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Radioshack Corp · 10-Q · For 3/31/01

Filed On 5/14/01 3:59pm ET · SEC File 1-05571 · Accession Number 96289-1-500004

  As Of               Filer                 Filing     As/For/On Docs:Pgs

 5/14/01  Radioshack Corp                   10-Q        3/31/01    1:10

Quarterly Report · Form 10-Q
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Quarterly Report                                      10     73K

Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (RTF, XML, et al.) Exhibits and Reports on Form 8-K Financial Statements Legal Proceedings Management's Discussion and Analysis of Financial Condition and Results of Operations ("Md&A") Qualitative and Quantitative Disclosures About Market Risk
1	1st Page
2	Item 1. Financial Statements
6	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ("Md&A")
"	Item 3. Qualitative and Quantitative Disclosures About Market Risk
7	Item 1. Legal Proceedings
"	Item 6. Exhibits and Reports on Form 8-K

10-Q 1st Page of 10 TOC Top Previous Next Bottom Just 1st
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 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------

 FORM 10-Q

X      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES     
EXCHANGE ACT OF 1934                                            

For the quarterly period ended March 31, 2001                   

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE        
SECURITIES EXCHANGE ACT OF 1934                                 

  For the transition period from ________________ to _______________

Commission File Number: 1-5571
  ------------------------

RADIOSHACK CORPORATION
(Exact name of registrant as specified in our charter)

      Delaware                                              75-1047710
(State or other jurisdiction of                               (I.R.S. Employer  
incorporation or organization)                               Identification No.)

100 Throckmorton Street, Suite 1800, Fort Worth, Texas                   76102  
        (Address of principal executive offices)                      (Zip Code)

Registrant's telephone number, including area code: (817) 415-3700
------------------------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was     
required to file such reports), and (2) has been subject to such filing         
requirements for the past 90 days. Yes X No __                                  

The number of shares outstanding of the issuer's Common Stock, $1 par value, on 
April 30, 2001 was 185,442,885.                                                 
 Index to Exhibits is on Sequential Page No. 13. Total pages 14.

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PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS                                                   

                                                                [Download Table]
                     RADIOSHACK CORPORATION AND SUBSIDIARIES                    
                  Consolidated Statements of Income (Unaudited)                 


                                                           Three Months Ended   
                                                                March 31,       
(In millions, except per share amounts)                      2001        2000   
                                                           ---------  --------- 
                                                                                
Net sales and operating revenues                           $ 1,139.5  $ 1,047.3 
Cost of products sold                                          593.0      531.3 
                                                           ---------  --------- 
Gross profit                                                   546.5      516.0 
                                                           ---------  --------- 

Operating expenses (income):                                                    
  Selling, general and administrative                          405.2      374.0 
  Depreciation and amortization                                 27.7       25.7 
  Restricted stock awards                                        --        (1.0)
                                                           ---------  --------- 
Total operating expenses                                       432.9      398.7 
                                                           ---------  --------- 

Operating income                                               113.6      117.3 

  Interest income                                                4.4        4.6 
  Interest expense                                             (13.0)      (9.5)
  Provision for loss on Internet-related investment            (30.0)        -- 
                                                           ---------  --------- 

Income before income taxes                                      75.0      112.4 
Provision for income taxes                                      28.5       42.7 
                                                           ---------  --------- 

Net income                                                      46.5       69.7 

Preferred dividends                                              1.3        1.4 
                                                           ---------  --------- 

Net income available to common shareholders                $    45.2  $    68.3 
                                                           =========  ========= 

Net income available per common share:                                          

  Basic                                                    $    0.24  $    0.36 
                                                           =========  ========= 

  Diluted                                                  $    0.23  $    0.35 
                                                           =========  ========= 

Shares used in computing earnings per common share:                             

  Basic                                                        186.6      188.9 
                                                           =========  ========= 

  Diluted                                                      195.5      198.9 
                                                           =========  ========= 

Dividends declared per common share                        $   0.055  $   0.055 
                                                           =========  ========= 

The accompanying notes are an integral part of these consolidated financial     
statements.                                                                     


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                                                        [Enlarge/Download Table]
                     RADIOSHACK CORPORATION AND SUBSIDIARIES                                   
                           Consolidated Balance Sheets                                         


                                                      March 31,     December 31,    March 31,  
                                                        2001            2000          2000     
(In millions, except for share amounts)              (Unaudited)                   (Unaudited) 
--------------------------------------               -----------    -----------    ----------- 
                                                                                               
