inventory since December 31, 2002, was primarily
the result of inventory decreases in all departments as our supply chain
initiatives decreased our weeks-of-supply.
In addition, during the first quarter of 2003, $86.1 million more in cash was
used for accounts payable, partially offset by $27.5 million more in cash
provided by accrued expenses and $15.2 million more in cash provided by income
taxes payable, compared to the first quarter of 2002.
We had $456.7 million in cash and cash equivalents at March 31, 2003, as a
resource for our funding needs. Additional borrowings are available under our
$600.0 million dollar commercial paper program, which is supported by a bank
credit facility which could be utilized in the event the commercial paper market
is unavailable to us. However, we currently do not expect that the commercial
paper market would be unavailable to us, causing us to utilize the credit
facility. As of March 31, 2003, we had no commercial paper outstanding and had
not utilized our credit facility. In June 2003, $300.0 million of our bank
credit facility will expire. We currently plan to renew this facility for an
additional year on substantially similar terms.
Cash used in investing activities for the quarter ended March 31, 2003, was
$21.4 million, compared to $15.0 million in the previous year. Investing
activities for the quarter ended March 31, 2003, included capital expenditures
totaling $21.4 million compared to $16.0 million in 2002, primarily for our
retail store expansions and remodels, information systems upgrades and our new
corporate campus. We anticipate that our capital expenditure requirements for
2003 will be approximately $210.0 million to $230.0 million, compared to total
capital expenditures of $106.8 million for the year ended December 31, 2002.
Approximately $100.0 million of the increase over 2002 relates to the
construction of our new corporate headquarters, which we plan to finance through
cash from operations and, if needed, existing cash and cash equivalents.
Cash used in financing activities for the quarter ended March 31, 2003, was
$71.7 million, compared to a $110.4 million cash usage in the previous year. We
repurchased $62.5 million of shares of our common stock during the quarter ended
March 31, 2003, compared to $72.0 million during the same period of 2002, under
our employee and board approved repurchase programs. These repurchases were
partially funded by $10.8 million and $15.8 million received from the sale of
treasury stock to stock plans and from stock option exercises during the same
corresponding periods. Preferred dividends paid, net of tax, amounted to $0.8
million in the first quarter of 2002. There were no preferred dividends paid in
the first quarter of 2003 due to the conversion of our preferred stock to common
stock at December 31, 2002. Additionally, we used $33.4 million less cash for
the repayment of our long-term borrowings in the three months ended March 31,
2003, when compared to the corresponding prior year period.
At March 31, 2003, total capitalization was $1,339.7 million, which consisted of
$606.7 million of debt and $733.0 million of stockholders' equity, resulting in
a total debt to capitalization ratio of 45.3%. The total debt to capitalization
ratio was 46.3% at December 31, 2002, and 44.1% at March 31, 2002. The decrease
since the 2002 year-end was primarily the result of a reduction of total debt of
$20.6 million. The increase in the ratio since March 31, 2002, was primarily the
result of a reduction in equity from our increased purchases of our common stock
in the first quarter of 2003. Long-term debt as a percentage of capitalization
was 44.1% at March 31, 2003, 43.6% at December 31, 2002, and 39.0% at March 31,
2002. The increases since last year's first quarter at both March 31, 2003, and
December 31, 2002, were due to the financing obligation resulting from the sale
and lease-back of our corporate technology center building and the reduction of
equity in 2002.
During the first quarter of 2003, we repurchased 2.5 million shares of our
common stock for $50.4 million under our existing share repurchase program. We
may continue to execute share repurchases from time to time in order to take
advantage of attractive share price levels, as determined by management. The
timing and terms of the transactions depend on market conditions, our liquidity
and other considerations. On February 20, 2003, our Board of Directors
authorized a new repurchase program for 15.0 million shares, which is in
addition to our existing 25.0 million share repurchase program. At April 30,
2003, there were 16.6 million shares available to be repurchased under our
existing repurchase programs. We anticipate that we will repurchase, under our
authorized repurchase programs, between $200.0 million and $250.0 million of our
common stock during 2003. The funding required for these share repurchase
programs will come from cash generated from net sales and operating revenues and
cash and cash equivalents. We will repurchase additional shares in the open
market to offset the sale of shares to our stock plans.
