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Radioshack Corp – ‘10-Q’ for 9/30/00

On: Monday, 11/13/00, at 5:34pm ET · As of: 11/14/00 · For: 9/30/00 · Accession #: 96289-0-22 · File #: 1-05571

  As Of                Filer                Filing    For·On·As Docs:Size

11/14/00  Radioshack Corp                   10-Q        9/30/00    2:45K

Quarterly Report — Form 10-Q
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Quarterly Report                                      17±    81K 
 2: EX-27       Financial Data Schedule                                2±     7K

10-Q — Quarterly Report
Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, 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") Other Information Quantitative and Qualitative Disclosures About Market Risk
1	1st Page - Filing Submission
2	Item 1. Financial Statements
6	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A")
"	Item 3. Quantitative and Qualitative Disclosures About Market Risk
7	Item 1. Legal Proceedings
"	Item 5. Other Information
"	Item 6. Exhibits and Reports on Form 8-K

10-Q 1st “Page” of 10 TOC ↑Top Previous Next ↓Bottom Just 1st
 
--------------------------------------------------------------------------------

 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 September 30, 2000               

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 __                                  

The number of shares  outstanding of the issuer's Common Stock, $1 par value, on
October 31, 2000 was 185,882,976.                                               
 Index to Exhibits is on Sequential Page No. 14. Total pages 15.

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

10-Q 2nd “Page” of 10 TOC 1st Previous Next ↓Bottom Just 2nd
PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS                                                   

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                     RADIOSHACK CORPORATION AND SUBSIDIARIES                                       
                  Consolidated Statements of Income (Unaudited)                                    


                                                       Three Months Ended       Nine Months Ended  
                                                          September 30,            September 30,   
                                                      --------------------    -------------------- 
(In millions, except per share amounts)                 2000        1999        2000        1999   
 -------------------------------------                --------    --------    --------    -------- 
                                                                                                   
Net sales and operating revenues                      $1,140.4    $  960.3    $3,211.0    $2,737.2 
Cost of products sold                                    575.0       473.9     1,596.0     1,332.1 
                                                      --------    --------    --------    -------- 
Gross profit                                             565.4       486.4     1,615.0     1,405.1 
                                                      --------    --------    --------    -------- 

Expenses (income):                                                                                 
 Selling, general and administrative                     404.2       361.4     1,155.8     1,041.5 
 Depreciation and amortization                            26.7        23.1        78.6        65.4 
 Interest income                                          (4.3)       (4.7)      (13.1)      (13.8)
 Interest expense                                         14.4         8.5        36.3        26.4 
 Restricted stock awards                                  --          --          (1.0)       (5.1)
                                                      --------    --------    --------    -------- 
                                                         441.0       388.3     1,256.6     1,114.4 
                                                      --------    --------    --------    -------- 

Income before income taxes                               124.4        98.1       358.4       290.7 
Provision for income taxes                                47.3        38.3       136.2       113.4 
                                                      --------    --------    --------    -------- 

Net income                                                77.1        59.8       222.2       177.3 

Preferred dividends                                        1.3         1.4         4.0         4.2 
                                                      --------    --------    --------    -------- 

Net income available to common shareholders           $   75.8    $   58.4    $  218.2    $  173.1 
                                                      ========    ========    ========    ======== 

Net income available per common share:                                                             

 Basic                                                $   0.41    $   0.30    $   1.16    $   0.89 
                                                      ========    ========    ========    ======== 

 Diluted                                              $   0.39    $   0.29    $   1.11    $   0.85 
                                                      ========    ========    ========    ======== 

Shares used in computing earnings per common share:                                                

 Basic                                                   186.7       194.3       187.6       194.3 
                                                      ========    ========    ========    ======== 

 Diluted                                                 197.8       205.4       198.0       204.7 
                                                      ========    ========    ========    ======== 

Dividends declared per common share                   $  0.055    $  0.050    $  0.165    $  0.150 
                                                      ========    ========    ========    ======== 

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

10-Q 3rd “Page” of 10 TOC 1st Previous Next ↓Bottom Just 3rd
                                                        [Enlarge/Download Table]
                     RADIOSHACK CORPORATION AND SUBSIDIARIES                                 
                           Consolidated Balance Sheets                                       

                                                    September 30, December 31,  September 30,
                                                       2000           1999          1999     
(In millions, except for share amounts)             (Unaudited)                 (Unaudited)  
 -------------------------------------                --------      --------      --------   
                                                                                             
Assets                                                                                       
Current assets:                                                                              
 Cash and cash equivalents                            $   74.9      $  164.6      $   54.3   
 Accounts and notes receivable, less allowance for                                           
  doubtful accounts                                      313.2         286.1         244.7   
 Inventories, at lower of cost or market               1,208.0         861.4         978.5   
 Other current assets                                     99.1          91.2         101.6   
                                                      --------      --------      --------   
  Total current assets                                 1,695.2       1,403.3       1,379.1   

Property, plant and equipment, at cost, less                                                 
 accumulated depreciation                                456.7         446.8         443.2   
Other assets, net of accumulated amortization            306.4         291.9         323.9   
                                                      --------      --------      --------   
Total assets                                          $2,458.3      $2,142.0      $2,146.2   
                                                      ========      ========      ========   