Assets                                                                                         
Current assets:                                                                                
  Cash and cash equivalents                          $     113.9    $     130.7    $      87.2 
  Accounts and notes receivable, net                       351.9          464.7          234.2 
  Inventories, at lower of cost or market                1,061.0        1,164.3          967.6 
  Other current assets                                      68.8           58.5           77.8 
                                                     -----------    -----------    ----------- 

    Total current assets                                 1,595.6        1,818.2        1,366.8 

Property, plant and equipment, net                         453.5          456.8          448.3 
Other assets, net of accumulated amortization              274.3          301.5          286.9 
                                                     -----------    -----------    ----------- 
Total assets                                         $   2,323.4    $   2,576.5    $   2,102.0 
                                                     ===========    ===========    =========== 

Liabilities and Stockholders' Equity                                                           
Current liabilities:                                                                           
  Short-term debt, including current maturities of                                             
long-term debt                                       $     407.5    $     478.6    $     267.9 
  Accounts payable                                         203.5          234.8          272.1 
  Accrued expenses                                         239.7          330.1          242.2 
  Income taxes payable                                     140.7          188.9          139.7 
                                                     -----------    -----------    ----------- 

    Total current liabilities                              991.4        1,232.4          921.9 

Long-term debt, excluding current maturities               249.8          302.9          318.3 
Other non-current liabilities                               66.1           60.9           51.4 
                                                     -----------    -----------    ----------- 

    Total liabilities                                    1,307.3        1,596.2        1,291.6 
                                                     -----------    -----------    ----------- 

Minority interest in consolidated subsidiary               100.0          100.0          100.0 

Common stock put options                                      --             --           14.0 

Stockholders' equity:                                                                          
  Preferred stock, no par value, 1,000,000 shares                                              
   authorized:                                                                                 
   Series A junior participating, 300,000 shares                                               
    designated and none issued                                --             --             -- 
   Series B convertible (TESOP), 100,000 shares                                                
    authorized; 68,200, 68,800 and 72,200 shares                                               
    issued, respectively                                    68.2           68.8           72.2 
  Common stock, $1 par value, 650,000,000 shares                                               
   authorized and 236,033,000 shares issued                236.0          236.0          236.0 
  Additional paid-in capital                               125.8          116.1           95.9 
  Retained earnings                                      1,694.9        1,661.5        1,409.1 
  Treasury stock, at cost; 50,234,000,  50,269,000                                             
     and 49,197,000 shares, respectively                (1,198.4)      (1,189.6)      (1,097.5)
  Unearned deferred compensation                            (9.2)         (11.5)         (18.2)
  Accumulated other comprehensive loss                      (1.2)          (1.0)          (1.1)
                                                     -----------    -----------    ----------- 
   Total stockholders' equity                              916.1          880.3          696.4 
Commitments and contingent liabilities                                                         
                                                     -----------    -----------    ----------- 
Total liabilities and stockholders' equity           $   2,323.4    $   2,576.5    $   2,102.0 
                                                     ===========    ===========    =========== 

The accompanying notes are an integral part of these consolidated financial statements.        

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                                                        [Enlarge/Download Table]
                     RADIOSHACK CORPORATION AND SUBSIDIARIES                           
                Consolidated Statements of Cash Flows (Unaudited)                      



                                                              Three Months Ended       
                                                                   March 31,           
(In millions)                                                 2001          2000       
--------------                                             ----------    ----------    
                                                                                       
Cash flows from operating activities:                                                  
Net income                                                 $     46.5    $     69.7    
 Adjustments to reconcile net income to net cash provided                              
  (used) by operating activities:                                                      
    Provision for loss on Internet-related investment            30.0            --    
    Depreciation and amortization                                27.7          25.7    
    Restricted stock awards                                        --          (1.0)   
    Other items                                                   5.8           6.7    
 Changes in operating assets and liabilities:                                          
    Receivables                                                 113.4          58.3    
    Inventories                                                 103.3        (106.2)   
    Other current assets                                        (11.2)         (2.0)   
    Accounts payable, accrued expenses and income taxes        (161.0)        (51.5)   
                                                           ----------    ----------    
Net cash provided (used) by operating activities                154.5          (0.3)   
                                                           ----------    ----------    