Our free cash flow, defined as cash flow from operating activities less
dividends paid and capital expenditures for property, plant and equipment, was
$81.9 million for the three months ended March 31, 2003, compared to $141.6
million for the corresponding period in 2002. We believe free cash flow is an
appropriate indication of the corporation's ability to fund share repurchases,
repay maturing debt, change dividend payments or fund other uses of capital that
management believes will enhance shareholder value. This decrease in free cash
flow was due primarily to lower working capital improvements in the first
quarter of 2003, when compared to the corresponding prior year period. We expect
free cash flow to be approximately $225.0 to $265.0 million for 2003, compared
to $375.0 million in 2002. The anticipated decrease in free cash flow from 2003
to 2002 is primarily related to the increase in 2003 capital expenditures, as
described above. The comparable financial measure to free cash flow under GAAP
is cash flow from operating activities, which was $103.3 million and $158.4
million for the three months ended March 31, 2003 and 2002, respectively.
The following table is a reconciliation of cash provided by operating activities
to free cash flow.
Three Months Ended March 31, Year Ended December 31,
---------------------------- -----------------------
(In millions) 2003 2002 2002
------------- ------------ ------------ ------------
Net cash provided by operating activities $ 103.3 $ 158.4 $ 521.6
Less:
Additions to property, plant and equipment 21.4 16.0 106.8
Dividends paid -- 0.8 39.8
------------ ------------ ------------
Free cash flow $ 81.9 $ 141.6 $ 375.0
============ ============ ============
ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK.
We are exposed to market risk principally from fluctuations in interest rates
which could affect our cash flows and consolidated financial statements. We
manage our exposure to interest rate risk, which results from changes in
short-term interest rates, by managing our portfolio of fixed rate debt and,
when we consider it appropriate, through the use of derivative financial
instruments. At March 31, 2003, we did not have any derivative instruments that
materially increased our exposure to market risks for interest rates, foreign
currency rates, commodity prices or other market price risks, other than the
interest rate swaps noted in MD&A in our Annual Report on Form 10-K for the year
ended December 31, 2002. We do not use derivatives for speculative purposes.
Our exposure to interest rate risk is managed by converting a portion of our
long-term debt from fixed to variable rates using interest rate swaps to reduce
our overall borrowing costs. We may continue to utilize interest rate swaps in
the future as market conditions allow.
The fair value of our fixed rate long-term debt is sensitive to interest rate
changes. Interest rate changes would result in increases or decreases in the
fair value of our debt due to differences between market interest rates and
rates at the inception of the debt obligation. Regarding the fair value of our
fixed rate debt, changes in interest rates have no impact on our cash flows or
consolidated financial statements.
ITEM 4. CONTROLS AND PROCEDURES.
Our management, including the Chief Executive Officer ("CEO") and Chief
Financial Officer ("CFO"), has conducted an evaluation of the effectiveness of
our disclosure controls and procedures pursuant to Exchange Act Rule 13a-14, as
of a date within 90 days of the filing date of this Quarterly Report on Form
10-Q. Based on that evaluation, the CEO and CFO concluded that these disclosure
controls and procedures are effective in ensuring that all material information
required to be filed in this Quarterly Report has been made known to them in a
timely fashion. There were no significant changes in internal controls, or in
factors that could significantly affect internal controls, subsequent to the
date the CEO and CFO completed their evaluation.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
We have various pending claims, lawsuits, disputes with third parties,
investigations and actions incidental to the operation of our business. Although
occasional adverse settlements or resolutions may occur and negatively impact
earnings in the year of settlement, it is our opinion that their ultimate
resolution will not have a materially adverse effect on our financial condition
or liquidity.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a) Exhibits Required by Item 601 of Regulation S-K.
A list of the exhibits required by Item 601 of Regulation S-K and
filed as part of this report is set forth in the Index to Exhibits
on page 18, which immediately precede such exhibits.
b) Reports on Form 8-K.
We filed a Form 8-K with the SEC on April 22, 2003, in which we
furnished an earnings release reporting our results of operations
for the quarter ended March 31, 2003.