Liabilities and Stockholders' Equity                                                         
Current liabilities:                                                                         
 Short-term debt, including current maturities of                                            
  long-term debt                                      $  541.3      $  188.9      $  254.3   
 Accounts payable                                        258.6         234.8         224.9   
 Accrued expenses                                        259.0         350.8         263.3   
 Income taxes payable                                    144.6         150.7         137.7   
                                                      --------      --------      --------   

  Total current liabilities                            1,203.5         925.2         880.2   
                                                      --------      --------      --------   

Long-term debt, excluding current maturities             316.0         319.4         324.9   
Other non-current liabilities                             55.5          45.7          39.6   
                                                      --------      --------      --------   
  Total other liabilities                                371.5         365.1         364.5   
                                                      --------      --------      --------   

Minority interest - RadioShack.com                       100.0          --            --     

Common stock put options                                  --            21.0          25.2   

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; 69,700, 72,800 and 73,700 shares                                              
   issued, respectively                                   69.7          72.8          73.7   
Common stock, $1 par value, 650,000,000 shares                                               
 authorized; 236,033,000, 235,840,000 and 235,840,000                                        
 shares issued, respectively                             236.0         235.8         235.8   
Additional paid-in capital                               111.5          82.4          63.2   
Retained earnings                                      1,530.5       1,353.3       1,247.4   
Treasury stock, at cost; 49,710,000, 45,113,000 and                                          
 42,593,000 shares, respectively                      (1,149.8)       (892.3)       (716.5)  
Unearned deferred compensation                           (13.7)        (20.5)        (23.3)  
Accumulated other comprehensive loss                      (0.9)         (0.8)         (4.0)  
                                                      --------      --------      --------   
  Total stockholders' equity                             783.3         830.7         876.3   
Commitments and contingent liabilities                                                       
                                                      --------      --------      --------   
Total liabilities and stockholders' equity            $2,458.3      $2,142.0      $2,146.2   
                                                      ========      ========      ========   

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

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                     RADIOSHACK CORPORATION AND SUBSIDIARIES                                
                Consolidated Statements of Cash Flows (Unaudited)                           


                                                                      Nine Months Ended     
                                                                        September 30,       
                                                                    ----------------------  
(In millions)                                                         2000          1999    
 -----------                                                        --------      --------  
                                                                                            
Cash flows from operating activities:                                                       
Net income                                                          $  222.2      $  177.3  
 Adjustments to reconcile net income to net cash (used)                                     
  provided by operating activities:                                                         
   Depreciation and amortization                                        78.6          65.4  
   Restricted stock awards                                              (1.0)         (5.1) 
   Other items                                                          23.3          19.7  
 Changes in operating assets and liabilities:                                               
   Receivables                                                         (14.6)         (1.3) 
   Inventories                                                        (346.6)        (64.5) 
   Other current assets                                                (25.9)          6.3  
   Accounts payable, accrued expenses and income taxes                 (26.9)         (8.5) 
                                                                    --------      --------  
Net cash (used) provided by operating activities                       (90.9)        189.3  
                                                                    --------      --------  
Investing activities:                                                                       
 Additions to property, plant and equipment                            (91.5)        (71.2) 
 Proceeds from sale of property, plant and equipment                     1.2           2.9  
 Investment in securities                                              (30.0)        (20.0) 
 Proceeds from sale of securities                                       17.9          --    
 Proceeds from sale of minority interest in RadioShack.com             100.0          --    
 Other investing activities                                             (3.1)         (4.3) 
                                                                    --------      --------  
Net cash used by investing activities                                   (5.5)        (92.6) 
                                                                    --------      --------  
Financing activities:                                                                       
 Purchases of treasury stock                                          (351.4)       (245.6) 
 Exercise of common stock put options                                   (8.6)         --    
 Proceeds from sale of common stock put options                          0.5           3.5  
 Sales of treasury stock to employee stock plans                        36.6          30.1  
 Proceeds from exercise of stock options                                16.6          27.3  
 Dividends paid                                                        (33.6)        (32.3) 
 Changes in short-term borrowings, net                                 354.8          23.9  
 Additions to long-term borrowings                                      --           100.6  
 Repayments of long-term borrowings                                     (8.2)        (14.4) 
                                                                    --------      --------  
Net cash provided (used) by financing activities                         6.7        (106.9) 
                                                                    --------      --------  

Decrease in cash and cash equivalents                                  (89.7)        (10.2) 
Cash and cash equivalents, beginning of period                         164.6          64.5  
                                                                    --------      --------  
Cash and cash equivalents, end of period                            $   74.9      $   54.3  
                                                                    ========      ========  

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

10-Q 5th “Page” of 10 TOC 1st Previous Next ↓Bottom Just 5th
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 - BASIS OF FINANCIAL STATEMENTS                                          
The  accompanying  unaudited  consolidated  financial  statements  of RadioShack
Corporation  ("RadioShack"  or the  "Company")  have been prepared in accordance
with the instructions to Form 10-Q and do not include all of the information and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements. In the opinion of management,  all adjustments (consisting
of normal recurring accruals)  considered necessary for a fair presentation have
been included.  Operating  results for the nine months ended  September 30, 2000
are not necessarily  indicative of the results that may be expected for the year
ending  December 31, 2000. For further  information,  refer to the  consolidated
financial  statements  and  management's  discussion  and analysis of results of
operations and financial  condition included in the Company's 1999 Annual Report
on Form 10-K for the year ended December 31, 1999.                              