Investing activities:                                                                  
 Additions to property, plant and equipment                     (24.4)        (29.8)   
 Proceeds from sale of property, plant and equipment              0.2           0.5    
 Proceeds from sale of minority interest in consolidated                               
  subsidiary                                                       --         100.0    
 Proceeds from sale of equity securities                           --          17.4    
 Other investing activities                                      (4.1)         (2.5)   
                                                           ----------    ----------    
Net cash (used) provided by investing activities                (28.3)         85.6    
                                                           ----------    ----------    
Financing activities:                                                                  
 Purchases of treasury stock                                    (28.2)       (238.3)   
 Exercise of common stock put options                              --          (8.6)   
 Proceeds from sale of common stock put options                   0.3           0.5    
 Sales of treasury stock to employee stock plans                 17.7          16.9    
 Proceeds from exercise of stock options                          3.5           1.2    
 Dividends paid                                                 (11.0)        (11.4)   
 Changes in short-term borrowings, net                         (124.0)         78.2    
 Repayments of long-term borrowings                              (1.3)         (1.2)   
                                                           ----------    ----------    
Net cash used by financing activities                          (143.0)       (162.7)   
                                                           ----------    ----------    

Decrease in cash and cash equivalents                           (16.8)        (77.4)   
Cash and cash equivalents, beginning of period                  130.7         164.6    
                                                           ----------    ----------    
Cash and cash equivalents, end of period                   $    113.9    $     87.2    
                                                           ==========    ==========    

The accompanying notes are an integral part of these consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)                          

NOTE 1 - PLAIN ENGLISH DISCLOSURE                                               
You may  notice  that we changed  some of the text in the notes,  as well as the
management's discussion section of this document. The substance is the same, but
we have made it more readable using the "plain English" guidelines issued by the
Securities and Exchange  Commission.  We hope this is helpful to you. Throughout
this report,  the terms "our," "we," and "us" refer to  RadioShack  Corporation,
including its subsidiaries.                                                     

NOTE 2 - BASIS OF FINANCIAL STATEMENTS                                          
We prepared the  accompanying  unaudited  consolidated  financial  statements in
accordance with the  instructions to Form 10-Q and we did not include all of the
information and footnotes required by generally accepted  accounting  principles
for complete  financial  statements.  In management's  opinion,  all adjustments
(consisting  of  normal  recurring  accruals)  considered  necessary  for a fair
presentation are included.  However,  our operating results for the three months
ended March 31, 2001 do not necessarily  indicate the results you may expect for
the year ending December 31, 2001. If you desire further information, you should
refer to our consolidated  financial statements and management's  discussion and
analysis of financial  condition and results of operations  included in our 2000
Annual Report on Form 10-K for the year ended December 31, 2000.                

NOTE 3 - PROVISION FOR LOSS ON INTERNET-RELATED INVESTMENT                      
During  the  second  quarter  of 2000,  we made a $30.0  million  investment  in
Digital:Convergence  Corporation,  a privately-held Internet technology company.
We believe that our investment  has  experienced a decline in value that, in our
opinion,  is  other  than  temporary.  This  belief  is due  to the  uncertainty
surrounding   Digital:Convergence's  ability  to  secure  sufficient  additional
funding or to complete an IPO. As such, in the first quarter of 2001 we recorded
a loss provision equal to our initial investment.                               

NOTE 4 - EARNINGS PER SHARE                                                     
The following  schedule is a  reconciliation  of the numerators and denominators
used in computing  our basic and diluted EPS  calculations  for the three months
ended  March 31, 2001 and 2000.  Basic EPS  excludes  the effect of  potentially
dilutive  securities,  while  diluted EPS reflects the  potential  dilution that
would have occurred if our  securities or other  contracts to issue common stock
were exercised,  converted, or resulted in the issuance of our common stock that
would have then shared in our earnings.                                         

                                                        [Enlarge/Download Table]

                                                     Three Months Ended                    Three Months Ended              
                                                       March 31, 2001                        March 31, 2000                
                                            -------------------------------------  ----------------------------------------
                                               Income      Shares      Per Share      Income       Shares      Per Share   
(In millions except per share amounts)      (Numerator) (Denominator)    Amount    (Numerator)  (Denominator)    Amount    
-------------------------------------       -----------  -----------   ----------  -----------   -----------   ----------- 
                                                                                                                           
Net income                                   $  46.5                                $  69.7                                
Less: Preferred stock dividends                 (1.3)                                  (1.4)                               
                                            -----------                            -----------                             

Basic EPS                                                                                                                  
Net income available to common shareholders     45.2         186.6      $  0.24        68.3          188.9       $  0.36   
                                                                       ==========                              =========== 