We filed a Form 8-K with the SEC on April 25, 2003, in which we
furnished a transcript of a conference call held on April 22, 2003,
concerning our results of operations for the quarter ended March 31,
2003.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
RadioShack Corporation
(Registrant)
Date: May 12, 2003 By /s/ David P. Johnson
------------------------------------
David P. Johnson
Senior Vice President and Controller
(Authorized Officer)
Date: May 12, 2003 /s/ Michael D. Newman
------------------------------------
Michael D. Newman
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
I, Leonard H. Roberts, certify that:
1. I have reviewed this quarterly report on Form 10-Q of RadioShack
Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which
this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
Date: May 12, 2003 By /s/ Leonard H. Roberts
------------------------------------
Leonard H. Roberts
Chief Executive Officer
A signed original of this written statement has been provided to RadioShack
Corporation and will be retained by RadioShack Corporation and furnished to the
Securities and Exchange Commission or its staff upon request.
I, Michael D. Newman, certify that:
1. I have reviewed this quarterly report on Form 10-Q of RadioShack
Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
Date: May 12, 2003 /s/ Michael D. Newman
------------------------------------
Michael D. Newman
Chief Financial Officer
A signed original of this written statement has been provided to RadioShack
Corporation and will be retained by RadioShack Corporation and furnished to the
Securities and Exchange Commission or its staff upon request.
RADIOSHACK CORPORATION
INDEX TO EXHIBITS
Exhibit
Number Description
3a Certificate of Amendment of Restated Certificate of Incorporation
dated May 18, 2000 (filed as Exhibit 3a to RadioShack's Form 10-Q
filed on August 11, 2000 for the fiscal quarter ended June 30,
2000).
3a(i) Restated Certificate of Incorporation of RadioShack Corporation
dated July 26, 1999 (filed as Exhibit 3a(i) to RadioShack's Form
10-Q filed on August 11, 1999 for the fiscal quarter ended June 30,
1999).
3b RadioShack Corporation Bylaws, amended and restated as of December
12, 2002 (filed as Exhibit 3b to RadioShack's Form 10-K filed on
March 28, 2003 for the fiscal year ended December 31, 2002).
12* Statements of Computation of Ratio of Earnings to Fixed Charges.
99(a)* Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99(b)* Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
____________________________
* filed with this report
EXHIBIT 12
RADIOSHACK CORPORATION
STATEMENTS OF COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
AND RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS
Three Months Ended
March 31,
--------------------
(In millions, except ratios) 2003 2002
---------------------------- --------- ---------
Ratio of Earnings to Fixed Charges:
Net income $ 56.6 $ 57.6
Plus provision for income taxes 34.7 35.3
--------- ---------
Income before income taxes 91.3 92.9
--------- ---------
Fixed charges:
Interest expense and amortization, including debt discount 9.4 10.5
Amortization of debt issuance costs 0.2 0.3
Capitalized interest 0.5 --
Appropriate portion (33 1/3%) of rentals 20.8 19.9
--------- ---------
Total fixed charges 30.9 30.7
--------- ---------
Earnings before income taxes and fixed charges, excluding
capitalized interest $ 121.7 $ 123.6
========= =========
Ratio of earnings to fixed charges 3.94 4.03
========= =========
Ratio of Earnings to Fixed Charges and Preferred Dividends:
Total fixed charges, as above $ 30.9 $ 30.7
Preferred dividends -- 1.2
--------- ---------
Total fixed charges and preferred dividends $ 30.9 $ 31.9
========= =========
Earnings before income taxes and fixed charges, excluding
capitalized interest $ 121.7 $ 123.6
========= =========
Ratio of earnings to fixed charges and preferred dividends 3.94 3.87
========= =========
Exhibit 99(a)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of RadioShack Corporation (the
"Company") on Form 10-Q for the period ending March 31, 2003 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Leonard
H. Roberts, Chief Executive Officer of the Company, certify to my knowledge,
pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-
Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Company.
/s/ Leonard H. Roberts
Leonard H. Roberts
Chief Executive Officer
May 12, 2003
A signed original of this written statement required by Section 906 has been
provided to the Company and will be retained by the Company and furnished to the
Securities and Exchange Commission or its staff upon request.
Exhibit 99(b)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of RadioShack Corporation (the
"Company") on Form 10-Q for the period ending March 31, 2003 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Michael
D. Newman, Chief Financial Officer of the Company, certify to my knowledge,
pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-
Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Company.
/s/ Michael D. Newman
Michael D. Newman
Chief Financial Officer
May 12, 2003
A signed original of this written statement required by Section 906 has been
provided to the Company and will be retained by the Company and furnished to the
Securities and Exchange Commission or its staff upon request.