NOTE 2 - BASIC AND DILUTED EARNINGS PER SHARE                                   
The following  schedule is a  reconciliation  of the numerators and denominators
used in computing the basic and diluted earnings per share  calculations for the
three and nine months ended September 30, 2000 and 1999, respectively. Basic EPS
excludes  the  effect of  potentially  dilutive  securities  while  diluted  EPS
reflects the potential  dilution that would have occurred if securities or other
contracts to issue common stock were  exercised,  converted,  or resulted in the
issuance  of common  stock that would have then  shared in the  earnings  of the
entity.                                                                         

                                                        [Enlarge/Download Table]

                                                 Three Months Ended                  Three Months Ended      
                                                 September 30, 2000                  September 30, 1999      
                                         --------------------------------    --------------------------------
                                          Income       Shares    Per Share    Income       Shares   Per Share
(In millions, except per share amounts) (Numerator) (Denominator) Amount    (Numerator) (Denominator) Amount 
--------------------------------------   --------     --------   --------    --------     --------   --------
                                                                                                             
Net income                               $   77.1                            $   59.8                        
Less: Preferred stock dividends              (1.3)                               (1.4)                       
                                         --------                            --------                        

Basic EPS                                                                                                    
Net income available to common                                                                               
 shareholders                                75.8        186.7   $   0.41        58.4        194.3   $   0.30
                                                                 ========                            ========

Effect of dilutive securities:                                                                               
Dividends on Series B preferred stock         1.3                                 1.4                        
Additional contribution required                                                                             
 for TESOP if preferred stock had been                                                                       
 converted                                   (0.9)         6.1                   (1.1)         6.4           
Stock options                                              5.0                                 4.7           
                                         --------     --------               --------     --------           

Diluted EPS                                                                                                  
Net income available to common                                                                               
 shareholders plus assumed conversions   $   76.2        197.8   $   0.39    $   58.7        205.4   $   0.29
                                         ========     ========   ========    ========     ========   ========
                                                        [Enlarge/Download Table]

                                                 Nine Months Ended                  Nine Months Ended        
                                                September 30, 2000                    September 30, 1999     
                                         --------------------------------    --------------------------------
                                          Income       Shares    Per Share    Income       Shares   Per Share
(In millions, except per share amounts) (Numerator) (Denominator) Amount    (Numerator) (Denominator) Amount 
--------------------------------------   --------     --------   --------    --------     --------   --------
                                                                                                             
Net income                               $  222.2                            $  177.3                        
Less: Preferred stock dividends              (4.0)                               (4.2)                       
                                         --------                            --------                        

Basic EPS                                                                                                    
Net income available to common                                                                               
 shareholders                               218.2        187.6   $   1.16       173.1        194.3   $   0.89
                                                                 ========                            ========

Effect of dilutive securities:                                                                               
Dividends on Series B preferred stock         4.0                                 4.2                        
Additional contribution required                                                                             
 for TESOP if preferred stock had been                                                                       
 converted                                   (2.6)         6.2                   (3.2)         6.5           
Stock options                                              4.2                                 3.9           
                                         --------     --------               --------     --------           

Diluted EPS                                                                                                  
Net income available to common                                                                               
 shareholders plus assumed conversions   $  219.6        198.0   $   1.11    $  174.1        204.7   $   0.85
                                         ========     ========   ========    ========     ========   ========

NOTE 3 - COMPREHENSIVE INCOME                                                   
Comprehensive  income for the three months ended September 30, 2000 and 1999 was
$77.1 million and $50.2 million,  respectively, and comprehensive income for the
nine months  ended  September  30,  2000 and 1999 was $222.1  million and $174.3
million, respectively.                                                          

NOTE 4 - REVOLVING CREDIT FACILITY                                              
In the second quarter of 2000,  RadioShack  expanded its existing $200.0 million
364-day  revolving  credit  facility  to $300.0  million and also  extended  the
maturity date to June 2001. The terms of the 364-day  revolving  credit facility
remained similar to the previous facility.  RadioShack also has a $300.0 million
five-year  revolving  credit facility  maturing June 2003. The revolving  credit
facilities are used as backup for the  commercial  paper program and may also be
utilized for general corporate purposes.                                        

NOTE 5 - RADIOSHACK.COM, LLC                                                    
In  October  1999,   RadioShack   launched  its  e-commerce   enabled   website,
www.RadioShack.com.  On November 10, 1999,  RadioShack and Microsoft Corporation
("Microsoft") formed a limited liability company,  RadioShack.com,  LLC, for the
purpose  of  marketing  and  selling  electronics   products  on  the  Internet.
RadioShack  contributed  assets and also  extended a  royalty-free  license  for
certain  trademarks  and  service  marks to  RadioShack.com,  LLC and  Microsoft
contributed  $100.0  million on January  4,  2000.  RadioShack  owns 100% of the
common units of RadioShack.com,  LLC, while Microsoft owns 100% of the preferred
units.  RadioShack includes  RadioShack.com,  LLC in its consolidated  financial
statements.  RadioShack  is entitled to receive 75% of the profits and losses of
RadioShack.com,  LLC, while Microsoft receives 25%; however, the preferred units
have  certain  liquidation  rights,  which could allow  Microsoft to recover its
initial  investment.  This liquidation  preference affects the allocation of the
profits and losses among the partners.  The preferred units are convertible into
common units at any time and must be  converted in the event of certain  capital
transactions.  In  certain  circumstances,  Microsoft  has the option to require
RadioShack to purchase,  and RadioShack  has the right to purchase,  Microsoft's
units.                                                                          