Effect of dilutive securities:                                                                                             
Plus dividends on Series B preferred stock       1.3                                    1.4                                
Additional contribution required for TESOP                                                                                 
 if preferred stock had been converted          (0.9)          5.9                     (0.9)           6.3                 
Stock options                                                  3.0                                     3.7                 
                                            -----------  -----------               -----------   -----------               

Diluted EPS                                                                                                                
Net income available to common shareholders                                                                                
 plus assumed conversions                    $  45.6         195.5      $  0.23     $  68.8          198.9       $  0.35   
                                            ===========  ===========   ==========  ===========   ===========   =========== 

NOTE 5 - COMPREHENSIVE INCOME                                                   
Comprehensive  income for the three  months  ended  March 31,  2001 and 2000 was
$46.3 million and $69.4 million, respectively.                                  

NOTE 6 - 1996 BUSINESS RESTRUCTURING                                            
In 1996 and 1997, we initiated certain restructuring  programs in which a number
of our former McDuff,  Computer City and Incredible  Universe retail stores were
closed. We still have certain real estate  obligations  related to some of these
stores. At December 31, 2000, the balance in the restructuring reserve was $11.0
million and consisted of the remaining  estimated real estate  obligations to be
paid.  During the three months ended March 31, 2001,  the charges  incurred from
the real estate obligations  approximated the payments received from sublessees,
leaving a balance in the reserve of $11.0 million at March 31, 2001.            

NOTE 7 - RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS                             
In June 1998,  the  Financial  Accounting  Standards  Board issued SFAS No. 133,
"Accounting  for Derivative  Instruments and Hedging  Activities"  ("SFAS 133"),
which establishes accounting and reporting standards for derivative instruments,
including certain derivative  instruments  embedded in other contracts,  and for
hedging activities. We use derivatives only in limited circumstances. We adopted
SFAS 133 effective January 1, 2001 and the impact was not material.             

NOTE 8 - SUBSEQUENT EVENT                                                       
On May 11, 2001, we issued  $350,000,000  of 7 3/8% Notes due 2011.  These notes
were privately offered only to qualified  institutional  buyers under Rule 144A.
The net  proceeds  from  the sale of these  notes  was used to repay  all of our
short-term  debt, not including  current  maturities of long-term  debt, and for
general corporate purposes.                                                     

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ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND       
RESULTS OF OPERATIONS ("MD&A")                              

FACTORS THAT MAY AFFECT FUTURE RESULTS                                          
Matters discussed in MD&A include forward-looking  statements within the meaning
of the federal securities laws. This includes statements concerning management's
plans and  objectives  relating to our  operations or economic  performance  and
related assumptions.  Forward-looking  statements are made based on management's
expectations  and beliefs  concerning  future events and,  therefore,  involve a
number of risks and  uncertainties.  Management  cautions  that  forward-looking
statements are not guarantees  and actual results could differ  materially  from
those expressed or implied in the forward-looking statements.  Important factors
that could cause our actual  results of  operations  or  financial  condition to
differ include, but are not necessarily limited to:                             

o   changes in the amount and degree of promotional intensity exerted by current
    competitors  and  potential  new  competition  from  both  retail stores and
   alternative  methods  or  channels  of  distribution,  such  as e-commerce,
telephone shopping services and mail order;                             
o   the  inability  to  successfully  implement  and  execute  our  strategic   
    initiatives,  including the  development of our new strategic business units
    ("SBUs")  and emerging sales channels, as well as new alliances which may be
formed with other retailers and third party service providers;          
o   changes in general U.S. or regional U.S. economic conditions, including, but
    not  limited  to,  consumer  credit availability, interest rates, inflation,
    personal discretionary spending levels and consumer sentiment and confidence
about the economy in general;                                           
o   the  inability  to  successfully  market  and execute the www.RadioShack.com
    website  and  its  coordination  with  our  retail  outlets and/or our other
existing and emerging sales channels;                                   
o   the  presence or absence of new services or products and product features in
    the  merchandise  categories  we  sell  and unexpected changes in our actual
merchandise sales mix;                                                  
o   the  inability  to  maintain  profitable contracts or execute business plans
    with  providers  of  third party branded products and with service providers
    relating  to  cellular  and PCS telephones, direct-to-home ("DTH") satellite
programming, Internet access and high-speed bandwidth;                  
o   the  inability to collect the level of anticipated residual income, consumer
    acquisition fees and rebates  for  products and third party services offered
by us;                                                                  
o   the inability to successfully implement and execute our strategic alliances,
   including  those  with  Microsoft,  Verizon  Wireless,  Excite@Home  and/or
Blockbuster;                                                            
o   the lack of availability or access to sources of supply inventory;          
o   the  inability  to retain and grow an effective management team in a dynamic
    environment or  changes in the cost or availability of a suitable work force
to manage and support our service-driven operating strategies;          
o   the  imposition  of  new  restrictions  or regulations regarding the sale of
    products  and/or  services  we sell or  changes in tax rules and regulations
applicable to us;                                                       
o   the  adoption  rate  and  market  demand  for  high-speed Internet and other
Internet-related services; or                                           
o   the  occurrence  of  severe  weather  events  which  prohibit consumers from
    travelling  to  our  retail  locations, especially during the peak Christmas
season.                                                                 