NOTE 6 - BUSINESS RESTRUCTURING                                                 
In the fourth  quarter of 1996,  the  Company  initiated  certain  restructuring
programs  to exit  its  Incredible  Universe  business,  close  21  unprofitable
Computer  City  stores  and  close  its  53  remaining   McDuff  stores.   These
restructuring  programs were  undertaken  as a result of the highly  competitive
environment in the  electronics  industry at the time. At December 31, 1999, the
balance  in the  restructuring  reserve  was  $14.5  million  and  consisted  of
remaining  estimated real estate  obligations  to be paid.  During the three and
nine months  ended  September  30,  2000,  approximately  $1.5  million and $3.6
million,  respectively,  were  charged  against the  restructuring  reserve.  An
additional  $0.8 million  relating to real estate  obligations  was added to the
reserve during the second  quarter of 2000,  leaving a balance in the reserve of
$11.7 million at September 30, 2000.                                            

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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                                          
With the  exception of  historical  information,  the matters  discussed in MD&A
contain forward-looking  statements that involve various risks and uncertainties
and are indicated by words such as "anticipates," "expects," "believes," "will,"
"should,"  could,"  and  similar  words and  phrases.  Factors  that could cause
RadioShack  Corporation's  ("RadioShack"  or the  "Company")  actual  results to
differ  materially  from  management's  projections,  forecasts,  estimates  and
expectations include, but are not limited to, the following:                    

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   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 about the
economy in general;                                                     
o   the inability to successfully implement, market and execute  the RadioShack.
comSM website and its coordination with RadioShack retail outlets;      
o   the presence or absence of new services or products and product  features in
    the  merchandise  categories  RadioShack  sells and  unexpected  changes  in
RadioShack's actual merchandise sales mix;                              
o   the  inability to negotiate  and  maintain  profitable  contracts or execute
    business  plans with  providers  of services  relating  to cellular  and PCS
    telephones,   direct-to-home  satellite,   Internet  access  and  high-speed
bandwidth;                                                              
o   the  inability  to  collect  the  level  of  anticipated  residual revenues,
commissions and bounties for products and services sold by RadioShack;  
o   the inability to successfully  implement and execute RadioShack's  strategic
    alliances   with  Thomson   Multimedia  SA  (RCA),   Microsoft   Corporation
    ("Microsoft"),  Cellco  Partnership  (dba Verizon  Wireless)  and/or At Home
Corporation (Excite@Home);                                              
o   lack of  availability  or access to sources of supply  inventory (as a large
    importer  of  consumer  electronic  products  from Asia,  unfavorable  trade
imbalances could negatively affect RadioShack);                         
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 RadioShack's service-driven operating strategies; 
o   the imposition of new restrictions  or  regulations  regarding  the  sale of
    products  and/or  services  RadioShack  sells  or  changes  in tax rules and
regulations applicable to RadioShack;                                   
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  prohibits consumers from
    travelling to the Company's retail locations, especially during peak holiday
periods.                                                                

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.  RadioShack's ability to anticipate and successfully respond
to continuing challenges is key to achieving its expectations.                  

RESULTS OF OPERATIONS                                                           

Net Sales and Operating Revenues                                                

RadioShack's  overall sales  increased  18.8% to $1,140.4  million for the three
months ended September 30, 2000, compared to $960.3 million in the corresponding
prior year period.  Overall sales  increased  17.3% to $3,211.0  million for the
nine months ended September 30, 2000,  compared to $2,737.2 million for the same
period in 1999.  Comparable  store sales increased 13.8% and 11.6% for the third
quarter and nine month periods  ended  September  30, 2000,  respectively,  when
compared to the prior year third quarter and nine month periods. Sales increased
for both the three and nine month periods,  driven  primarily by increased sales
of audio and video equipment,  including  "direct-to-home" satellite systems and
services  ("DTH"),  as well as by  increased  sales of  personal  computers  and
wireless communications  products.  Management anticipates that sales growth for
the remainder of 2000 will come from a broad  assortment of products and product
categories, but primarily from audio and video products, DTH, personal computers
and wireless communications.                                                    

Sales in the audio and video category increased approximately 39% and 49% during
the three and nine months ended September 30, 2000, respectively,  when compared
to the same periods ended September 30, 1999. This category continued to benefit
from the June 2000 launch of the RCA Digital Entertainment Center at RadioShack,
as well as from increased  sales of DTH during the quarter and nine months ended
September 30, 2000.                                                             

Sales of communications  products increased  approximately 15% and 8% during the
three and nine  months  ended  September  30,  2000,  when  compared to the same
periods in the prior year.  For the three and nine months  ended  September  30,
2000,  increased  unit and dollar sales of PCS and digital  cellular  telephones
accounted  for the  majority of the increase in this  category.  Unit and dollar
sales  of  wireless  telephones  are  expected  to  continue  to  increase  over
comparable prior year periods for the remainder of 2000.                        

Sales in the personal computers and peripherals category increased approximately
35% and 21%  during  the  three  and  nine  months  ended  September  30,  2000,
respectively,  when compared to the corresponding periods in the prior year. The
average selling price of personal computers  decreased  approximately 6% and 12%
during the three and nine months ended  September 30, 2000,  respectively,  when
compared to 1999. However, increases in CPU units sold and increases in sales of
monitors and printers  during the quarter and nine months  ended  September  30,
2000 more than offset these price reductions.                                   

Sales in the personal electronics category increased approximately 2% and 7% for
the  quarter  and nine months  ended  September  30,  2000,  respectively,  when
compared to the quarter and nine months ended  September 30, 1999. For the three
and nine months ended  September  30, 2000,  sales  increased  primarily  due to
strong sales of giftable  items.  An increase in toys,  primarily  radio control
cars, also contributed to the year-to-date increase.                            

Sales in the parts,  accessories  and  specialty  equipment  category  increased
approximately  5% for both the three and nine month periods ended  September 30,
2000,  when  compared to the same  periods in the prior year,  due  primarily to
increased sales of accessories for personal  computers,  wireless  communication
products and audio and video products.                                          

Sales in the services and other category,  which includes  residual  revenue and
sales from prepaid  wireless  airtime,  repair  services  and  extended  service
contracts,  increased for the quarter and nine months ended  September 30, 2000,
when compared to the same periods in the previous year. During the third quarter
and first  nine  months of 2000,  increases  in  residual  revenue  and sales of
extended  service plans were partially  offset by a decrease in sales of prepaid
wireless airtime. Management expects this trend to continue during the remainder
of 2000.                                                                        

As of September 30, 2000,  approximately  4,700 retail outlets had been fixtured
for  the  Microsoft  Internet  Center@RadioShack.  Management  anticipates  that
fixtures  for most of the  remaining  RadioShack  company-owned  stores  will be
installed by the end of December 2000 and that most of these retail outlets will
be able to demonstrate and sell high-speed Internet access service by the end of
2000.                                                                           

RadioShack Retail Outlets                                                       

                  September 30, June 30,    March 31, December 31, September 30,
                2000        2000        2000        1999        1999
                --------    --------    --------    --------    --------
Company-owned          5,082       5,060       5,052       5,087       5,042    
Dealer/Franchise       2,092       2,073       2,091       2,099       2,057    
                --------    --------    --------    --------    --------
Total number of                                                                 
retail outlets        7,174       7,133       7,143       7,186       7,099   
                ========    ========    ========    ========    ========

Gross Profit                                                                    

During the third quarter of 2000, gross profit dollars increased 16.2% to $565.4
million, but decreased 1.1 percentage points to 49.6% of net sales and operating
revenues,  compared to 50.7% in the third  quarter of 1999.  For the nine months
ended  September  30, 2000,  gross profit  dollars  increased  14.9% to $1,615.0
million,  but decreased 1.0 percentage point to 50.3% of net sales and operating
revenues, versus the corresponding period in 1999. These gross profit percentage
decreases were partly due to a shift within  RadioShack's  product  offerings to
increased  sales of branded  audio and video  products and  personal  computers,
which have a lower  gross  margin  than  RadioShack  overall,  and were  further
impacted by increased  sales to dealer  stores,  which have a lower gross margin
percentage than sales to retail customers. These decreases were partially offset
by an increase in residual  revenue,  which has 100% gross margin, as well as by
an  increase  in the gross  profit  percentages  in the parts,  accessories  and
specialty  equipment  category.  Management  anticipates  that gross profit as a
percentage  of net  sales and  operating  revenues  will  continue  to  decrease
slightly during the remainder of 2000, when compared to the prior year.         

Selling, General and Administrative Expense                                     

Selling,  general and administrative ("SG&A") expense increased by $42.8 million
and $114.3  million,  respectively,  but decreased as a percent of net sales and
operating revenues by 2.2 and 2.0 percentage points, respectively, for the three
and nine month periods, when compared to the same periods in the prior year. For
these  three and nine  months  ended  September  30,  2000,  rent,  payroll  and
advertising  expense  increased in dollars,  but decreased as a percent of sales
and  operating  revenues  when  compared to the same  periods in the prior year.
These  decreases  as a  percentage  of sales  and  operating  revenues  were due
primarily to the  favorable  effect of increased  comparable  store sales on the
expense rate structure during the periods. Rent expense increased in dollars for
the quarter and nine months ended  September  30, 2000,  due  primarily to lease
renewals at slightly  higher rates and retail store  expansion.  Payroll expense
increased in dollars during these same periods due to retail store expansion and
increases in  commissions,  bonuses and other  incentives  resulting from strong
comparable store sales and profits. Advertising expense increased in dollars for
the quarter and nine months ended  September 30, 2000, when compared to the same
periods in the prior year. The quarterly increase was due primarily to increases
in television  advertising,  while the year-to-date  increase is attributed to a
shift  in  advertising   from  print  to  television   advertising.   Management
anticipates  that RadioShack  will continue to obtain  positive  leverage in its
major expense  categories for the remainder of 2000,  dependent upon  continuous
sales growth.                                                                   

Net Interest Expense                                                            

Interest  expense,  net of interest income,  for the three and nine months ended
September 30, 2000 was $10.1 million and $23.2 million, respectively versus $3.8
million  and $12.6  million  for the  comparable  three and nine months in 1999.
Interest expense  increased $5.9 million and $9.9 million for the three and nine
month  periods,  due  to  higher  nominal  interest  rates  and  higher  average
short-term debt outstanding  resulting from increased inventory levels and share
repurchases.  Interest expense,  net of interest income, is expected to continue
to increase during the remainder of 2000, when compared to the prior year.      