Both the United States  retail  industry and the  specialty  retail  industry in
particular are dynamic by nature and have undergone significant changes over the
past  several  years.  Our ability to  anticipate  and  successfully  respond to
continuing challenges is key to achieving our expectations.                     

RESULTS OF OPERATIONS                                                           

Net Sales and Operating Revenues                                                

Our sales  increased  8.8% to $1,139.5  million for the three months ended March
31, 2001,  compared to $1,047.3 million in the corresponding  prior year period.
Comparable  store sales  increased  7.4% for the quarter,  when  compared to the
first  quarter last year.  Our  comparable  store sales  increase was  primarily
driven by increased sales of audio and video equipment,  including DTH satellite
systems and services,  wireless phones and personal computer products.  Sales of
parts,  batteries and accessories also contributed to our comparible store sales
increase.                                                                       

Sales in our audio and video category  increased  approximately 17% in the first
quarter of 2001,  compared to the first quarter of 2000. This sales increase was
due  primarily  to DTH  satellite  systems  and  services.  The  audio and video
category also benefited from increased  sales of RCA-branded  DVDs,  VCRs,  home
theater products and other digital equipment.                                   

Sales in the  communications  category  increased  approximately  6% during  the
quarter ended March 31, 2001,  compared to the same period last year. This sales
increase  was due  primarily  to  increases  in both  unit and  dollar  sales of
wireless  telephones.  We expect unit and dollar  sales of wireless  products to
increase for the fiscal year 2001, though to a lesser extent than last year.    

Sales in the personal computers and peripherals category increased approximately
16% during the first  quarter of 2001,  compared  to the first  quarter of 2000,
despite an 8% decrease in the average selling price of CPUs for the same period.
Our  increased  sales in CPUs and  monitors,  as well as an increase in sales of
handheld pocket PCs and Internet devices, contributed to our first quarter sales
increase.                                                                       

Sales in the parts,  accessories  and  specialty  equipment  category  increased
approximately  8% during the three months ended March 31, 2001,  compared to the
same period in the prior year.  This  increase  was due  primarily  to increased
sales of video cables and  accessories,  batteries and, to a lesser  extent,  DC
adapters and computer accessories and supplies.                                 

Sales in the personal  electronics  category increased slightly during the first
quarter of 2001, compared to the first quarter of 2000.                         

Our  services  and other  category,  which  includes  residuals  and income from
prepaid  wireless  airtime,  repair  services  and extended  service  contracts,
increased  approximately 6% in the first quarter of 2001.  Increases in residual
income,  primarily from wireless service  providers,  were partially offset by a
decrease in sales of prepaid wireless airtime.                                  

RadioShack Retail Outlets                                                       

                                                        [Enlarge/Download Table]
                                March 31,  December 31,  September 30,  June 30,  March 31,
                                  2001        2000         2000           2000      2000   
                                --------    --------      --------      --------  -------- 
                                                                                           
Company-owned                      5,099       5,109         5,082         5,060     5,052 
Dealer/Franchise                   2,067       2,090         2,092         2,073     2,091 
                                --------    --------      --------      --------  -------- 
Total number of retail outlets     7,166       7,199         7,174         7,133     7,143 
                                ========    ========      ========      ========  ======== 

Gross Profit                                                                    

For the three months ended March 31, 2001, gross profit dollars  increased 5.9%,
but  decreased  1.3  percentage  points,  to 48.0% of net  sales  and  operating
revenues,  compared to 49.3% for the corresponding 2000 period.  This percentage
point decrease was due primarily to increased margin  pressures  associated with
sales of DTH satellite systems and services and the markdowns taken on computers
as we introduced  new models.  In addition,  both the  audio/video  and personal
computer categories increased as a percent of sales, further impacting our gross
profit percentage  decline.  The gross profit percent decreases in the audio and
video category and in the personal  computer  category were partially  offset by
increased residuals,  which have 100% gross margin, as well as by an increase in
the  gross  profit  percentage  for  the  parts  and  accessories  category.  We
anticipate that gross profit as a percentage of net sales and operating revenues
will continue to decrease  slightly  during the remainder of 2001, when compared
to the prior year, due to the sales mix described above.                        