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 fiscal year,  as evaluated at the end of
each quarter.  The  effective tax rates for the third  quarters of 2000 and 1999
were 38.0% and 39.0%,  respectively.  The rate decrease resulted  primarily from
improved  utilization of foreign tax credits and implementation of certain state
income tax initiatives.                                                         

FINANCIAL CONDITION                                                             

Cash flow used by operating  activities  approximated $90.9 million for the nine
month  period  ended  September  30,  2000,  compared  to cash flow  provided by
operating  activities of $189.3 million in the prior year. This decrease in cash
flow was  primarily  attributable  to a $346.0  million  use of working  capital
during the nine month period ended September 30, 2000,  primarily resulting from
increases  in  inventory  and other  current  assets and a reduction  in accrued
expenses.  The  decrease in cash flow was  partially  offset by a $65.8  million
increase in net income after  adjustments  for non-cash  items in the first nine
months of 2000, when compared to the first nine months of 1999.                 

Inventory at September 30, 2000 increased $346.6 million or 40.2% since December
31, 1999 and increased  $229.5  million or 23.5% since  September 30, 1999.  The
increase  since  September  30,  1999 was due  primarily  to DTH  inventory  and
additional audio and video products related to RadioShack's  introduction of the
RCA Digital  Entertainment  Center at  RadioShack  in June 2000 and, to a lesser
extent,  increases in digital cellular handsets.  These increases were partially
offset by decreases in  computers  resulting  from strong sales during the third
quarter,  as well as decreases in  residential  telephones.  The increase  since
December 31, 1999 was due  primarily to  increases in DTH  inventory,  audio and
video  products  and  digital  cellular  handsets,  as well as  normal  seasonal
fluctuations.                                                                   

Total accounts  receivable at September 30, 2000 increased $27.1 million or 9.5%
since December 31, 1999 and increased $68.5 million or 28.0% since September 30,
1999.  The  increase  in accounts  receivable  since  December  31, 1999 was due
primarily to an increase in sales to dealers,  which was  partially  offset by a
decrease in receivables from service providers.  The receivables  increase since
September  30, 1999 related  primarily  to an increase in residual  revenue from
service providers resulting from increased sales of wireless  communications and
DTH,  as well as  rebates  relating  to the  sale of  MSN(TM)  Internet  access.
Additionally,  an increase in sales to dealers  contributed  to the  increase in
receivables since September 30, 1999.                                           

Cash used by investing  activities for the nine months ended  September 30, 2000
was $5.5 million, compared to cash used by investing activities of $92.6 million
in the previous year.  Investing  activities for the nine months ended September
30, 2000 included  capital  expenditures  totaling $91.5 million,  primarily for
retail expansion,  costs related to a new distribution  facility and upgrades of
information   systems.   Management   anticipates   that   capital   expenditure
requirements  will approximate  $25.0 million to $30.0 million for the remainder
of 2000,  primarily to support  RadioShack store  refurbishments  and expansions
and,  to a lesser  extent,  enhance  information  systems.  On  January 4, 2000,
RadioShack  received  $100.0  million in cash from  Microsoft,  which related to
Microsoft's  investment  in  RadioShack.com,  LLC, a limited  liability  company
formed by  RadioShack  and  Microsoft  for the purpose of marketing  and selling
electronics  products  on the  Internet.  Proceeds  from the sale of  marketable
securities  provided  $17.9 million in cash,  while  RadioShack's  investment in
Digital:Convergence  Corporation,  an Internet  technology  company,  used $30.0
million in cash for the nine months ended September 30, 2000.                   

Cash provided by financing  activities  for the nine months ended  September 30,
2000 was $6.7  million, compared to the $106.9  million used the previous  year.
Purchases of treasury  stock  required  $351.4 million for the nine months ended
September 30, 2000,  compared to $245.6  million during the same period of 1999.
The current year's stock  repurchases were partially funded by a net increase in
short-term  debt, as well as by $53.2 million received from the sale of treasury
stock to employee  stock plans and from stock option  exercises.  Dividends used
$33.6 million of cash for the nine months ended September 30, 2000,  compared to
a $32.3  million  usage in the same period of the prior year.  In October  1999,
RadioShack  announced a 10%  increase in the  quarterly  dividend  payment  from
$0.050 per common share to $0.055 per common share, which impacted the quarterly
2000 dividend payments.                                                         

In the second quarter of 2000,  RadioShack  expanded its existing $200.0 million
364-day  revolving  credit  facility  to $300.0  million and also  extended  the
maturity date to June 2001. The terms of the 364-day  revolving  credit facility
remained similar to the previous facility.  RadioShack also has a $300.0 million
five-year  revolving  credit facility  maturing June 2003. The revolving  credit
facilities are used as backup for the  commercial  paper program and may also be
utilized for general corporate purposes.                                        

Cash and cash equivalents at September 30, 2000 were $74.9 million,  compared to
$164.6  million at December 31, 1999 and $54.3  million at  September  30, 1999.
Total debt as a percentage  of total  capitalization  was 52.3% at September 30,
2000,  compared to 38.0% at December 31, 1999 and 39.8% at  September  30, 1999.
The  increase in the  debt-to-capitalization  ratio  resulted  primarily  from a
reduction  in  RadioShack's  stockholders'  equity  due to the share  repurchase
programs,  as  well  as to an  increase  in  short-term  borrowings  related  to
RadioShack's  inventory purchases and share repurchase programs.  Long-term debt
as a  percentage  of total  capitalization  was  19.3% at  September  30,  2000,
compared to 23.9% at December 31, 1999 and 22.3% at September 30, 1999.         