Selling, General and Administrative Expense                                     

For the first  quarter of 2001,  our SG&A expense in dollars  increased  8.3% or
$31.2 million, when compared to the first quarter of 2000. However, SG&A expense
as a percentage  of net sales and  operating  revenues  decreased  slightly when
compared to the quarter ended March 31, 2000. This decrease was primarily due to
increased  comparable  store  sales in the first  quarter  of 2001,  which had a
positive effect on our overall expense rate structure.                          

For the three months ended March 31, 2001, advertising expense increased in both
dollars and as a percentage of net sales when compared to the same period in the
prior year.  This was due  primarily to a shift from print to  broadcast  media.
Rent  expense  increased in dollars for the quarter  ended March 31,  2001,  but
remained  at the same  percentage  of net sales as the March 2000  quarter.  The
dollar  increase was due to 47 new store  openings,  lease  renewals at slightly
higher  rates and, to a lesser  extent,  an increase in the average  size of our
stores.  Salary  expense  increased in dollars during the first quarter of 2001,
because of retail store  expansions  and  increases in  commission,  bonuses and
other  incentives  resulting from comparable  store sales and profits.  However,
salary  expense  decreased as a percentage of net sales and  operating  revenues
during the same period,  due to the positive  leverage  achieved from  increased
sales.                                                                          

Net Interest Expense                                                            

Interest expense,  net of interest income,  for the three months ended March 31,
2001 was $8.6  million  versus $4.9  million for the first three months in 2000.
Interest  expense  increased  $3.5  million  due  to  our  higher  average  debt
outstanding during the first quarter of 2001, when compared to the first quarter
of 2000. Interest income decreased slightly for the three months ended March 31,
2001,  compared to the prior year period.  We expect  interest  expense,  net of
interest  income,  to  decrease  slightly  during the  remainder  of 2001,  when
compared  to the prior  year due to an  anticipated  decrease  in  overall  debt
levels.                                                                         

Provision for Loss on Internet-Related Investment                               

During  the  second  quarter  of 2000,  we made a $30.0  million  investment  in
Digital:Convergence  Corporation,  a privately-held Internet technology company.
We believe that our investment  has  experienced a decline in value that, in our
opinion,  is  other  than  temporary.  This  belief  is due  to the  uncertainty
surrounding   Digital:Convergence's  ability  to  secure  sufficient  additional
funding or to complete an IPO. As such, in the first quarter of 2001 we recorded
a loss provision equal to our initial investment.                               

Provision for Income Taxes                                                      

Provision for income taxes for each quarterly period is based on the estimate of
the annual  effective tax rate for the year,  which we evaluate  quarterly.  The
effective tax rate for the first quarters of both 2001 and 2000 was 38.0%.      

FINANCIAL CONDITION                                                             

Cash flow provided by operating  activities  approximated $154.5 million for the
three  month  period  ended  March 31,  2001,  compared  to a cash usage of $0.3
million  in the prior  year first  quarter.  This  $154.8  million  increase  in
operating cash flow was primarily  attributable to a $113.4 million  decrease in
accounts  receivable  and a $103.3  million  decrease in inventory for the first
quarter of 2001. These decreases were partially offset by a reduction in accrued
expenses and income taxes payable in the first three months of 2001.            

Inventory at March 31, 2001 decreased  $103.3 million or 8.9% since December 31,
2000,  but increased  $93.4  million or 9.7% since March 31, 2000.  The decrease
since  December  31,  2000  was  primarily  due  to  strong  sales  of  wireless
telephones,  computers  and DTH  satellite  systems  during the first quarter of
2001.  The  inventory  increase  since  March 31, 2000 is in line with our sales
increase for the same period.                                                   

At March 31, 2001, accounts  receivable  decreased $112.8 million or 24.3% since
December 31, 2000,  but increased  $117.7 million or 50.3% since March 31, 2000.
The decrease in accounts receivable since December 31, 2000 was due primarily to
the  collection  of accounts  receivable  outstanding  at year end. The increase
since  March 31,  2000  resulted  primarily  from  increased  vendor and service
provider  receivables related to increased sales of wireless  communications and
services,  DTH satellite systems and services and long distance service, as well
as rebates relating to internet access.                                         

Cash used by investing  activities for the three months ended March 31, 2001 was
$28.3  million,  compared to cash  provided  by  investing  activities  of $85.6
million in the previous  year.  Investing  activities for the three months ended
March 31, 2001 included capital expenditures  totaling $24.4 million,  primarily
for retail expansion and upgrades of information systems. Management anticipates
that capital expenditure  requirements will approximate $100.0 million to $110.0
million  for  the   remainder   of  2001,   primarily  to  support  our  stores'
refurbishments as well as expansions to enhance our information systems.        

Cash used by financing  activities for the three months ended March 31, 2001 was
$143.0 million, compared to a $162.7 million cash usage in the previous year. We
purchased  $28.2  million of treasury  stock during the three months ended March
31, 2001,  compared to $238.3  million  during the same period of 2000.  The net
decrease in short-term  debt of $124.0  million since  December 31, 2000 was due
primarily  to  collections  of  accounts  receivable  outstanding  at year  end.
Dividends  used $11.0 million of cash for the three months ended March 31, 2001,
compared to $11.4 million in the same period of the prior year.                 

The net increase in short-term  debt of $139.6  million since March 31, 2000 was
the result of $52.0 million of long-term  debt maturing  within the next  twelve
months,  as well as increased  inventory and accounts receivable  balances, when
compared  to the  same  period  of 2000.  Total  debt as a  percentage  of total
capitalization  was 41.8% at March 31,  2001,  compared to 47.0% at December 31,
2000 and  45.7% at March  31,  2000.  Long-term  debt as a  percentage  of total
capitalization  was 15.9% at March 31,  2001,  compared to 18.2% at December 31,
2000 and 24.8% at March 31, 2000.                                               

On May 11, 2001, we issued  $350,000,000  of 7 3/8% Notes due 2011.  These notes
were privately offered only to qualified  institutional  buyers under Rule 144A.
The net  proceeds  from  the sale of these  notes  was used to repay  all of our
short-term  debt, not including  current  maturities of long-term  debt, and for
general corporate purposes.                                                     

During the first  quarter of 2001,  we  repurchased  0.3  million  shares of our
common  stock  for $9.6  million.  This  brought  the  total  number  of  shares
repurchased  since the inception of our existing  10.0 million share  repurchase
program to 0.4 million  shares  totaling  $16.2  million at March 31,  2001.  In
connection  with the  share  repurchase  program,  our  Board of  Directors  has
authorized us to sell up to 4.0 million shares of our common stock, through both
equity forwards and put options,  with an expiration date no later than December
31, 2002. We have sold approximately 1.5 million put options since the inception
of this program and 0.1 million put options  remained  outstanding  at March 31,
2001.                                                                           

We  may  continue to  execute share repurchases, put options and equity forwards
from time to time in order to take  advantage of attractive  share price levels,
as determined by management. The timing and terms of the transactions, including
maturities, depend on market conditions, our liquidity and other considerations.

ITEM 3.   QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK.           

We do not have any derivative  instruments that materially increase our exposure
to market risks for interest rates, foreign currency rates,  commodity prices or
other market price risks. In addition, we do not use derivatives for speculative
purposes.                                                                       

Our exposure to market risks  results from changes in interest  rates.  Interest
rate risk exists principally with respect to our short-term indebtedness,  which
bears  interest at floating  rates.  At March 31, 2001, we had $336.4 million of
indebtedness  bearing  interest  at  floating  rates.  If we were to  assume  an
unfavorable  change of 100 basis points in the interest  rate  applicable to our
floating-rate  indebtedness  at  March  31,  2001,  we  would  have  experienced
additional  interest  expense of $0.8 million for this three month period.  This
assumption   assumes  no  change  in  the  principal  or  a  reduction  of  such
indebtedness.                                                                   

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 PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.                                                      

We  have  various  pending  claims,  lawsuits,   disputes  with  third  parties,
investigations  and  actions  incident to the  operation  of our  business.  The
liability,  if any,  associated with these matters was not determinable at March
31, 2001.  Although  occasional adverse settlements or resolutions may occur and
negatively impact our earnings in the year of settlement, it is our opinion that
their  ultimate  resolution  will not have a  materially  adverse  effect on our
financial position.                                                             

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.                                      

a)  Exhibits Required by Item 601 of Regulation S-K.          