The Board of Directors has authorized  management to purchase up to 70.0 million
shares of  RadioShack  common stock  through its two existing  share  repurchase
programs, of which approximately 69.2 million shares, totaling $1,467.8 million,
had been purchased as of September 30, 2000.  During the quarter ended September
30,  2000,  RadioShack  repurchased  approximately  0.5  million  shares  for an
aggregate  cost of $26.5  million and for the nine months  ended  September  30,
2000,  RadioShack  repurchased  approximately 5.5 million shares totaling $264.4
million under the programs.  Purchases for either or both of these  programs may
continue to be made from time to time in the open market and management  expects
that funding of these  programs will come  primarily from excess free cash flow,
short-term  borrowings  and,  if  needed,  from  the sale of  treasury  stock to
employee stock plans.                                                           

In  connection  with the share  repurchase  program,  the Board of Directors has
authorized management to sell up to 2.0 million put options on RadioShack common
stock.  RadioShack  has sold  approximately  1.5 million  put options  since the
inception of the program and no put options were  outstanding  at September  30,
2000.  Additionally,  at its February 23, 2000  meeting,  the Board of Directors
authorized  management to supplement the put option program with equity forwards
and increased the number of shares subject to put options and equity forwards to
4.0 million shares. The Board of Directors also extended the expiration date for
the program to no later than December 31, 2002. Put options and equity  forwards
will  continue to be executed  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,
RadioShack's liquidity and other considerations.                                

On May 18, 2000,  the  Company's  stockholders  voted to approve an amendment to
increase the number of authorized  shares of RadioShack  common stock from 250.0
million shares to 650.0 million shares. The increase in the number of authorized
shares of common  stock may be used for general  corporate  purposes,  including
future stock splits,  if any, and other  transactions.  There was no increase in
the number of authorized shares of RadioShack preferred stock.                  

RECENT EVENTS                                                                   

RadioShack  entered into the following two agreements in 2000,  which management
believes  enhance its  strategic  plan to become  "America's  Home  Connectivity
Store."                                                                         

On August 1, 2000, RadioShack announced a multi-year cellular wireless telephone
alliance with Verizon  Wireless,  the nation's largest  wireless  communications
service provider.  This strategic alliance will permit over 3,700  company-owned
RadioShack  stores  to  consolidate  cellular  service  offerings  with a single
service provider, thereby creating training,  marketing,  inventory,  repair and
other supply-chain synergies. Additionally, RadioShack and Verizon Wireless will
create  and  implement  a   "store-within-a-store"   concept,  which  management
anticipates   launching  in  mid-2001.  In  addition  to  RadioShack's  existing
relationship with Sprint PCS, the Verizon Wireless alliance allows RadioShack to
offer a second national  wireless  carrier in a majority of the Company's retail
stores.  RadioShack  continues  to offer  cellular  service in its other  retail
outlets  through  various  cellular  carriers  in areas not  covered  by Verizon
Wireless.                                                                       

On October 20,  2000,  RadioShack  announced a strategic  alliance  with At Home
Corporation  (Excite@Home),  the  country's  leading  broadband  online  service
provider,  whose major  cable  partners  include  Comcast,  AT&T and Cox,  among
others.   Excite@Home   service   will  be  rolled  out  at   RadioShack   on  a
market-by-market  basis,  with an initial  launch  beginning in November 2000 in
selected   markets.   Management   anticipates   that  by  December   31,  2001,
approximately  1,500 RadioShack  retail outlets will be able to offer high-speed
Internet cable service through Excite@Home.  The service will be distributed via
a simple  self-installation  kit with a phone call to the local cable company to
activate the service.  The agreement  also  encompasses  joint  marketing and an
Excite@Home promotional display in RadioShack stores.                           

NEW ACCOUNTING PRONOUNCEMENTS                                                   

The Financial  Accounting  Standards Board issued SFAS No. 133,  "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133"), in June 1998, which
establishes  accounting  and  reporting  standards for  derivative  instruments,
including certain derivative  instruments  embedded in other contracts,  and for
hedging activities. SFAS 133 becomes effective for all fiscal quarters of fiscal
years beginning after June 15, 2000. RadioShack uses derivatives only in limited
circumstances and does not expect the impact of SFAS 133 to be material.        

In  addition,  the SEC  issued  Staff  Accounting  Bulletin  No.  101,  "Revenue
Recognition in Financial Statements" ("SAB 101"), in late 1999. SAB 101 provides
guidance in the recognition, presentation and disclosure of revenue in financial
statements.  The SEC recently  delayed the date that  companies were required to
adopt the provisions of SAB 101 to the fourth quarter of fiscal years  beginning
after  December 31, 1999.  RadioShack is continuing to analyze the provisions of
SAB 101 and the SEC  interpretations,  as they relate to the  Company's  revenue
recognition  policies.  The full impact of the  adoption of SAB 101 has not been
determined at this time.                                                        

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK             

RadioShack does not have any derivative instruments that materially increase the
Company's  exposure to market risks for interest rates,  foreign currency rates,
commodity prices or other market price risks.                                   