             A list  of the exhibits required by Item 601 of Regulation  S-K and
             filed as part of this report is set forth in the  Index to Exhibits
on page 13, which immediately precede such exhibits.  

b)  Reports on Form 8-K.                                      

         On May 4, 2001,  we  announced  a  proposed  note  offering  of
             approximately $300.0 million.  The  Form  8-K  was  filed on May 4,
2001.                                                 

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SIGNATURES                                                                      

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.                                          

                                                    RadioShack Corporation
                                                (Registrant)

Date:  May 11, 2001                           By   /s/  Richard L. Ramsey       
                                                   -----------------------------
                                                 Richard L. Ramsey
                                                   Vice President and Controller
                                                    (Authorized Officer)

Date:  May 11, 2001                            By   /s/ Loren K. Jensen         
                                                    ----------------------------
                                               Loren K. Jensen
                                                    Vice President - Finance and
                                                  Acting Chief Financial Officer
                                                 (Principal Financial Officer)

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RADIOSHACK CORPORATION
 INDEX TO EXHIBITS

Exhibit                                                                         
Number         Description                                                      

3a             Restated  Certificate of  Incorporation of RadioShack Corporation
               dated  July 26, 1999 (filed as Exhibit 3a(i) to RadioShack's Form
               10-Q filed  on August 11, 1999  for the fiscal quarter ended June
30, 1999 and incorporated herein by reference).   

3a(i)          Certificate of Amendment of Restated Certificate of Incorporation
               dated  May 18, 2000.  (Filed as Exhibit  3a to RadioShack's  Form
               10-Q filed  on  August 11, 2000 for the fiscal quarter ended June
30, 2000.)                                        

3b             RadioShack Corporation Bylaws Amended and Restated as of July 22,
               2000.  (Filed  as  Exhibit 3b to  RadioShack's Form 10-Q filed on
          August 11, 2000 for the fiscal quarter ended June 30, 2000.)

11*            Statement of Computation  of Ratios of Earnings to Fixed Charges.

----------------------------                                                    

* filed with this report                                                        

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                                                                      EXHIBIT 11

RADIOSHACK CORPORATION

STATEMENT OF COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
AND RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS

                                                            Three Months Ended
                                                             March 31,
                                                          --------------------
(In millions, except ratios)                                 2001        2000   
---------------------------                                --------    -------- 
Ratio of Earnings to Fixed Charges:                                             

Net income                                                 $   46.5    $   69.7 
Plus provision for income taxes                                28.5        42.7 
                                                          --------    --------
Income before income taxes                                     75.0       112.4 
                                                          --------    --------

Fixed charges:                                                                  

Interest expense and amortization, including debt discount     13.0         9.5 
Amortization of issuance expense                                0.2         0.2 
Appropriate portion (33 1/3%) of rentals                       18.8        17.6 
                                                          --------    --------
   Total fixed charges                                        32.0        27.3
                                                          --------    --------

Earnings before income taxes and fixed charges             $  107.0    $  139.7 
                                                          ========    ========

Ratio of earnings to fixed charges                             3.34        5.12 
                                                          ========    ========

Ratio of Earnings to Fixed Charges and Preferred Dividends:                     

Total fixed charges, as above                              $   32.0    $   27.3 
Preferred dividends                                             1.3         1.4 
                                                          --------    --------
Total fixed charges and preferred dividends                $   33.3    $   28.7 
                                                          ========    ========

Earnings before income taxes and fixed charges             $  107.0    $  139.7 
                                                          ========    ========

Ratio of earnings to fixed charges and preferred dividends     3.21        4.87 
                                                          ========    ========

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Dates Referenced Herein and Documents Incorporated By Reference

		Referenced-On Page
This 10-Q Filing	Date	First	Last	Other Filings

	6/30/99	9		10-Q
	7/26/99	9
	8/11/99	9		10-Q
	3/31/00	5	6	10-Q/A, 10-Q, 11-K
	5/18/00	9		DEF 14A, PRE 14A, 8-K
	6/30/00	9		10-Q
	7/22/00	9
	8/11/00	9		10-Q
	12/31/00	5	6	11-K, 11-K/A, 10-K
	1/1/01	5
For The Period Ended	3/31/01	1	7	11-K
	4/30/01	1
	5/4/01	7		8-K
	5/11/01	5	8
Filed On / Filed As Of	5/14/01
	12/31/01	5		10-K, 11-K
	12/31/02	6		10-K, 11-K

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Radioshack Corp · 10-Q · For 3/31/01

Filed On 5/14/01 3:59pm ET · SEC File 1-05571 · Accession Number 96289-1-500004

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Dates Referenced Herein and Documents Incorporated By Reference

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