10-Q 7th “Page” of 10 TOC 1st Previous Next ↓Bottom Just 7th
 PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.                                                      

RadioShack  has  various   claims,   lawsuits,   disputes  with  third  parties,
investigations and pending actions involving allegations of negligence,  product
defects,  discrimination,  infringement of  intellectual  property  rights,  tax
deficiencies,  violations  of permits or licenses,  breach of contract and other
matters against RadioShack and its subsidiaries incident to the operation of its
business.  The  liability,  if  any,  associated  with  these  matters  was  not
determinable at September 30, 2000.  Although  occasional adverse settlements or
resolutions may occur and negatively  impact earnings in the year of settlement,
it is the opinion of management  that their ultimate  resolution will not have a
materially adverse effect on RadioShack's financial position.                   

ITEM 5.  OTHER INFORMATION                                                      

       a)     RadioShack  announced  on  October 23, 2000  the  appointment of
               Lawrence V.  Jackson  to  the Board of  Directors  of  RadioShack
               Corporation.  Mr. Jackson  is currently  Senior Vice President of
         Supply Operations and an executive officer of Safeway, Inc.

        b)     In order to  provide  all  investors  with  accurate  and  timely
               market-moving   data,   RadioShack's   conference  calls  on  its
               quarterly results,  management's  recorded monthly sales comments
               following  monthly sales releases and any conference  calls after
               an  announcement of a major event can be accessed (in listen only
               mode) on  the Company's  web page,  www.RadioShackCorporation.com
five days following their initial posting.        

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 14, which immediately precedes such exhibits.

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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:  November 10, 2000               By   /s/  Richard L. Ramsey              
                                   ---------------------------
                                   Richard L. Ramsey
                                     Vice President and Controller
                                    (Authorized Officer)

Date:  November 10, 2000                    /s/  Dwain H. Hughes                
                                   ---------------------------
                                 Dwain H. Hughes
                                   Senior Vice President and
                                   Chief Financial Officer
                                     (Principal Financial Officer)

10-Q 9th “Page” of 10 TOC 1st Previous Next ↓Bottom Just 9th
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.)                                        

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. 

27.1*          Financial Data Schedule.                                         

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

* filed with this report                                                        

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                                                        [Enlarge/Download Table]
                                                                 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      Nine Months Ended  
                                                           September 30,           September 30,   
                                                       --------------------------------------------
(In millions, except ratios)                             2000        1999        2000        1999  
 --------------------------                            --------    --------    --------    --------
                                                                                                   
Ratio of Earnings to Fixed Charges:                                                                

Net income                                             $   77.1    $   59.8    $  222.2    $  177.3
Plus provision for income taxes                            47.3        38.3       136.2       113.4
                                                       --------    --------    --------    --------
Income before income taxes                                124.4        98.1       358.4       290.7
                                                       --------    --------    --------    --------

Fixed charges:                                                                                     

Interest expense and amortization of debt discount         14.4         8.5        36.3        26.4
Amortization of issuance expense                            0.1         0.2         0.6         0.6
Appropriate portion (33 1/3%) of rentals                   17.9        17.2        53.2        50.9
                                                       --------    --------    --------    --------
    Total fixed charges                                    32.4        25.9        90.1        77.9
                                                       --------    --------    --------    --------

Earnings before income taxes and fixed charges         $  156.8    $  124.0    $  448.5    $  368.6
                                                       ========    ========    ========    ========

Ratio of earnings to fixed charges                         4.84        4.79        4.98        4.73
                                                       ========    ========    ========    ========

Ratio of Earnings to Fixed Charges and Preferred                                                   
 Dividends:                                                                                        

Total fixed charges, as above                          $   32.4    $   25.9    $   90.1    $   77.9
Preferred dividends                                         1.3         1.4         4.0         4.2
                                                       --------    --------    --------    --------
Total fixed charges and preferred dividends            $   33.7    $   27.3    $   94.1    $   82.1
                                                       ========    ========    ========    ========

Earnings before income taxes and fixed charges         $  156.8    $  124.0    $  448.5    $  368.6
                                                       ========    ========    ========    ========

Ratio of earnings to fixed charges and preferred                                                   
dividends                                                  4.65        4.54        4.77        4.49
                                                       ========    ========    ========    ========

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Dates Referenced Herein and Documents Incorporated by Reference

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

	12/31/02	6		10-K, 11-K
	12/31/01	6		10-K, 11-K
	12/31/00	5		10-K, 11-K, 11-K/A
Filed as of:	11/14/00
Filed on:	11/13/00
	11/10/00	8
	10/31/00	1
	10/23/00	7
	10/20/00	6
For Period End:	9/30/00	1	7
	8/11/00	9		10-Q
	8/1/00	6
	7/22/00	9
	6/30/00	9		10-Q
	6/15/00	6
	5/18/00	6	9	8-K, DEF 14A, PRE 14A
	2/23/00	6
	1/4/00	5	6
	12/31/99	5	6	10-K, 11-K
	11/10/99	5
	9/30/99	5	6	10-Q, 424B3
				List all Filings

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Radioshack Corp – ‘10-Q’ for 9/30/00

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